KANSAS CITY — Today’s vibrant snack food market is much different from the past. Just 15 years ago, potato chips, pretzels, popcorn, nuts and other categories clearly dominated the well-defined market. Back then, few trendwatchers considered a hard-boiled egg or a cup of microwaveable soup as a potential competitor to these conventional salted snacks.
While the core segments still comprise the overwhelming majority of sales, they are only part of a larger, $100 billion-plus mega snack market that includes fruit, prepared veggies, yogurt, smoothies, meal kits and anything else that provides a quick fix of satiation between traditional meals.
As a result, the “other snack” category has become one of the largest and fastest growing segments in the industry.
“It’s driven by lifestyle and people on the move,” said Elizabeth Avery, president and chief executive officer, SNAC International. “Families only have the opportunity to sit down for dinner one or two times a week, which has created a need for snacks with nutritional credentials to replace a meal.”
Overall, the shift toward all-day snacking to replace traditional meals isn’t new. Rather, it has been going on for decades. However, it has accelerated even more in recent years as established manufacturers and start-up incubators roll out better-for-you offerings that are gaining greater acceptance with today’s consumers. They include not only millennials, but perhaps more importantly, an even younger — and potentially more influential — generation of future snack purchasers.
In fact, that mega-trend is among the many insights derived from a recent analysis of the Economic Census of Manufacturing data by Cypress Research. The Kansas City, Mo.-based research firm delved into census data dating back to 2002 and supplemented its findings with statistics from the Annual Survey of Manufacturers (A.S.M.).
The census data showed the value of shipments rose 41% to $17.2 billion in 2007 from $12.2 billion in 2002 and another 19% to $20.5 billion in 2012. A.S.M. data, which includes a smaller sample of snack manufacturers, indicated sustained double-digit growth through 2016.
“When you look back 15 years, what you really see is that snacking is a ‘durable growth’ story,” Ms. Avery pointed out. “With limited exceptions, the trends have all been upward. There’s nothing but opportunity for the future of this category.”
During the past decade, she added, snack sales have risen two to five times faster than the underlying food industry, and it’s attracting incubators because this market has a lower barrier to entry than other food groups.
“We have new companies coming in, scaling up and being acquired, which powers the bigger companies and makes space for new companies,” Ms. Avery observed. “And don’t forget that online has created the platform for a lot of new companies to get into the market. They don’t have to navigate through the complexities of getting into the large retailers.”
Another shift involves where consumers purchase snacks, such as hardware stores, office supply outlets and other non-traditional outlets in addition to c-stores, vending and grocery chains. However, Ms. Avery advised, keep in mind that snacks are just fun.
“You cannot say the word ‘snack’ or ‘let’s have a snack’ and not bring a smile to somebody’s face,” she said. “No matter what the characteristics of that snack are, it can be a small break. It can be a momentary indulgence. Even if it’s a healthy product, it can provide a small amount of joy.”
In the vibrant snack market, she acknowledged that plenty of the factors that contributed to the overall growth of the snack industry during the past 15 years look to be trends that will continue to drive growth well into the future.
“However, the biggest of all trends is that we have the demographic wind at our back,” she said. “Every survey shows that for younger consumers — whether they’re Gen X compared to millennials or millennials compared to Gen Z — the number of snacking occasions just rises, and that gives current companies and newcomers to the industry more opportunity to meet their needs.”