Snack Inflation Doubles That of Total Food
By Rachel Gignac on Dec. 07, 2023Total snack prices rose at twice the rate of food inflation in total U.S. multi-channel markets and convenience, according to data from NielsenIQ (NIQ) for the 52 weeks ending May 6, leading to volume declines.
Total food increased 7.7% in price while total snacks prices went up 15.2%. On-the-go and family snacks were among a few exceptions seeing positive or flat unit growth.
Snacking accounts for $135 billion annually in total U.S. multi-channel markets and convenience, according to NIQ.
The data company compiled its snack findings in a report titled Snackonomics: Finding Growth Beyond Inflation. Click ahead for more data from the snack category.
Purchase Drivers
The top-five purchase drivers for snacks included taste and flavor (72%), affordability (57%), convenience (42%), availability (40%) and comfort (38%), according to the report. Fifty-six percent of consumers devote 5-20% of their total food spend to snacks.
Snacks with sustainable packaging claims/certifications turn faster than other snacks, affirming consumers' rising interest in sustainability. Ninety-two percent of consumers said sustainability is important when choosing a brand, and 69% said sustainability is much more or a little more important when choosing a brand compared to two years ago.
And with convenience being a top purchase driver, it makes sense that omnichannel availability is important to consumers. With snack dollars growing by 14% online and more than 15% in mass/club/dollar retail channels, brands without a robust omnichannel strategy to drive growth beyond brick-and-mortar food stores are already lagging, the report said.
What Performed Well
Categories that lend themselves well to lunchbox use—healthier, packable and variety pack snacks—are seeing improved promo lifts compared to a year ago. Consumers seek on-the-go convenience, variety, indulgent portion control and savings. While they are gaining volume, they are also seeing lower lifts on deal, hinting at opportunities to optimize promotional strategy.
Smaller pack sizes within indulgent confections and cookies are gaining popularity, too. Price increases for some key snack categories have been steeper in smaller pack sizes, but consumers may still be gravitating towards them due to value perception and portion control, said NIQ.
Total multi-pack snacks grew 31.9% in dollar sales and 7% in unit sales compared to two years ago. In the same time frame, single-pack snacks grew 24.6% in dollar and 2.7% in unit sales.
Growing salty snack flavors include Mexican and spicy flavors. The most popular Mexican flavors include Verde, Mexican Style Street Corn, Fiesta, Fajita, Mild Guacamole and Loaded Nachos. Growing spicy varieties include Flamin Hot Sweet Carolina Reaper, Hot Chili Pepper, Buffalo, Spicy Dill Pickle, Hot Buffalo Wing and Blazin Buffalo and Ranch.
Private-Label Competition
Retailers are giving branded snack manufacturers a run for their money with competitive private-label offerings. National brands must fine tune their trade strategy to keep pace with private label in the wake of inflation.
More than 50% of snack-dollar growth is from less than $500 million brands and private label brands, according to NIQ. As smaller, more nimble brands expand distribution through differentiated innovations, many larger players stand to lose share of shelf. To win, snacking brands must develop a robust, yet agile innovation pipeline to keep up with evolving consumer demands.
Opportunities for Growth Despite Inflation
- Price: Re-evaluate brand/category elasticity and price gaps across premium, mainstream and value tiers in the wake of inflation. Identify critical price thresholds and opportunities to premiumize.
- Promotion: Use promotional efficiency as a competitive advantage. Optimize trade spend on deal-sensitive pack sizes and formats, such as those shopped heavily for back-to-school and other occasions.
- Assortment: Evaluate product mix across brick-and-mortar and online channels to fill gaps in your price-pack architecture. Don't overlook smaller pack sizes as a vehicle to boost margins.
- Distribution: Ensure your brand is available where consumers expect to find it—and where your competitors are already playing. This includes mass, club, dollar and e-commerce retailers, each with distinct merchandising considerations.
- Innovation: Improve success rate on new launches by grounding innovation in proven consumer trends, not fads. Use concept testing and forecasting rigor to reduce portfolio cannibalization and increase speed-to-market.
Questions for Snack Manufacturers to Assess:
- Which lever(s) will drive the greatest ROI for my brand in the short-term? Over the next three years?
- Is my revenue management model out of date? How can I optimize price and promotion for the "new normal?"
- Do I need to fix my (product) mix? Does this look different for different channels? Regions?
- Do I know which product features my consumer is willing to pay a premium for?
- What blind spots do I need to eliminate? Do I have a true view of my competitive set and my must-win channels and retailers?
- How can I innovate better? Faster?
Want to learn more about the snacks and candy category? Check out our event CRU in Nashville Feb. 28-March 1, 2024. Sponsors can gain 15 one-to-one meetings with qualified retailers.
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