Top Learnings from IRI's State of Snack

August 2, 2017

The snack food industry continues to be a powerhouse, outpacing total food and beverage trends annually. By 2020, the global market for snack foods is expected to exceed USD$630 billion [1]. Market research company IRI recently published its State of the Snack Food Industry. The annual report analyzes 2016 category performances against market predictions for 2017. We pulled the following learnings from the report that can help brands succeed with consumers and at shelf.  

 

Snacking Around the Clock

Beyond regular mealtimes, consumers are snacking now more than ever. It was reported that 14.2% of consumers are snacking 5+ times per day, up 2.7 points since 2016. This may be due to consumers looking to snack earlier in the day as early morning snacking is also up 3 points. Brands should be seizing the growth opportunity for this early morning usage occasion.

 

Holistic Wellness

The unstoppable trend of living a healthy lifestyle, which includes regular exercise and a balanced diet, has flooded the food and beverage markets. A balanced diet is leading growth across the board with dollar sales up 3.4% in indulgent snacks and 0.9% in healthy snacks. Indulgent snacks, which consist of sweet or savory flavors may be experiencing a boon thanks to the recent positive data supporting full fat/whole fat foods for overall wellbeing versus low fat/fat free diets. Categories such as whole fat yogurts, whole fat ice cream/sherbet, chocolate and snack/granola bars are all experiencing growth. Brands looking to grow in these categories should strengthen their natural full fat/whole fat messaging.

 

Category Blurring

Treating and snacking categories are blurring. Though consumers view candy as a treating occasion, brands are adding confection ingredients such as chocolate to savory snacks, which are impacting snack growth. Almost 59% of food and beverage categories now contain chocolate as consumers look to enjoy their sweet with their savory. By category blurring, brands can appeal to a larger audience set.

 

Packaging Power

In the world of snack, packaging continues to be a leading purchase driver with 53% of consumers saying it influences their purchase decision. An even greater number of millennials claim packaging as an influencer with 60% of consumers aged 18-24 and 62% of consumers aged 25-35 saying it influences them at point of purchase. Brands, especially young brands, should be leveraging their packaging as much as possible to pop at shelf against competitors and grab consumer’s attention.

 

Attribute Point of Differences

With a shift toward holistic wellness, brands are delivering on health attributes to satisfy consumer demand. Protein has been a significant new purchase driver across 20 categories with a compound annual growth rate of 8.8%. Whether in dairy, meat or plant based snacking, brands are utilizing this consumer attribute as a means for purchase. Gluten Free also continues to dominate with a 19% compound annual growth rate. Brands should be boosting their product attributes in the communication hierarchy on the package.

 

Distribution Planning

Penetration opportunities across retail channels are shifting with the greatest opportunities remaining in Mass, Dollar and Online. Unsurprisingly, internet sales are driving double digit growth. By 2018, 50% of Consumer Packaged Goods category market growth will be online. That being said, new brands are more likely to gain the most distribution in mass and online in the first year, while established brands need to continue to saturate in all markets to ensure availability to consumers. With recent acquisitions of brick and mortar retailers by major online distributors and retailers, expansion in new markets could prove easier for brands who can establish strong relationships with the new retail leaders. 

 

For the full report on IRI's State of the Snack Food Industry, visit here.

 

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