CHICAGO — “There are some concerns I have,” said Sally Lyons Wyatt, executive vice president and practice leader for the market researcher Circana about the US snack segment. “We may have pushed the button on pricing almost too much.”
Ms. Lyons Wyatt spoke May 23 at the annual Sweets & Snacks Expo taking place in Chicago. She said the snack category has had a positive story to tell in terms of unit and dollar sales over the past few years, but this year it is different. All snack categories tracked by Circana experienced unit declines in 2022 but outpaced all of food and beverage.
Raising Ms. Lyons Wyatt’s concern is snack unit sales have continued to decline in 2023 through the end of March at a faster rate than total food and beverage.
“In any economic situation it’s normal (that) you would see declines in units and volumes,” she said. “But what you don’t want to see is the continual decline. That part is the part that is concerning.
“We are definitely in inelastic categories in snacking, but there may be a point where we go too far. I think we are close, if not there.”
Ms. Lyons Wyatt encouraged snack manufacturers to find ways other than price increases to drive greater sales.
“You need them to buy more snacks,” she said. “You need to up their frequency. Get better distribution. Up the buy rate. When you do those things, it could be a counterbalance to the heavy cost of doing business.”
One key to turning the tide, she said, is price/pack architecture, particularly multi-packs.
“Multi-packs are an area where we continue to see growth,” Ms. Lyons Wyatt said. “In ’22, we heard from consumers that 49% of them are looking for snacks that come from multi- and variety-packs. That was up 8 points in one year. That’s huge.”
She added the shift to multi-packs may be counterintuitive to some manufacturers.
“For many of you, you may be saying ‘I don’t get it — multi-packs are more expensive,’” Ms. Lyons Wyatt said. “And it is unless they (consumers) are looking at the price per ounce or price per serving, and their pocket can afford that out-of-pocket expense.”
While the overall snack category appears to be weak, Ms. Lyon-Wyatt said two categories that are defying the odds are tortilla chips and non-chocolate candy.
“Tortilla chips have been on fire for several years,” she said. “Consumers love the flavors, they love the convenience, they love the simplicity and they gravitate to that, especially younger consumers. Tortilla chips are still defying the odds and doing quite well.”
Year-to-date unit sales of non-chocolate candy are holding steady, according to Circana data, which is positive when compared to other snack categories.“The opportunity there is to continue to work with sizes, promotions and improve the buy rate,” Ms. Lyons Wyatt said.