Sales of sweet and savoury snacks in the UK continued to rise in 2010, underpinned by demand for premium brands and products beneficial to health, writes Euromonitor International’s Anastasia Alieva. Innovation is focusing more on reformulation and the creation of nutritionally-balanced indulgent snacks, which will pave the way for future growth.
According to the latest research from Euromonitor International, the recession did not translate into crunch time for sweet and savoury snacks in the UK. Sales grew by a dynamic 4% in retail value terms in 2010 to GBP4bn (US$6.5bn).
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UK consumers continued to save on eating out at expensive restaurants or going to the pub but were happy to spend more on entertainment and snacking at home. Snacking is also supported by busy working consumers who have fewer fixed meal times during the day and are opting for quick snacks to save time and refuel.
Value growth in sweet and savoury snacks in 2010 was driven by premium products rather than retailer activity. The latter cut back on promotions that did nothing to help value sales, and, as a result, volume growth was compromised, reaching only 1% in 2010 and translating into sales worth 430,400 tonnes. Unit prices of sweet and savoury snacks meanwhile increased by 4% to GBP9.30 per kg.
Ongoing economic uncertainty had an impact on distribution of sweet and savoury snacks in 2010. Consumers continued to shop in supermarkets more often, as these outlets offer better value for money, and independent stores lost out in the wake of the competition. Independent stores’ share of overall sales fell to just 4% in 2010, while sales through supermarkets/hypermarkets increased to 66% due to consumers’ increasing bargain-hunting culture.
Retail value sales of tortilla/corn chips and popcorn were the most dynamic in 2010, growing by 13% and 7% respectively, boosted by consumer interest in healthier eating and snacking. Tortilla chips gained popularity as party and movie night snack on the back of their healthier image, promoted by manufacturers. PepsiCo emphasises that, since it started to use Sunseed oil, naturally low in saturates in 2006, it managed to reduce saturated fat levels in Doritos corn chips by 75%. Doritos commanded 61% value share of tortilla/corn chips in 2009.
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By GlobalDataHigh dietary fibre content and the presence of antioxidant vitamins B1 and B2 in popcorn helped to position it as healthy, with companies investing heavily in the development of new flavours to make it more attractive to consumers. Home entertainment and the growing popularity of popcorn as a sharing snack drove forward value sales of microwavable varieties, which increased by 38% to reach GBP11m in 2010. While Butterkist caramel remains the most popular flavour in the UK, continued flavour innovations are envisaged to generate new interest in popcorn and boost sales.
Extruded snacks experienced the slowest value growth of 2% and a 3% decline in volume sales in 2010, outpaced by snacks projecting more natural and wholesome images.
Chips/crisps grew by 5% in retail value and 1% in retail volume terms in 2010. Premium products with an emphasis on the naturalness of ingredients, such as Walkers’ Red Sky and revamped United Biscuits’ Phileas Fogg crisps launched in 2009, as well as new for 2010 Kettle’s Ridge crisps in a variety of flavours including Flamed Steak and Spicy Chilli, were particularly successful.
Over the past few years, manufacturers have been responding to the growing health trend by reformulating and improving the nutritional value of chips/crisps. PepsiCo has reduced the saturated fat in its chips/crisps by 70-80% and halved the salt content in some products. Meanwhile, United Biscuits has reduced the saturated fat content of its ultimate ridge cut McCoy’s crisps by 30%.
Larger sharing formats of chips/crisps, nuts and fruit snacks thrived in 2010 as consumers moved from single-serve packs to better value for money multi or larger packs. The so-called ‘lipstick effect’, and consumers’ desire to treat themselves with affordable luxuries, helped to bolster value growth in these categories.
The top three players in sweet and savoury snacks – PepsiCo, United Biscuits and Procter & Gamble (prior to its deal to sell Pringles to Diamond Foods) – accounted for a combined 51% value share of sweet and savoury snacks in the UK in 2009, generating sales worth GBP1.8bn. The largest domestic player Whitworths, which produces bagged fruit snacks, ranked fifth after Diamond’s Kettle Foods and accounted for 3% of value, with sales worth GBP98m in 2009.
Private-label products continue to play an important role in sweet and savoury snacks, generating sales worth GBP882m in 2009 and accounting for 23% of total value sales. Private label’s presence is most prominent in nuts and pretzels, where retailers’ private-label ranges accounted for 63% and 42% shares of total value sales respectively in 2009.
Obesity in the UK is growing due to excessive calorie intake and sedentary lifestyles. The proportion of the population aged over 15 years classified as obese reached 25% in 2009. This figure is expected to escalate to 27% by 2015, and, in light of the latest statistics, the government is expected to put further effort into discouraging consumers from snacking on products with a high fat and salt content and promoting the benefits of healthier choices.
Snack manufacturers will respond by launching products with improved nutritional properties. Leading player PepsiCo has pledged within the next five years to reduce salt and fat content in its new savoury products and ensure that up to 50% of snacks are baked or include “positive nutrition”, such as fruit, fibre, wholegrain and vegetables. The company aims by 2015 to increase the number of healthier snacks it makes fivefold and limit calories to 160 per savoury snack serving. Meanwhile, United Biscuits has announced a 60% reduction in saturated fat levels in its Twiglets brand from April 2011.
Over the forecast period, sweet and savoury snacks is set to record a constant value CAGR of 1% to reach GBP4.1bn, according to Euromonitor’s projections. Growth will be driven by tortilla/corn chips (constant value CAGR of 10% over 2010-2015), popcorn (CAGR of 2%) and fruits snacks (CAGR of 1%). This is a reflection of the move towards producing and marketing snacks that are healthier and more sophisticated, appealing to a more mature palate.
Innovation in terms of flavours and packaging is expected to underpin sales growth within sweet and savoury snacks during 2010-2015. The current notable shift towards premium brands is expected to continue throughout the forecast period.
