Snack Industry Overview

The following is a transcription of an Innovation Stage presented Monday afternoon, November 9, during PACK EXPO Connects.

Screen Shot 2020 11 09 At 1 50 15 Pm

Watch the discussion here until March 31, 2021.

Greetings everyone. My name is David Walsh. I'm with SNAC International, proud to be a partner of a PACK EXPO Connects. Hope everyone has a great show and glad to be with you all today. Today, we're going to talk about the evolving snack category trends, issues and growth drivers. We're going to start by taking a high level look at what's going on in the industry, how consumers are changing their lifestyles, all through the lens of how the pandemic has impacted snacking. And then we're going to drill down on several high growth subcategories of the overall snack's category and take a look at some sales data, and analyze why some of those categories are growing. And then, finally, we're going to wrap up with just a quick note on some of the SNAC International's advocacy priorities and some of the issues impacting snack manufacturers and their suppliers.

            But before we do all that, I'm just going to give you a quick note about who SNAC International is. So SNAC International is a leading trade association for the global snack industry with over 400 member companies worldwide. We have three pillars of member value, which are networking, advocacy and education. And it's really across those three pillars and by providing member engagement opportunities through networking, advocacy and education that would reach our vision, which is connecting the snack industry to create growth and opportunity.

            So just a quick look at a sampling of some of our business member brands, these are our core snack producers, snack manufacturer snack marketer members, and they really range as you can see there from big to small, private to public, national companies to regional companies; traditional salty snack manufacturers to some of the newer, more innovative, better-for-you manufacturers and snack producers, startup companies, long-standing companies, it really runs the full gamut in the industry.

            The other category of membership that we have is associate members. We consider these mainly suppliers to the industry, and they really range from companies supplying things like packaging and manufacturing equipment, processing equipment, seasonings, ingredients, flavors for snacks, quality control instruments, and other services like distribution and marketing. Anything that goes into making a snack business operate and grow, we have those types of companies, support companies, within our membership as associate members.

            So to get into some of the trends information, it's really the reason that we're presenting today. We're going to take a look at some overall trends from a high level. Again, consumer trends, how some changing lifestyles and shifting preferences have impacted the category and how that's played out in snack trends from transforming categories, and it's really led to growth, category redefined, spanning all aisles of the grocery store today, and then all through, again, the lens of how the pandemic has impacted the industry, how COVID has impacted the category. And then finally, on industry trends, what's kind of going on, on the business front.

            So to start, we're going to drill down a little bit on consumer trends, which really set the stage for the recent category growth before the pandemic hit. The numbers you see here are pre-COVID. We're going to focus on how COVID impacted the category in a few slides, but it's really, a lot of this growth has resulted from the lifestyle change that consumers enacted a few years ago. So consumers, more than ever before, had been snacking on the go, they're using snacks to replace their meals. You see that 90% of consumers snack multiple times per day; 7%, actually, no traditional meals, they're just kind of grazing throughout the day and always on the go. Some consumers snack over five times per day and that number has just been growing in the past several years. With that, increasingly number of consumers are focused on health and wellness, and more than ever before, omni-channels keys. Snacks are being purchased throughout all channels, it's not just traditional grocery.

            You see there, there was a 38% growth in e-commerce according to IRI; 10% growth in C-store, again, this is pre COVID; 21% in mass merchandise and 11% in groceries. So for snack producers, snack manufacturers, it's really been more important than ever before to optimize their marketing to touch all different channels. E-commerce still has a huge growth opportunity, especially in today's times when folks are not leaving the house as much as they were before the pandemic hit. But e-commerce can also really help level the playing field a little bit and help some of the smaller companies that have trouble competing for shelf space with the bigger players, but are really adept at navigating those digital platforms. They can also go directly to the consumer and bigger companies are doing that, of course, as well. Many consumers, we found that 40% don't think to buy snacks online yet, there's concerns about breakage and melting and the expense of it, so there's still a big opportunity for growth here, and brick and mortar store continue to be important for growth. You see there, 90% of the snack sales are still happening in brick and mortar today.

            So again, you need to integrate the brick and mortar marketing strategy and bring in technology, things like video. We're seeing more augmented reality can really show the nutrition of a product and where the product is made and all those things that consumers want to know more of today.

            Because of this lifestyle shift, that's this on-the-go portable lifestyle, consumers have been relying more on the snack category than ever before, and it's because they're snacking much more frequently than ever before. So because of that, functional snacks are much more important. They're looking for things like fiber and protein, minerals, antioxidants in their snacks. They're taking a real holistic view of their health. So they're looking at brain, skin, gut and heart health. And you see there, that 88% number, that really shows that consumers are willing to put their money where their mouth is, and 88% are willing to pay more for foods that they perceive as healthy.

            So this reliance on the category has really helped redefine the category a little bit, a lot of innovation, traditional snacks that have been reinvented, which we're going to take a look at in a few slides here, and there's just been a lot of growth. And this was really led by the younger populations, younger demographics, millennials and gen Z, they're really the ones that are snacking much more frequently, they're the most likely to replace meals with snacks.

            So this next slide is going to show you an example and a little bit of data to back up the snacking frequency trend. You see there, on the light blue section of the cookie how that number has grown, the number of consumers that are snacking three plus times per day over the last 10 years or so has only continued to grow. To consumers a snack is a way of life, that's steadily on the rise. There's been a generational tailwind, so younger consumers are taking this trend with them as they get older and as they increase their purchasing power. Now, we're going to take a look at how these consumer behaviors are impacting the snack category at a bit of a higher level.

            So we take a look at the snack overall, macro snack trends, as we like to call it. Snack growth compared to a total store shows why this category is really one of the most exciting categories in all food and beverage. So you see 4.2% snack growth compared to 3.2% total food and beverage, so it is outperforming the rest of the food and beverage categories in the grocery store. As noted in the previous slide, because consumers are relying much more on the category, especially younger consumers, they're also looking for new alternative ingredients from their snacks. Ingredients like, you see there, beans and chickpeas, which are projected to grow double digits through 2020 by IRI; coconut, chia, hemp, and all kinds of new alternative ingredients like that.

            That said, traditional snacks will always have a firm place in consumer's hearts. They continue to hold strong, those traditional salty snacks, forecasted to grow up to 29 billion by 2022, according to package facts. So it really is all about that balance. Some consumers are looking for those innovative, better-for-you options, and many consumers are simply looking for an indulgent treat with their snacks. So when you look at some of the main growth drivers that are helping a lot of the categories see tremendous growth over the last few years, it's always all about taste. Taste still reigns supreme above health, above price, above freshness, above brand recognition, above, really, any attribute that you can think of is taste.

            So a majority of snacks that introduce a combination of flavors, so different flavors, either in the same product or in the same bag, grew in sales last year. Consumers like to really try snacks to see what they taste like, to see if they'll like it, they see it as an adventure in their snacks. Variety and experiential flavors are really driving excitement and growth. So there's really flavors across the spectrum from sweet, like Superfruit's birthday cake marshmallows, all the way to the other end of the spectrum with extremely hot, which we're seeing a lot of today and have been for the past several years, chili pepper lime, for example. And we're also seeing more exotic flavors like blood orange and combining exotic global flavors for winning combinations.

            Another big growth driver is packaging. So different types of packaging that can signal different attributes about the product. So is the packaging elevating the product? Is it fun and engaging? Is it communicating transparency, simplicity, clean label to consumers? And the younger generations are really looking for sustainability in their packaging. There's been a lot of growth and better-for-you nicer packages, but still the key to win is the product needs to taste great and be affordable. So you see there, the food influencers, the first one on the list is price, and so, really, the winners in the marketplace are finding a balance between the indulgent treat and the health benefit.

List: Digitalization Companies From PACK EXPO
Looking for CPG-focused digital transformation solutions? Download our editor-curated list from PACK EXPO featuring top companies offering warehouse management, ERP, digital twin, and MES software with supply chain visibility and analytics capabilities—all tailored specifically for CPG operations.
Download Now
List: Digitalization Companies From PACK EXPO
Dairy Food & Beverage Innovations Report
Discover cutting-edge packaging and processing solutions in the inaugural Packaging World/ProFood World Innovations Report. From high-speed filling machines to mono-material lids, see how the latest advancements from PACK EXPO International 2024 are driving safety, sustainability, and extended shelf life—shaping the future of dairy food and beverage packaging.
Access Now
Dairy Food & Beverage Innovations Report