The Remarkable Growth of the U.S. Snack-Bar Market

And four reasons it will continue to outpace savory snacks and packaged foods

NEW YORK -- A new research report shows the U.S. snack bar market has grown at twice the rate of other snack foods and nearly three times the rate of the overall packaged food sector during the past decade. And Rabobank forecasts strong continued growth in the category in the years ahead, powered by favorable consumption trends and expanded distribution channels.

In the report titled "Never Eat More Than You Can Lift," Rabobank's Food & Agribusiness Research and Advisory group examines the drivers behind the strong growth of the U.S. snack bar market over the past decade, weighs category leaders as well as stragglers, and identifies trends and opportunities that promise an even rosier future for the U.S. snack bar market.

"Snack bars are one of the few bright spots in today's U.S. processed food market," says Nicholas Fereday, author of the report and Rabobank analyst. "By capitalizing on consumer trends and evolving demographics, snack bars have found broad appeal among a large consumer base that ranges from athletes to couch potatoes, from working mothers to professionals on the go. Even so, not every brand is a winner and there are some surprising names on the list of 'must try harder.’ "

The U.S. market for snack bars has more than doubled to almost $6 billion over the last decade, with an average CAGR of 6.4%. That far outpaces the 3.5% CAGR of the $34 billion savory-snack market (i.e. chips and pretzels), and the modest 2.4% growth of the wider packaged-food segment. Neither of the past two recessions had much impact on snack bar category sales.

Within the snack bar market--comprised of breakfast, energy and nutrition, fruit, granola/muesli, and other bars--Rabobank estimates that energy and nutrition bars account for more than one-third of sales, which grew at a 9% CAGR between 2007 and 2012.

"Most of that explosive growth is attributable to just one maker, Clif Bar & Co.," said Fereday. "Clif's socially conscious credentials, hip image, and emphasis on taste and quality ingredients have made their Clif, Luna and Mojo brands a hit with consumers and a market leader since 2008."

In the concentrated U.S. snack bar segment, three companies--General Mills, Kellogg's and Clif Bar--own almost 60% of the market and boast seven of the top 10 brands. General Mills alone owns about one-quarter of the market.

On the "must try harder" list, however, are a few confectionery companies that have not found success in extending their candy brands into the snack-bar space, suggesting there is a line between snack bars and candy that cannot be crossed.

The U.S. snack food market still continues to offer significant room for growth. Four main drivers will fuel that:

  1. Persistent consumer trends toward greater convenience, portability, and health and wellness show no signs of waning and will drive the energy and nutrition and breakfast bar classes in particular.
  2. A la Kellogg's, there is huge potential for companies to expand their strong brands from the wider food and snack categories into the snack bar segment.
  3. As the foodservice industry takes a larger slice of the consumer food dollar, there is strong opportunity for partnership with QSR companies who seek to open up new day parts to boost sales.
  4. Like the humble potato chip, snack bars are an excellent platform to launch new flavors and functional food ingredients.

Rabobank Group, based in the Netherlands, is a global financial services leader providing wholesale and retail banking, asset management, leasing, real estate services and renewable energy project financing.