Growth curtailed by developed market saturation; prospects stunted by socioeconomic woes in emerging markets: This is the new reality that the snack industry faces having grown by just 1.7% in retail over 2015. This represents the slowest rate of growth since 2008, which should concern all involved. Confectionery, the largest sector within the snack segment, grew by the smallest amount at only 1%. A deeper look reveals a common story. Chocolate confectionery still delivered decent growth at 2%, but sugar confectionery sales barely registered anything positive, and gum continued to decline.

In other years, the blame would usually have fallen on North America and Western Europe. This year, however, things are a little different. The Latin American continent has been the biggest disappointment, only growing by 0.3% over 2015 largely due to sizeable economic and political woes in three of the largest snacks markets: Brazil, Argentina and Venezuela. China, the cornerstone of growth for so many years, has also faced a dramatic slowdown having contracted in 2015 and only marginally recovering in 2016. The change in the Chinese market mimics similar concerns expressed by Mondelez, Hershey and other snack giants.

Appear natural, stay sweet

With sweet snacks such as confectionery continually linked by the media to childhood obesity and other diseases, consumers are increasingly aware of their own recommended sugar intake levels and what sweet snacks contribute to that. This has proven to be one of the biggest barriers to growth for sweet snacks categories in developed markets. The solution? Products that appear more natural to the consumer. Processed fruit snacks (for children) and fruit and nut bars (for adults) have shown   that growth is still possible in developed markets. KIND bar has been labelled as a  'game changer' in the US snack bar market - as have other brands such as Nakd bar in the UK - for their clean label approach to marketing their products to consumers.


Savory snacking goes indie

Another hot topic for the snack industry in 2016 is the notion of 'alternative snacks'; the idea of producing a snack product that is made with non-potato, non-corn ingredients. Intriguing examples over recent years have included IPS egg white chips and Calbee Harvest Snaps (known as Yushoi in the UK) which are made from pea or lentil flour. These new product launches reflect the growing desire by consumers for something 'a bit different' and snacks that are made from ingredients that are generally perceived to be healthier than the usual staples of potato and corn. Meat snacks have also featured heavily in this space, with Slim Jim from ConAgra and Jack Link's from Link Snacks Inc being two of the better performing brands. This has inspired confectionery companies such as Hershey to acquire Krave and General Mills to purchase EPIC Provisions. The longer term future for meat snacks is, however, in doubt as a dual combination of health warnings from the World Health Organization take hold and consumers become ever more exposed to the adverse environmental impact of raising cattle.

The future for the snacks industry looks much brighter than the present, with growth expected to return to 2% a year from 2017 onwards. This recovery will be driven by a return to stability in Latin America and an expected rebound in growth within the Chinese market, which has been creating a considerable lag on world growth. In emerging markets, we should expect improved snacks distribution to aid growth. In developed markets, the shift towards higher end, 'naturally healthier' alternative snacks should deliver greater value for brands.