Snacks in P&C outlets had their strongest growth in the three years pre-pandemic but took a dive with the advent of Covid-19.
During buoyant times consumers showed a definite preference for healthy and savoury snacks, but chips still retained their popularity as evident in them delivering the greatest value contribution to the category.
Snack manufacturers are aware of the trend toward health but not at the cost of taste, and the interest in new dietary regimes from gluten free to vegan.
The space remains competitive, with trial by consumers difficult, making locally manufactured, correct positioning, online marketing and eco-friendly packaging important differentiators in the quest for success.
Healthy snacks take lead
Research from Roy Morgan earlier in the year before the pandemic hit revealed that nearly 90 per cent of Australian adults consume packaged snack food in an average week, with the biggest increase taking place in the healthy snack category.
Roy Morgan CEO Michele Levine said, “Over the past decade the proportion of Australians who regularly consume packaged snacks has declined slightly, moving from 90.8 per cent to 88.5 per cent. Savoury snacks, such as potato chips, are the most popular choice of Australians, with two-thirds of adults eating them in an average week.
She points out that Choice and nutrition experts have repeatedly pointed out that there is wide variation as to the health factor of products in this category.
AACS State of the Industry Report
The ‘AACS 2019 State of the Industry Report’ (sources: AACS 2019 State of the Industry Report, CMA Shopper Insights, IRI, retailer information) showed that snacks had the strongest growth in the last three years at 4.1 per cent after a slight 0.7 per cent increase in 2018.
AACS CEO Jeff Rogut tells Convenience World out that the sales performance of snacks was $202 million in 2019, which constitutes $8 million in growth.
Dollar share was comparable to 2018 at 2.3 per cent, he says, and margin was down 1.7 per cent to 44.4 per cent, “which was still on the buoyant side”.
Nuts, jerky and rice snacks grew the most at 8.3 per cent according to the report. Their dollar share was 16 per cent, which represented 8.9 per cent dollar growth over -18.5 per cent dollar growth in 2018.
Chips delivering the biggest value contribution. Their dollar share was 80.4 per cent, which represented five per cent dollar growth over 0.5 per cent dollar growth in 2018.
Popcorn performed poorly with its dollar share coming in at 3.6 per cent, which represented -26 per cent dollar growth in 2019 versus -18.5 per cent in 2018.
The recently released ‘AACS State of the Industry Half Yearly Report 2020,’ prepared for AACS by Convenience Measures Australia, points out that on a MAT basis snacks’ growth is now at +0.1 per cent. The largest category, chips, represents 80 per cent share and remains in growth of +2.7 per cent on a MAT basis.
Like a number of categories, the report shows that the last quarter has been tough for snacks, with a decline of -6.9 per cent. Chips declined -3.6 per cent in that period, with nuts -14.3 per cent and popcorn -41.9 per cent being impacted significantly.
Mr Rogut underscores that innovation is a critical avenue for growth as consumers seek out new products and taste sensations when it comes to snacking products.
“It is important that snack companies balance price with quality and wellness as well as value. With more people working from home and less opportunities for mobility and eating out at cafes, snacking has a terrific opportunity to capitalise on the trend,” he said.
“While we all look forward to the Covid-19 period passing, we need to offer our customers products that will give them both comfort and sustenance as they navigate stressful situations. This is not just a short passing phase.
“With children learning from home in some states, developing special products and offers to cater to their needs, again thinking healthier and fun options, will be an opportunity.”
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