Snack sales eroding on market alternatives

Related tags Mintel Analyst

Makers of snacks and crisps need new ways to tempt consumers as
competition from alternative healthier snack products start to
erode sales in Europe's biggest market, the UK.

New research from market researchers Mintel finds the Brits munched their way through 268 000 tonnes of crisps and snacks this year, a 12 per cent fall on 2002, when volume sales peaked at around 306 000 tonnes.

Of equal concern, consumers are also spending less on these products. In 2002 sales valued €3.5 million (£2.4 billion), but two years later they slipped by 6 per cent to €3.2 million.

"Last year may well have marked a turning point for the crisps and savoury snacks market, with sales entering a gradual but persistent decline which could well last for several years,"​ says David Bird, a Mintel analyst.

Healthier eating trends, near market saturation and competition from alternative healthier snacking products such as cereal bars and dried fruit are all charged with digging into the market, threatening existing sales and future growth.

According to Bird, crisps and savoury snacks in particular have suffered from a real image problem. "They are generally perceived as being predominantly high-fat, high-salt foods with comparatively few nutritional benefits,"​ adds the analyst.

Demographics, says Mintel​, are also playing a role. The population of children aged under 15 fell by almost 4 per cent, between 2000 and 2005.

Overall, sales of savoury snacks have taken the greatest battering, falling in volume by 17 per cent between 2002 and 2005. By comparison, crisp sales have dropped by nine per cent over the same three year period.

In terms of value, snacks have again suffered more than crisps, because despite the introduction of healthier rice-based, baked snacks, the sector has not enjoyed the same level of value-added and premium new product development as seen in the crisps sector, claims the report.

In fact, 'premiumisation' through the development of the hand-fried and added-value propositions in the crisps market has seen good growth in an otherwise disappointing market.

Manufacturers have launched new products using a wider range of ingredients such as soy, rice, parsnips and other root vegetables which have offered some growth opportunities in this area.

Low fat paradox​ Despite increasing concerns over health and weight issues, the Mintel report finds that sales of low-fat crisps and potato snacks have experienced only modest growth.

Poor sales through small independent retailers, which tend not to stock healthy snacking ranges, have slowed impulse sales of these lower-fat potato crisps, claims the report.

In addition, as many as one in four (26 per cent) of British are sceptical about manufacturers' low-fat/low-calorie claims.

"Consumers see crisps as an inherently unhealthy product and if they are dieting or adopting a healthier eating regime, they will avoid crisps completely rather than opting for a healthy variant.

Some may even choose a healthier option, for example fruit, or cut out their snacking habits altogether,"​ comments David Bird.

Despite a 17 per cent decrease in sales of ready salted crisps over the past two years, this flavour still remains the nation's favourite, accounting for a 26 per cent value share in 2004.

Sales of both cheese & onion and salt & vinegar crisps have also suffered in popularity, nevertheless they still account for a 20 per cent and 18 per cent market share respectively.

Although each accounting for just 7 per cent in market value, the real star performers in 2004 are both prawn cocktail and beef derivatives. While sales of prawn cocktail crisps increased by as much as 91 per cent between 2002 and 2004, sales of beef derivatives increased by a staggering 103 per cent.

As consumers' eating habits have become increasingly eclectic, so their tastes in crisp flavours have shifted away from the standard ready salted, cheese & onion and salt & vinegar flavours in favour of more prawn- and meat-influenced flavours, says Bird.

The BSE scare is reflected in the strong growth of beef flavours, while the rise in demand for other flavours reflects a trend towards the influence of ethnic cuisines, comments the analyst.

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