Pretzels: The ultimate renaissance snack
November 22, 2016
by Dan Malovany
Classic pub-style sourdough pretzels remain popular with a broad array of consumers.
When it comes to the art of snacking, pretzels paint on a canvas for almost every taste. It doesn’t matter if it’s sweet, savory, salty or all of the above. These traditional snacks can be found among better-for-you alternatives, a crunchy component in a swath of snack mixes, in the dairy section as an integral part of an appetizer or even as a chocolate- or yogurt-coated counterpart to conventional candy and others in the confection category.
In many ways, pretzels are a consummate neoclassical snack that strives to leave a lasting impression no matter what consumers want.
“Pretzels are considered light and lower in fat and calories than other salty snacks, and therefore are seen as a classic yet modern sensible snack,” noted Bob Clark, vice-president of marketing, Herr Foods, Inc., Nottingham, PA. “Over the past several years, there has been a trend away from products [like pretzels] that contain gluten, which has dampened some consumer enthusiasm, but the category looks to be holding up well based on the excitement around new flavors and shapes.”
Perhaps pretzel manufacturers just need a little bit more creativity for the versatile snack to meet its full potential, suggested Scott Carpenter, president and CEO, Savor Street Foods, Inc., a contract manufacturer based in Reading, PA. “Although innovation in the pretzel category has been increasing, pretzels continue to be under-developed versus other snacks with some important consumer trends such as gluten-free, organic and ancient grains,” Mr. Carpenter explained. “Pretzels have tremendous untapped potential as snack alternatives in these areas, and over the next few years, consumers are going to have a wider array of innovative pretzel snacks to choose from.”
Looking at total sales, research firm Canadean expects the pretzel category to grow slightly faster than the broader savory snack market, according to Tom Vierhile, innovations insights director. Canadean is projecting that pretzels will enjoy a 3% compound annual growth rate (CAGR) based on market volume for the period of 2014 to 2019 vs. a 2.6% CAGR for savory snacks over the same period.
Seasonal and limited-time-only products add excitement and drive impulse sales in the pretzel category.
Building on its base
For decades, pretzels have positioned themselves as the better-for-you (BFY) alternative in the salted snack aisle. However, with the proliferation of baked snacks and gluten-free munchies entering the market, many companies like Utz Quality Foods, Inc., expanded its portfolio with more healthful products under its core Utz brand as well as its Good Health
platform. One of its newest products, Good Health Gluten Free Pretzels, contains whole grain brown rice flour that creates a crunchy, salty bite, noted Kevin Brick, senior vice-president of marketing for the Hanover, PA-based company.
Meanwhile, the snack producer also rolled out veggie pretzels under the Good Health banner, added Jeff Martin, executive vice-president of sales and marketing for Utz. The snacks contain a panoply of nutrient vegetable pieces as well as Himalayan salt that’s known for its high mineral content and other benefits. “It’s a savory style of pretzel,” Mr. Martin said. “It’s something different to give consumers a slightly more unique profile than a traditional pretzel.”
While BFY remains a powerful trend, the healthy snacking segment continues to be a moving target. “Gluten-free is definitely a trend, but we aren’t sure how long that will last,” said Scott Green, vice-president, sales and marketing, Pretzels, Inc., Bluffton, IN. “Clean label is huge. That’s going to grow. That is one area where consumers are educating themselves, along with organic products. Retailers and manufacturers have to be careful when using the descriptor natural because no one has defined what ‘natural’ is.”
While sodium may be perceived as a potential health concern, Mr. Martin suggested that it’s more of a consumer preference — or matter of taste — when it comes to pretzels. “We see people who just want a little bit of salt on their pretzels, and then there are others who want a ton of salt,” he said. “In the pretzel category, salt is one thing people really pay attention to and notice. Consumers will buy a pretzel based on the amount of salt or the lack thereof. It’s a very personal preference in this category.”
To reach more consumers and drive impulse sales, many producers now offer seasonal and limited-time products. Snyder’s-Lance, Charlotte, NC, came out with Oktoberfest pretzels this fall under its Snyder’s of Hanover brand. Crafted in the Old World style, each individually twisted pretzel is given extra time to rise before baking to create an item that’s crusty on the outside and airy on the inside. Snyder’s of Hanover also rolled out Halloween-themed peanut-free pretzels. For those with allergen issues, the company also produces pretzels in a peanut-free facility.
Overall, many snack manufacturers like Utz and Herr’s offer a complete line of regular and sourdough pretzel products that has sparked growth in the pretzel category along with innovation, new package designs and an emphasis on in-store displays to drive impulse purchases. Herr’s recently launched a Sourdough Pub-style thin pretzel that has a hearty crunch with a thinner twist than other sourdough pretzels.
At the same time, Mr. Clark said, newer pretzel formats such as crisps, crackers and sourdough extensions have brought new usages and more sophisticated tastes to pretzels, allowing them to be merchandised along the perimeter of the store adjacent to dips, spreads, cheeses and more that can accompany or act as a topping.
Many industry observers agree with Mr. Green’s assessment that the overall category is relatively flat, rising at 1 to 2% annually over the past several years. His assessment includes foodservice, contract manufacturing and other channels that might not be included in IRI, Nielsen and other scanning data. The extension of multiple snacking occasions throughout the day — coupled with the broader definition of what constitutes a snack — created great potential to alter the dynamic of the category.
“Our diets are changing. We’re snacking more often than we’re eating [meals],” Mr. Green said. “If you define what snack foods are, they include a much wider variety of items. They’re not just salty and savory. Before, chip companies were competing with chip companies, and pretzel companies were competing with other pretzel producers. Now, snacking and our lifestyles have changed. Snacking incorporates the vegetable aisle, the cheese department and anything else that is proportioned into small servings. We’re really re-defining what snacking is. Before, people would open up a bag of chips or pretzels and go for a dip. Snacking is occurring all across the grocery store.”
Various forms of pretzels, in fact, now appear in parts of the store where they never have been merchandised before. “Pretzels are now in the produce section, the dairy department or deli next to the hummus dip,” Mr. Green added. “We’re in the candy aisle now with coated pretzels competing with chocolate candy bars and other sweet goods. We’ve never been there before.”
Many snack and confectionery companies are jumping on the popular sweet-and-salty product trend.
Headwinds and tailwinds
Bold flavors, Mr. Brick said, are only part of the story. “Like the rest of snacks, it’s about not only flavors but also portability,” he said. “That just continues to be important for everybody. Snacks are a fill-in or meal replacement. Pretzels are pretty well-positioned in the market.”
However, skyrocketing sales of ready-to-eat (RTE) popcorn may have dampened a bit of momentum from pretzels, especially as a more healthful alternative in the snack aisle. That may be partly because of shifting consumer preferences. Additionally, some savvy marketers tout RTE popcorn in terms of calories per cup on the front of the package instead of calories per serving found on the back. Nutritionists claim such front-of-packaging marketing allows producers to promote that some RTE popcorn has 15 to 20 Cal per cup while it actually has around 130 Cal per serving, which is similar to a serving of pretzels.
“Popcorn became that low-fat, low-calorie favorite and exploded,” Mr. Martin pointed out. “In the past couple of years, popcorn has been amazingly strong. For a long time, pretzels were viewed as the low-fat alternative, and pretzels from a calorie standpoint remain a balanced alternative.”
Sales of RTE popcorn/caramel corn jumped 16.9% to $1,213.3 million for the 52 week period ending Sept. 4, 2016, according to IRI, a Chicago-based market research firm. In comparable data, IRI reported pretzels slipped 2% to $1,185.5 million. While popcorn is the rage right now, the question remains if it has a sustaining power to be called a trend or fad.
“We’ve seen people move back into the pretzel category,” Mr. Martin said. “People tend to get in and out of various categories. Popcorn is still going to grow, but we’re seeing the move back to classic pretzels.”
Partnering pretzels with other items such as cheese snacks, nuts and even candy has stoked sales. Nutritional snack/trail mix sales rose 6.3% to $1,125.6 million, according to IRI.
“We are seeing significant growth in pretzels as a component in snack mixes and various other products — whether they are dipped, enrobed or even seasoned,” Mr. Carpenter observed. “They can be a more cost-efficient alternative that can not only add value to the ingredient panel, but with distinctive shapes, sizes and ingredients, can really help differentiate a product.”
Often it may be a matter of economics when it comes to incorporating pretzels into snack mixes. Mr. Green noted that pretzels are much more affordable than nuts, and combining the two can create a mix that appeals to consumers who crave a little bit of everything. “It’s on the rise,” he said. “During the past five years, pretzels as a component have definitely grown.”
Mr. Brick suggested that the potential for pretzels in snack mixes remains strong. Utz Pub Mix for club stores remains one of its most popular items, for example. “There is a lot of interest there, and we have to take snack mixes forward and play with them more,” he said.
Veggie pretzels provide a unique, savory alternative to traditional pretzels and offer a variety of nutritional benefits.
Creating crunchy indulgence
From a flavor perspective, sweet and salty complement as well as counterbalance each other nicely, according to Mr. Clark. “Flavor combinations such as honey mustard and salted caramel are natural fits,” he observed. “Hot and spicy tends to match better with corn- or potato-based snacks. However, we expect to see more flavor innovation into the future.”
Pretzels also add new textures to foods in many ways. “Anecdotally, we are seeing more emphasis on texture in confectionery, and Mars Chocolate’s launch of Snickers Crisper is a classic example of what is happening there,” Mr. Vierhile said. “Mars even quantifies the growth in the ‘crispy crunchy segment of the chocolate category’ — who knew there was such a thing?” he noted, adding that it grew 9.2% between 2011 and 2014, or twice as fast as the category average, according to Nielsen data.
Pretzels also provide a crunchy texture to creamy ice cream and frozen desserts. From an indulgence perspective, enrobed pretzels compete effectively with candy, especially during the holiday season. “We have been doing that for years, and it’s a space a lot of people are entering because it’s been growing over the past few years,” said Mr. Brick of Utz. “We were one of the early adopters. We’d love to be out there longer, but there is also a seasonality to the business.”
According to IRI, chocolate-covered salted snacks rose 17.5% to $197.1 million. IRI reported the category leader, Stamford, CT-based DeMet’s Candy Co., saw sales rise 25% to $52.3 million during the past year. Marissa Foray, brand manager for Flipz, which was acquired in 2003 by DeMet’s Candy Co., noted limited-time offers and seasonal items can create new consumption occasions and spark incremental sales.
New varieties also help bring consumers into the segment. At the Sweets and Snacks Expo, held in Chicago earlier this year, DeMet’s introduced a Caramel Sea Salt variety to its coated pretzel brand.
Still, it’s the old standbys that dominate this niche market. “Like most chocolate confections, milk chocolate is the highest performing flavor segment based on its broad appeal,” Ms. Foray said. “In more niche segments and among different consumer groups, dark chocolate is gaining in appeal.”
She added that DeMet’s has turned to social media — specifically Facebook and Instagram — to promote using coated pretzels in other snacks and desserts as a part of the broader meal occasion. While gaining in popularity, the chocolate-covered pretzels segment is challenged by a lack of awareness among consumers. “Many brands are working to drive awareness and trial in the overall chocolate-covered snacks category via 360 media campaigns,” Ms. Foray said. “One of the largest trends impacting overall snacking among other food segments is the better-for-you movement. Manufacturers are developing new products, enhancing packaging communications and evolving marketing programs to increase the relevance of their brands within this trend.”
Utz, for instance, recently refreshed its packaging to make it more contemporary and drive excitement and clarity around its product lines. “When you stand back from a shelf, our company now makes it easier to understand what varieties we have out there,” Mr. Brick said. “We have a full line of pretzels, and we really want to show the line off well.”
Single-serve packs not only provide channel-specific sales, such as in c-stores, but also cater to grab-and-go sales.
“People are guided toward innovation in packaging,” Mr. Green explained. “Resealable and small-portion packages are increasing. Small portions have been strong for years, and we don’t see it stopping anytime soon. People want one portion or two servings of snacks instead of simply snacking on a 32-oz bag. Still, those family-sized bags aren’t going away.”
In the pretzel category, a little imagination can create a work of art while a stroke of genius can result in a masterpiece. As Mr. Green pointed out, “Any innovation you can come up with is going to take off in the long run.”