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Category Insights: Snacks

Store Brand Snack Culture

Store brand snacks like cookies and salty snacks are currently seeing growth through diversification.

May 1, 2014

While talk around better-for-you foods continues, a mix of healthy—and less-healthy—snacks is still popular in the snack category. In November 2013, Mintel found survey respondents snacked on cookies and cakes 91 percent of the time, right behind more-popular salty snacks and fruits and vegetables.

Younger consumers, particularly ages 18–37, are most likely to snack between meals and also tend to eat a variety of snacks during these occasions, according to Mintel’s February 2014 “The Snacking Occasion—U.S.” report.

The report also found male consumers are more likely to gravitate toward indulgent snacks, such as cookies and ice cream. According to Kimberly Lowden, senior manager, Global Business Development, Cookies/Crackers for Daymon Worldwide, 92 percent of U.S. households buy cookies, so this is a category with a broad consumer base. However, children do have a significant impact on this category.

Cookie Cravings

One area where cookies have seen diversification is through products catered specifically to adult shoppers.

An example, said Lowden, would be the “adultification” of old favorites like the chocolate chip in a “thin and crispy” premium format, along with other adult flavor combinations like cranberry and white chocolate. “Innovation in private brand cookies has been coming from the more premium cookie segment,” she said. Products that fit this approach often carry an indulgent/gourmet proposition, including international varieties like Dutch or Belgian cookies. These products often see more premium packaging and positioning.

Seasonally available Girl Scout cookies make a considerable impact each year. ALDI saw an opportunity in catering to consumers seeking Girl Scout favorites with its new Caramel Coconut Fudge Cookies under its Benton’s brand, which bear a striking resemblance to Samoas.

Better-for-you approaches are also driving snack trends forward, noted Lowden—but not just for adults. “‘Better-for-you’ is a consumer proposition that is also appearing in cookies for children, as concerns over rising obesity levels among children have motivated some consumers to seek out healthier options in the category,” she said.

With health-and-wellness propositions often comes increased ingredient scrutiny. Mintel’s report notes many consumers are interested in knowing about the ingredients in the foods they purchase, while products with “reduced” claims (26 percent) and added health benefits (23 percent) also are influential on shopper snack purchases.

Walgreens, for example, offers Nice! Sugar-Free Crème Wafers, and H-E-B offers Central Market’s The Lighter Side of Popcorn with 50 percent less fat and sodium.

Other cookie flavor trends Lowden sees are sea salt and caramel, coconut, almond, ginger, raspberry and chocolate, and variations on traditional citrus flavors, such as Meyer lemon.

What’s trending forward often depends on the channel of play. “In terms of channel trends, dollar stores are making a strong play in the mainstream and value cookie segments with their private brand cookies, while traditional supermarkets are matching much of the branded flavor innovation in their own brands,” Lowden said.

Something Salty

Select areas of salty snacks have seen solid growth per IRI data for the latest 52 weeks ending March 23, 2014. Private label ready-to-eat popcorn and caramel corn was up 16.25 in dollar sales, while private label pretzels were up 12.87 percent. “Other salted snacks (no nuts)” jumped 16.63 percent.

Sales of the “chips, popcorn, nuts and dips” category are estimated to have hit $21.8 billion in 2013, an increase of 3.3 percent from 2012, according to Mintel’s January 2014 “Chips, Popcorn, Nuts and Dips—U.S.” report. The report found potato chips (81 percent), nuts (76 percent) and tortilla chips (74 percent) were the most-purchased snacks by households within the last six months.

These products exhibited strong growth from 2008–13, proving they could prosper despite the U.S. recession and slow recovery that followed. Looking ahead, Mintel predicts chips, popcorn, nuts and dips will continue its yearly growth with an overall 31 percent increase from 2013–18, at current prices, and 17 percent when accounting for inflation.

Most consumers haven’t made a change in the amount of salty snacks they’ve purchased over the past year. However, those ages 25–34 are significantly more likely to be buying more salty snacks this year, as well as snacks that are higher in price, compared to all other age groups.

According to Mintel’s “The Snacking Occasion—U.S.” report, households with children are significantly more likely than households without children to consume snacks across nearly all snack segments, and the differences in consumption are most apparent among salty snacks, meat snacks and snack bars. While overall the most commonly consumed snack was fruits and vegetables, salty snacks such as chips and popcorn came in second at 94 percent.

The potato chips market remains the largest, with 34.8 percent share and sales of $7.6 billion estimated for 2013, according to Mintel. Private label potato chips account for just over 3 percent of the market with sales at $425 million.

Incorporating healthier chip bases such as flax seed and quinoa into snack formulations might help the segment regarding better-for-you options while setting private label products apart from their nationally branded counterparts by adding extra value. This will require strong branding efforts by retailers, though. Mintel found consumers appear brand-loyal when it comes to the snacks they purchase, with less than one-third (31 percent) agreeing that store brands are comparable to name brands in taste and quality in a November 2013 study.

Younger generations demonstrate interest in natural and organic offerings, according to Mintel, while baby boomers show concern about the nutritional content of snacks and place importance on salty snacks with “reduced” ingredient claims, along with those that eliminate specific ingredients. Those who have purchased more salty snacks within the past year place more importance on snacks that are natural, organic or have functional claims.

Nuts and trail mix, according to Mintel, is the fastest-growing segment with 53 percent sales growth from 2008–13 and estimated growth of 61 percent from 2013–18 to reach sales of $10.1 billion. The segment has benefited from positive perceptions related to health and nutrition, as well as an increase in flavor and product variety.

While private label snack nuts missed out on being included on our Hot List—Food (see page 10) with sales growth coming in at just under 10 percent growth, sales were up to $1.16 billion with a 27 percent share. This private label category is clearly performing well, with retailers across channels getting in on the action. Drugstore retailer Walgreens offers premium options under its Good & Delish line, with options such as Wholesome Nut Mix (a source of five vitamins and minerals, according to package copy). The nuts are packaged in a clear bottle with an ingenious “flip & fill” cap, to make snacking easy. The retailer’s value option, Nice!, offers more-affordable options such as new Mixed Nuts (50 percent peanuts).

The Right Package

When it comes to snacks, the influence of packaging cannot be underestimated. The most-important factors considered when purchasing snacks are those related to packaging type and ingredients, according Mintel’s “The Snacking Occasion—U.S.” report. Natural product claims (30 percent), single-serving packaging (29 percent) and resealable packaging (28 percent) are most influential on snack purchases.

“Packaging can vary greatly in the cookie category and is influenced by multiple factors, including cookie type, segment (value, mainstream, premium), retailer (brand guardrails) and consumer preferences, as well as industry capabilities,” said Lowden.

“Size choices in cookie packaging vary significantly and are driven by the retailers’ brands and brand strategies (value, mainstream, premium) and how they position their brands within the overall category.”

Increasing between-meal consumption of snacks can be met with portable packaging options. However, the Mintel report found that more than two in five respondents (42 percent) bring their own snacks from home to save money when on the go. So, in addition to individually sized packaging, retailers should also offer resealable packaging so shoppers can pre-portion items themselves.

The oldest consumers, those aged 65 and up, are more interested in resealable packaging compared to those aged 25–54. The youngest consumers also are quite interested in resealable packaging. These consumers likely purchase snacks for themselves rather than others in their household, according to the report, so this type of packaging is important to allow them to purchase larger quantities while having the option to control portion sizes.


Promotion & Development

Social media now plays an important part of snack marketing and cannot be ignored by the private label industry.

“With major new brand launches, you often see deep spending to generate trial in the blogger community and build momentum and awareness through social media,” said Lowden, “as well as aggressive in-store merchandising, including standalone displays, end caps, BOGOs, etc.  Cross-merchandising and multiple placements of popular items are strategies also employed in this category.”

For retailers looking to add a new private label cookie line, she suggests starting with your consumer targets and building from there.  “Retailers should focus first on the consumer, determine what existing brand or brands and their associated guardrails match the consumer they are targeting, or create a brand if they determine a white space may exist,” said Lowden. “Follow that with determining the optimal assortment/items in those brands. This process will provide the retailer with the right product choices in each brand and ensure that the associated consumer targets’ category needs are met.”

Success will stem from a category-wide approach. “From a total category perspective, successful retailers are adopting a multi-tiered strategy to meet different consumer needs and grow the total category as well as their private brands,” said Lowden.

Snacks con Sabor

A distinct growth edge for snacks exists in the ever-expanding U.S. Hispanic market.

Navarro Discount Pharmacy’s private label brand Vida Mia recently celebrated its two-year anniversary. The retailer claims Vida Mia was the first brand in the United States targeting Hispanics across a variety of categories with bilingual product packaging and ingredients in English and Spanish. During the last two years, Vida Mia has sold more than 7 million product units and the company expects approximately 4 percent in sales growth annually for the next 1–3 years.

With more than 1,100 SKUs currently, the Vida Mia line offers the sub-brand Mi Sabor for snacks. The company felt it would be easier for customers to shop the entire store and better visualize the assortment with specific categories, Cristy Leon-Rivero, chief marketing and merchandising officer for Navarro Discount Pharmacy, explained.

With snacking on the rise and Hispanic population growth expected to continue, many retailers may want to look at including ethnically targeted snacks in their private label lines.

For example, Navarro currently offers its Maria crackers in two sizes. “These are a type of wafer/cracker imported from Spain that is instantly recognizable to any Hispanic person, and often brings back memories of their childhood,” explained Leon-Rivero.

In addition, Navarro offers turrónes (a Spanish nougat-type confection), fine chocolates, nuts and assorted candies.

“Specifically, the turrónes and chocolates are imported from Spain and are ethnic items with the most cultural relevance,” Leon-Rivero said.

Navarro positions the items strategically at the stores to benefit from incremental impulse purchases, as well as regular sampling of products so that customers continue to develop brand loyalty.

“The brand has been received very well by a variety of Hispanic and non-Hispanic ethnic groups,” said Leon-Rivero. “We anticipated it to be successful, and have been pleasantly surprised that it has exceeded our expectations by far.”

Such products could easily find an audience outside of the Hispanic community, though. “There is definitely an opportunity to better appeal to Hispanic customers and changing demographics nationwide,” said Leon-Rivero. “The beauty of the Vida Mia label is that, although Spanish is incorporated, it maintains full translation in both English and Spanish, creating a mainstream appeal that is inclusive.”

Navarro stores are found in Florida, and Leon-Rivero said that when it comes to snack flavors, location plays a huge role, as do the demographics of each location.

 “Understanding the customer base and, more importantly, their cultural preferences in terms of food, tradition and palate,” said Leon-Rivero, “is an important factor in developing a successful brand.”  

Eye on the National Brands

Nabisco (a subsidiary of Mondel?z International) has launched two new limited editions of Oreos: cookie dough and marshmallow crispy. Kellogg’s Keebler updated its Coconut Dreams by adding new Fudge Covered Coconut Dreams.

In June 2013, Kellogg said it was responding to consumer demand for new flavors and ingredients across its line of snack foods. Some of the changes included launching new varieties of Cheez-It crackers with bold flavors, and Keebler Simply Made cookies made with “the same simple ingredients that you’d find in your pantry,” available in Chocolate Chip or Butter varieties.

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