Crispy business: survival in the impulse snack market

While some categories have declined over the past few years, crisps, nuts and snacks have gone from strength to strength, helped by countless npd and some innovative advertising campaigns that have brought increasing awareness of the sector. Saleswise, the market hasn't done too badly, either, with a 4% increase in value sales (Nielsen 12 months to June 18, 2010).

United Biscuits commercial manager Nick Stuart explains why the category has thrived, even given the recent troubled economic times: "Snacks are seen as inexpensive treats by consumers who have been cutting back on out-of-home social occasions," he says. "Retailers should capitalise on this by stocking the best-sellers in both on-the-go and the sharing markets."

Pepsico's Jon Kyle gives credit to retailers for the great year the category has had. "Retailers are thinking more about the right range and getting smarter about which brands they sell," he says. "The category is actually quite an easy one to stock, but we weren't getting it right up until recently. Now there is better category advice out there and some excellent planograms that make the job very easy for retailers."

The snacks sector is proving appealing to manufacturers as well. Baker Warburtons was tempted into enter the market with its own offerings of Snackadoodle and ChippidyDooDaas, both of which were launched in March of this year. "The snacking category is one of the few that has remained resilient throughout the recent challenging economic climate," says chairman Jonathan Warburton. "Consumers have increasingly chosen to spend their money on inexpensive treats instead of larger purchases such as white goods or holidays."

Cranberry Enterprise also launched a range of snacks in individual packs earlier this year and believes that market demand will carry on even as the economy improves.

Says managing director Nick Charlton: "We attribute the growing performance to improving confidence in the economy and people having more disposable income. Naturally, an improving economy means more people on the move and therefore higher spend levels when they break for refreshment."

Made to share

One area that attributes at least some of its success to the downturn is sharing packs. Stuart says that the sharing market has seen steady growth over the past year. "Sharing formats have been one of the key drivers of growth during the past year, both in everyday and adult ranges," he says. "Sharing formats currently make up 16% of bagged snacks sales in impulse outlets, and year-on-year value sales are up 16%.

"Sharing formats are definitely increasing in popularity as people are looking to buy them for nights in with family and friends."

Kyle believes that the sharing sub-category has the potential to grow further. "With staying in becoming the new going out, sharing is growing the category," he says. "There is a big opportunity in the market for an everyday sharing brand that can be enjoyed at mainstream social occasions such as an informal treat in the evening or weekend."

In an attempt to capitalise, Walkers has launched 99p sharing size packs of new Extra Crunchy crisps. Kyle has high hopes for this new range. "We are confident that it will be a top five sharing brand by the end of its first year," he adds.

Procter & Gamble trade communications manager Paul Lettice says that store owners can encourage customers to trade up by clever positioning of products. "The large sharing segment continues to be a great opportunity for retailers to increase performance and encourage increased basket spend, particularly by displaying large sharing snacks alongside beers, wines and spirits as well as with displays in the at-home entertainment areas," he says.

Kettle Chips marketing director Andrew Slamin says that although there has been more focus on the sharing sector than in previous years, retailers should continue to stock the brands they know and trust. "The sharing sector is becoming increasingly important in snacking as convenience retailers look to capitalise on night-in occasions," says Slamin. "There has been a large amount of npd and noise in this sector, however it remains important to focus on the best-selling brands."

Kyle warns retailers not to forget about the standard size sector of crisps, nuts and snacks when deciding on their range. "It's essential that retailers give their customers a choice when it comes to crisps," he says. "While the ratio between sharing and standard has evened out a little more, retailers can't start sacrificing too much space of their standard-size packs as there is still a massive demand for them. The current ratio is 4:1 in favour of standard, so a retailer's display should represent this."

Premier league

As well as seeing growth in sharing size packs, the crisps, nuts and snacks market has also moved upmarket. According to Stuart, the premium snacks market has become more popular in the convenience channel. "Premium snacks are currently worth £85m and experienced 3% value sales growth in the impulse channel," says Stuart. "UB addressed this consumer trend by bringing back its Phileas Fogg range last year. We've also introduced a KP Jumbo Nuts range and a lamb & mint variant of Brannigans crisps to meet consumer desire for luxury nuts and crisps."

Slamin says that retailers should stock several premium brands to satisfy increased consumer interest in this sector. "Premium brands such as Kettle Chips can help convenience store owners capitalise on consumer trends towards better quality snacking options for those moments of indulgence," he says.

While the crisps, nuts and snacks market has been growing over the past year, things will only get better, according to Charlton. He says autumn and winter are better sales periods for the snacks market than the summer as people are more likely to buy ice creams as a treat during this time rather than something savoury.

Tayto marketing director Elly Hunter agrees. "The category builds to a peak in December when people buy into the market for entertaining visitors during the Christmas period, especially within nuts," she says. "Snacks also see a slight increase during the end of the school holidays, going into the back-to-school period."

Kyle says that it's not just npd that will help grow the category in the future. "I think the growth will continue as there are some fantastic initiatives out there from all savoury snacks suppliers, not just Walkers," says Kyle. "Our key goal is to grow the entire category and ensure that it has long-term sustainability."