The year was 2009, and CSP was publishing its first story on the growth of snacking amid the trend toward around-the-clock consumption.
Since then, manufacturers, retailers and restaurants have all tried to capture the opportunity, while parallel trends such as customization, protein and enhanced beverages have sprung from snacking’s upsurge.
And once again, it’s been a sweet year for the candy and snack categories, according to figures from Chicago-based IRI and Larry Levin, its executive vice president of business development. A $24 billion business, candy sales were up 3% in the 52 weeks ending Aug. 12, while the $39 billion snack industry has pushed its sales up 4.6%. More solid news for snacking: While the category is about 62% of total candy and snack sales, it’s contributing 70.5% to annual growth.
“To me, that’s a cool ‘a-ha,’ ” says Levin, pointing to the norm today of snacks as meal replacements and eating on the go as causes for the continued rise in snacking sales. He likes to joke about our vehicles becoming “carfeterias” to cater to these changing dietary habits.
Convenience retailers have even more to be pleased about: Candy sales are up 6% in c-stores—double that of the total industry. “It’s even more profound on the snacking side, where convenience has 22% of the share of snacks, but it’s up 8.4%—twice the category average of 4.6%,” Levin says. “For your readers, of course that is phenomenal news.”
Levin spoke to CSP about the state of the candy and snack industry, including the trends that are shaping the makeup of your plan-o-grams and the health of your sales. In a nutshell: millennials, midsized brands and popcorn.
Q: What subcategories are driving growth in snacks and confection?
A: From a snacking perspective, the biggest growth is coming in things like apple chips and ready-to-eat popcorn. We’ve got 15.4% growth in ready-to-eat popcorn and a 1.2% increase in penetration. I think a lot of times people don’t understand the magnitude [of a] 1.2% increase in penetration. If you think about 120 million households in the United States, another 1.2 million, 1.3 million households bought ready-to-eat popcorn in the last year that hadn’t in the prior 52 weeks.
A few categories like that really emphasize the importance of successful new products. … Nutritional bars are up 12.9% with a gain of 1.3 points of penetration, so another one where more than 1 million households joined the party. Of course the challenge for manufacturers is to retain those buyers and make sure they aren’t just passing through. You want to make sure you have the right flavor varieties and experiences that keep them.
Another area that grew a lot from an absolute dollars perspective would be dried meat snacks and jerky. [We] see a 15% increase in other dried meat snacks and 11% growth in jerky.
Growth in candy is largely in nonchocolates. Seasonal candy is up 13%, with 2.2% increase in penetration. Mints and breath fresheners [also] increased significantly. Mints are up 8.4% and breath fresheners are up 6.7%, and both are gaining more than a point in penetration. People want to snack, but they want to refresh their breath because some of these snacks are a little bit spicy.
Q: At the Sweets & Snacks Expo this past May, you shared how midsized brands are getting a disproportionate amount of consumers’ money. Can you talk about that?
A: The growth in candy and snacks is really coming from the smaller manufacturers. The midmarket candy manufacturers are 26% of sales, but they contributed 40% of the growth. From the snacking perspective, the small guys are 37% of sales and 62% of growth, so they’re even more profound on the snacking side.
It’s the smaller companies that are really paving the way for growth. … They are able to get new products out much more quickly than the big companies; they’re just able to innovate more quickly and get products out there that consumers are adopting.
Q: Is this a new phenomenon?
A: It’s been a phenomenon over the past few years that small brands are the big contributors. They leverage the natural channels. … [It comes from the] excitement that “Shark Tank” brings to the U.S. population and inspires small companies to put out these new products. It just shows you that David can beat Goliath with the right products. It’s up to the big guys to try to become a little bit more nimble.
Q: Any sales trends by channel?
A: [Besides c-stores], the other channel of note ... is dollar, which is only 1% of total snack sales, but it’s up 8.4% year over year. It’s one channel where it really doesn’t matter what category we are studying—we always see disproportionate growth. While this might not be a popular thing to say to convenience writers, for a lot of people the dollar store becomes the safer option.
I think that drug is becoming an important quick-trip opportunity for millennials. And maybe it’s because they live in inner cities … but while drug is underperforming relative to total snack, maybe there are certain subgroups that over time your readers need to be thinking about.
Q: Do you see any nuances between candy and snack consumption and different demographics?
A: Millennials spend two-thirds of their [candy and snack] dollars on snacks, as opposed to the national average of 62%, showing that they are more investing in putting their money into snacks than candy. … Understand at a very, very localized level who’s coming into your store to make sure that you have the right kind of products. Boomers and seniors are much more into candy than snacking, whereas millennials are much more into snacking.
Q: What’s on your radar in terms of seasonal selling opportunities?
A: Last year, Valentine’s Day was really hampered by horrible weather across the country and also by the fact that it was on a Saturday. And so a lot of theories went out that it was date night, and so I’m going to go out for a nice dinner and maybe buy a piece of candy or chocolate cake at the restaurant, as opposed to when we got home. Next year Valentine’s is on a Sunday, and it will be interesting to see if it again becomes more of an opportunity for restaurant operators than channel operators.
The other thing I found fascinating is when we looked at the Super Bowl. It’s America’s favorite party, I think. But this was the first year we looked at sales numbers and we saw big growth in snacks and candy. … We’ve spent a lot of time on Halloween, Easter, Christmas and Hanukkah, and I think the Super Bowl [is] another one that manufacturers and retailers really need to pay attention to.
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