Sector Insight: Crisps and snacks

Manufacturers have adapted their offerings to answer demands for healthier eating.

Sector Insight: Crisps and snacks

Pester power has reached new heights in the crisp aisle with market leader Walkers giving shoppers the chance to vote for their favourite new flavour to stay on the shelf. In its latest marketing activity, Walkers has put six trial variants on the market, including Cajun Squirrel, Builder's Breakfast and Crispy Duck & Hoisin, only one of which will be added to its range in the long term.

This promotional push has pulled together traditional and new media to build interest and purchase in a sector that has encountered significant external pressure in recent years.

In the face of the huge efforts being made to encourage the nation's children to eat better, it might seem that a product comprising mostly potatoes, fat and salt would be suffering. Consumption among children may well be declining, but manufacturers have adapted their offering to grow the market.

While Jamie Oliver has tried to revolutionise school dinners, more recent initiatives from the government have focused on improving the nutritional content of packed lunches. Unhealthy snacks, including crisps, have been removed from schools. The volume of sales in this sector has consequently declined.

While parents are trying to get their children to eat fruit, nuts and cereal bar snacks in preference to crisps, they are more than willing to trade up to more premium crisps and snacks themselves, so sales value has grown in this sector. Premium crisps, championed by smaller brands such as Tyrrells, Kettle Chips and Burts, have carved a position as an indulgent treat, commanding higher prices in the process.

In 2008 the market was worth £2.5bn in the UK, a 5% increase on 2007 sales, according to Mintel, and the first rise in sales since 2003.

Manufacturers have adapted to shifts in consumer behaviour and modified recipes to offer healthier options. These include changing the type of cooking oil, baking rather than frying and introducing wholegrain ingredients.

The 'better for you' segment has enjoyed the highest growth, but more recent NPD activity has come from crisps and snacks claiming a 'natural' positioning.

Although younger consumers remain the most frequent purchasers, men tend to be heavier users than women and the affluent ABs indulge least frequently, according to TGI. When women do buy crisps, they are more likely to opt for healthier low-fat or non-potato-based snacks.

The trend for sharing crisps as part of a night in, such as while watching a DVD, has helped boost sales of sharing packs, but overall single packs are still the most popular format. Even the premium brands have extended their ranges to include single-serve packs.

When it comes to flavours, Cheese and Onion is now the most popular, overtaking Ready Salted. These two, combined with third-placed Salt and Vinegar, account for almost two-thirds of sales of standard crisps.

Brands rule this sector, with own-label accounting for only 11% of the market. The brand leader, PepsiCo-owned Walkers, accounts for more than half the market, although its premium offering, Sensations, has not been faring so well.

The company's focus has been on improving its health positioning. It has reduced saturated fat and salt content; in 2007 it also started publicising its carbon footprint on packs.

United Biscuits owns the Hula Hoops and McCoy's brands. In 2007 it redesigned its bags to reflect its change in recipe to reduce the saturated fat content of products such as Skips, Nik Naks and Wheat Crunchies.

Although snacking is engrained in our eating culture, projected sales of crisps and snacks are limited. As the recession deepens, it is likely that people may re-evaluate their spending on products such as premium crisps and this could limit value growth. The market is expected to be worth almost £2.6m by 2012, a 2% rise on 2008 sales, according to Mintel. When inflation is taken into consideration, this is a decline of 7% over the period.

 

Crisps and Snack Manufacturers by Value and Share
RankManufacturer200820072006% change
£m%£m%£m%
1Walkers  1358541308541279556.2
2United Biscuits   45218410173901715.9
3Procter & Gamble  1697160715579
4Kettle Foods  67353243255.8
5Tayto  47240235234.3
Other   153616871707-10
Own-label  28711269112501114.8
Total   2533100240710023221009.1
Source: Mintel

 

Crisps and Snack Flavors by Value and Share
RankFlavor200820072006% change
£m%£m%£m%
1Cheese & Onion  25625236242232314.8
2Ready Salted  2442423424233244.7
3Salt & Vinegar  144141471515516-7.1
4Beef & derivatives  74774767710.4
5Prawn Cocktail  727758778-6.5
6Chicken & derivatives  6365965868.6
7Bacon & derivatives  911018112.5
Other   16816153151351424.4
Total   10301009881009561007.7
   Source: Mintel

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