Snacks and shares

Consumers are bored of the recession. The recent news that the economy has experienced a double-dip has meant that already jaded shoppers may be forced to forego a holiday in the sun, or put that new car on hold. Now, no one would ever claim that snacks are a substitute for two weeks on a sandy beach, but there is no doubt that consumers are seeking consolation in a night in with a DVD and some indulgent snacks as a treat.

The figures speak for themselves. Over the past 12 months in the impulse channel, the snacking category is showing 5.3% year-on-year value growth, slightly below the total market which is currently seeing 6.1% value growth (Nielsen). This is good news, especially compared with the previous year when impulse channel value growth was 1.3%, way below the total market growth of 5.8%.

The breakdown of pack sizes also makes for interesting reading: handy packs account for 58% of volume sales sharing 25% and multipacks 17%. While handy packs dominate, volume sales have fallen by 2.2% year on year, while sharing and multipacks are delivering growth (5.4% and 4.3% respectively).

Ivan Cross, snacks market strategy and planning director at United Biscuits UK, says the growth in the category over the past year demonstrates just how resilient the snacking category is. “Consumers have remained cautious about how and where they spend their money, but continue to consider snacks as a relatively inexpensive treat which they will continue to purchase,” he says. “This, coupled with the growth in the Big Night In trend, has helped to drive growth into the category despite consumers tightening their purse strings.

“People are eating out less and entertaining at home more to save money, and bagged snacks can play a central part in this,” he says. “Whether it’s a group of mates watching a Champions League match, or a night in front of The Voice with the family, people are grazing at home during these social occasions. It’s up to manufacturers to come up with the right products and formats that meet this need.”

Cross adds that the introduction of the new 150g sharing bags of McCoy’s is a great example of UB responding to this trend. “Hula Hoops Big Hoops were also introduced last year in sharing bags and, alongside our range of £1 pricemarked sharing packs, have sold particularly well through convenience outlets and have a strong rate of sale.”

While value and volume growth traditionally go hand in hand, the snacking category has bucked this trend. According to Nielsen data, value growth is being driven by pack price increases, combined with consumers trading into larger, higher priced bags such as grab bags and sharing, with no increase in the number of crisps and snacks packs being purchased.

Cross says that premium ranges are on the rise and retailers need to have these ready for consumers who are playing host. “Luxury snacks certainly have a part to play within the convenience channel, with sales of premium snacks accounting for £98m and growing by 2%,” he says. “Often a key choice for consumers hosting a dinner party or inviting friends round for the evening when looking to impress, premium snacks should be high on the agenda for retailers looking to maximise their core snacks offering. However, it’s important for retailers to take time to understand what their customers want to buy and do buy on a regular basis, and ensure they stock their products accordingly, especially if space is tight.”

Pipers Crisp Co managing director Alex Albone agrees that retailers need to be loading their displays with premium ranges. “Retailers are missing a trick if they’re not stocking high-quality, high-margin crisps,” he says. “Mintel’s recent figures show a continued strong growth in the snacks category. Interestingly, their report singled out the fact that there were further opportunities for growth in the premium end of the snacks market, particularly to the more discerning consumer who does not see price as an important factor in choosing them.”

Kieran South, wholesale director PepsiCo UK & I, says that shoppers are being a little more adventurous and retailers can cash in on this, especially if they can tie in stock with an event.

“Consumers are increasing their repertoire of crisps so it’s still possible to unlock incremental sales opportunities and grow the category by identifying new occasions,” he says. “People are willing to pay more for something new and different, so innovation is the key to adding value.”

Cross agrees and urges retailers to be ready for the numerous events taking place this year. “Key social occasions throughout the year spent snacking with family and friends such as Easter, Christmas and New Year will always be an important time for snacks. However, there are impressive uplifts in sales around sporting events in the summer as friends get together to watch the various sporting events and host summer BBQs. During the 2010 World Cup McCoy’s sales grew by 23% and KP Nuts by 12%, as people gathered round the TV at home to watch the big games. With a whole host of sporting events planned for the summer, we’re expecting similar sales increases during 2012.”

Hitting the mark

Cross points out that retailers shouldn’t overlook those consumers who are watching what they spend. “While price will remain a key focus for the snacking category over the next year, added value will be of great importance,” he adds. “Pricemarked packs offer shoppers visible value for money and reassurance that they are getting a good deal, but in addition to low-cost treats consumers are increasingly looking for added value from the products they buy, such as the 25% extra weight being introduced on Hula Hoops, NikNaks, Wheat Crunchies, Skips and Discos.”

PepsiCo recently introduced a 49p price flash on single bags of its five core flavours: salt & vinegar ready salted cheese & onion prawn cocktail and smoky bacon. South says this will help to cultivate a better relationship between shopper and retailer. “Pricemarked packs can help to achieve positive price perceptions, with 44% of consumers more likely to purchase an item on impulse when pricemarked,” he explains. “This impact is even greater within crisps, snacks and nuts as purchases in this category are just as impulsive as confectionery.”

Kettle Foods has made a new range of smaller pricemarked sharing bags available specifically for the independent convenience sector. The 100g ‘Little big bags’ come in the brand’s top-selling seasonings: lightly salted, sea salt & balsamic vinegar, sea salt with crushed black peppercorns, mature Cheddar & red onion, and sweet chilli. To highlight their position as an affordable treat and prompt purchase the bags are being pricemarked at £1.29.

Albone advises retailers not to fill their store with flashed stock, but rather try offering a point of difference within the category. “The great benefit for retailers is that selling a premium product at a higher price gives a greater cash margin,” he says. “And because we’ve pledged never to price mark our packs, retailers can set their own selling price. We see the ability to set their own prices as a key advantage for a retailer selling a premium brand.

“This puts them in a position to determine their own competitiveness and decide what margin they make,” adds Albone. “Balancing prices and margin to give the best return is, surely, the art of good retailing. But it’s also about offering a point of difference - stocking something that’s not available in every supermarket.”

Good to go

It’s not just evenings that shoppers may need a treat. For early morning consumers who want something quick and on the go, it may be worth stocking a range of snacks that fill that breakfast-shaped hole. Kellogg’s UK head of specialist accounts Lee Doherty says the sub-category has experienced a strong 12 months. “The cereal snacks market is worth £68m and has experienced 2% value growth year on year,” he says. “This is extremely promising, especially when you consider the difficult economic climate retailers have been operating in.”

He says that this growth can be attributed to consumers looking for quick, healthy treats. “In terms of trends driving the market, there has been a shift towards healthier alternatives, especially snacks which help women to manage their shape,” says Doherty. “This has really helped to grow the snacks business as people are now looking for healthier options.

“You only have to look at the success of the Special K snacks range to see this in action. Special K is one of the biggest shape management brands in the country,” he adds. “Women have confidence in Special K and we’ve had some great results from this range, most notably with the introduction of Special K Double Chocolate bars. Convenience store sales of Special K Double Chocolate account for 36% of the total market share, which is above the usual rate.”

He says that retailers can use these products to capitalise on the breakfast snacking market. “It’s always a great idea to package things up for your customers as this will really help to draw them in to what’s on offer,” says Doherty. “For instance, you can promote breakfast snacks as being part of a meal deal, for example, sell a Nutrigrain bar and a coffee at a fixed price. These types of promotions work well with shoppers as they feel like they are getting a good deal and better value for their money. You can also place breakfast snacks on newspaper stands as these are more likely to be an impulse purchase and will ultimately help to drive sales for your store.”

Realising that consumers often don’t have time for a full breakfast, Kraft Foods UK last year created the Belvita Breakfast Biscuit, which achieved value sales of £27.7m. Kraft trade communications manager Susan Nash says: “For single, career-focused consumers and busy families with working parents, time is tight and breakfast then becomes a luxury rather than the most important meal of the day,” she says.

“This has meant that manufacturers have been looking at new ways to cater for increasingly time-pressured households. It’s not so much about educating people about eating a nutritious breakfast, as most know that they should be, it’s about giving them convenient solutions that contribute to a balanced breakfast.”

Cuisine de France brand communications manager Laura Smith agrees there is a significant opportunity within the early morning snacking market. “About 55% of consumers leave home without having breakfast, presenting retailers with a key opportunity to attract additional footfall in the mornings with customers looking for a quick, tasty and filling snack on the go, often on their way to work,” says Smith.

She advises retailers hoping to capitalise on this to focus on freshness. “Freshness is key to ensuring strong footfall and repeat sales for any store market research shows that 78% of customers value freshness above product type and price when buying baked goods, and with Cuisine de France’s Bake-off range, it is easy to bring that freshness appeal into any outlet.”

The brand also recently unveiled a new counter-top snacking display unit that holds its range of wrapped snacks, making it easier for consumers to pick something on impulse while queueing at the counter.

From a premium offering for evenings in with friends and family, to the early morning rush to replace a missed breakfast, if retailers can provide a solid offering that covers all of the bases, then there’s no reason why their snacking sales won’t go down a treat.