Retail volume expectations for sweet and savoury snacks should be fairly constrained in the event of a weaker economic recovery, mainly because increasing employment levels, particularly in emerging markets in Latin America and Asia Pacific, tend to drive the expansion of a truly global snacking culture.

Rising employment levels and disposable incomes will also increase continued substitution from bulk/unpackaged snacks to discretely packaged offerings.

By contrast, global oils and fats retail volumes are likely to be fairly resilient to any deterioration in global economic prospects, as more consumers continue to cook at home rather than eat out. However, retail value sales forecasts for 2009-2014 could suffer in a faltering recovery as consumers reduce their overall usage, and thus spending, on less essential cooking aids such as premium olive oil.

Retail volumes for soup, frozen processed food and canned/preserved food should be comparatively less affected by a slower economic recovery during the 2009-2014 period. In part, the continued expansion of private label in these categories will support retail volume sales by keeping prices low, coupled with a general consumer perception of such convenient meal solutions as a practical necessity rather than an unnecessary indulgence.

That said, niche meal solution categories such as chilled and UHT soup could be severely constrained by a faltering recovery given their higher retail unit price and because they target professionals willing to pay a premium for products offering quality and convenience in a single product.

The increased snacking culture

Overall, weak economic growth and increasing unemployment levels are forcing European consumers to reduce their expenditure on restaurants and outdoor leisure, which has in turn resulted in an increase of snack consumption at home.

Retail value sales of sweet and savoury snacks in Western Europe are predicted to reach US$20.2 billion by the end of 2010, up 4% (US$ fixed 2010 exchange rates) on the previous year. This represents a moderate slowdown on 2009, when sales grew by 5% in retail value terms.

Innovation is continuing to focus on the introduction of healthier snack lines and exotic flavours at the higher end of the market and is regarded by many manufacturers as an effective strategy for market survival. This strategy is in-line with current market trends, as healthier indulgence categories like snack bars continue to gain ground on chips/crisps and extruded snacks.

Retail volume sales of sweet and savoury snacks in Western Europe are predicted to grow by 11% over the 2010-2015 period, according to Euromonitor International's projections. This represents a fairly moderate increase when compared with emerging regions like Latin America and Asia-Pacific, where sales are projected to grow by 16% and 21%, respectively.

The difference in growth between Western Europe and emerging economies will come down to maturing consumer demand in markets like Germany and the UK, according to Euromonitor International's findings.

Sweet and savoury snacks in Western Europe are expected to continue to underperform categories like snack bars and, to a lesser extent, fresh food, as they are considered healthier alternatives in most developed countries.

Furthermore, private label is predicted to continue to gain share from branded products. Additionally, private label is set to gain ground in terms of product sophistication, quality and health-orientation, putting additional pressure on branded manufacturers to differentiate further through the introduction of exotic flavours and new health properties.

As well as manufacturers investing in innovation to maintain consumer interest, the industry is predicted to use increased price promotions in order to maintain volume output. This is likely to have a positive impact on snacks' volume performance at regional levels but might slow its value growth over the medium term.

Going Nuts: Six Key Market Facts beyond 2010

Consumer demand for nuts has benefited from improved economic prospects and the category's health positioning within the broader snacks market. Innovation is now focusing more on the creation of added value through indulgence and fortification, which will pave the way for future growth.

Global retail value sales of nuts grew by 4% in real terms (constant 2010 prices, fixed US$ exchange rate) in 2010, an increase of one percentage point from the previous year. In retail volume terms, sales grew by 5% in 2010, double the rise registered the previous year.

Nuts were the strongest performing category in sweet and savoury snacks in 2010, benefiting from better economic prospects in emerging regions and a generally healthy perception among consumers across the world. Likewise, the category's retail growth over the 2007-2010 period surpassed all other snack categories, despite relatively high retail prices.

Western Europe and North America were the most important regions for packaged nuts, accounting for around 60% of global retail value sales in 2010. Asia-Pacific and Latin America followed in the rankings, accounting for 19% and 9%, respectively.

The relatively high share of developed markets is largely due to the premium positioning of nuts and their extensive retail presence in supermarkets in countries like the US and Germany.

Research shows that packaged nuts continue to account for a relatively small share of overall sweet and savoury snack sales in countries like Brazil and China, but their rapid expansion in urban areas is turning them into an increasingly common snack among mainstream consumers.

There was an upward commodity price trend for most unprocessed nut varieties in 2009/2010, despite rising production output for almonds, walnuts and pistachios. This was down to stronger demand in emerging regions, especially in countries like China and Indonesia. Stronger demand for snacks, on the back of economic recovery and the current trend among international traders to invest in commodities as a safe haven from global stock fluctuations, might underpin further price rises in 2011.

In terms of more recent innovations, Euromonitor International highlights the development of non-traditional categories, which are strictly not classified within the snack category, but include nuts as a key part of their added value. One key example in 2010 was the introduction of Puleva Omega 3 con Nueces (Grupo Ebro Puleva SA), a UHT-milk line including walnuts and cashews in its formulation and marketed as functional because of the magnesium and omega-3 content of the nuts it contains.

Global retail value sales of nuts are projected to grow by 10% in real terms (constant 2010 prices and fixed 2010 US$ exchange rate) over the 2010-2015 period. Moreover, just eight countries will account for 70% of predicted absolute volume growth, according to Euromonitor International's projections.

The US and Indonesia, the largest markets in absolute terms, will account for around 40% of predicted retail volume gains. Poland will be the most dynamic market in Eastern Europe, with retail sales expected to grow by 37% in volume and 21% in value over the 2010-2015 period. Strong economic growth and an expanding snacking culture in the country will drive consumption of premium snacks, like nuts, closer to Western European levels by 2015.

Meanwhile, peripheral Western countries severely affected by the economic recession will see retail volume sales expand over the medium term as a result of heavy promotional activities from manufacturers. This will in turn result in declining unit prices, which will hamper value performance of the nut category as a whole.