Snacking: the fourth meal: whether a health-conscious move toward lowered fat or the recent splurge on bold flavoring, snack manufacturers have been more than willing to cater to changing consumer demands

Prepared Foods, August, 2003 by William A. Roberts, Jr.

Sales of salty snacks have grown 33% since 1997 to top $15 billion in 2002. These snacks--whether potato chips, pretzels, popcorn, cheese snacks or nuts--can be found in 98% of the country's households, as Americans purchase salty snacks an average of 20 times a year, according to "The Salty Snacks Market," a new report from Mintel International Group (Chicago).

With more than a 41% market share and topping every salty snack segment except snack nuts and seeds, Frito-Lay (Piano, Texas) dominates the salty snacks category. For a comparison, consider that the next-largest salty snack presence is private label items, accounting for 6% of the category total. This explains the abundance of regional brands strong in many segments. Mintel notes that the number-two brand is highly dependent on region, although a few other national companies challenge Frito-Lay in some segments.

Extensions in salty snacks can run the gamut between new flavors, innovative shapes and novel containers. Changing consumer tastes have had a direct influence on product innovations for snack foods, resulting in a richer variety of spices, herbs and other flavor enhancers, such as roasted garlic. Of course, this also results in a highly segmented market.

Gourmet potato chips are a prime example, considering the thicker and crunchier varieties that have punctuated the marketplace. Normally these items are highly reflective of the latest flavor trends. Lay's Bistro Gourmet, for example, featured such flavors as roasted garlic & herb, applewood BBQ and smoked cheddar, generating $49 million in first-year sales. There will be more adventuresome flavor varieties, as Americans express an appreciation for such exotic tastes as Mediterranean, Caribbean, Pacific-style Szechwan and Thai.

Manufacturers also have responded to consumers' hectic lifestyles by introducing more-convenient packaging. Simply put, a snack on the go is a meal substitute for many, and some regard it as the fourth meal. Again, Frito-Lay leads the way here, with its launch of Go Snacks, portable packages of its favorites that can fit into an automobile's cup holder for added convenience. Such single-serve products could lead to a number of changes in the market, notably rising prices.

Children of the Corn

Following the trend toward robust flavors, corn chips have seen a 25% jump in sales, although new forms and colors also boosted the segment. Frito-Lay leads with its Fritos brand, but the company has not been sitting on its hands. The traditional varieties have expanded to include Chili Cheese, Flamin' Hot Texas Grill-style Honey BBQ and Nacho Fiesta, among others. Innovating in shapes also has benefited Fritos, as the Flavor Twists version boasts larger, sturdier chips to ease dipping.

Frito-Lay's control of the segment grew to 79% in 2002. The category was helped by the late 1990s' return to flavor among consumers, 'although baked varieties, such as Baked Bugles, have fared better than some more-healthful products, including low-fat and fat-free varieties.

Tortilla chips account for 23% of the overall salty snack market. Frito-Lay's introduction of Doritos Extremes, Tostitos Scoops and Tostitos Santa Fe Gold led to a spike in sales from 2000 to 2001.

Going to Pot-ato

With 32% of sales in 2002, potato chips are the runaway leader among salty snack segments. Powerhouse Frito-Lay drove potato chip sales with such introductions as Lay's Bistro Gourmet and new varieties of Wavy Lay's, although Procter & Gamble's (Cincinnati) Pringles line boosted the segment as well.

According to Mintel's exclusive consumer research, 88% of households consume potato chips, a full 6% ahead of popcorn and 9% in front of corn/tortilla chips. Furthermore, households that consume potato chips eat plenty of them, with nearly three-quarters of them saying they had consumed two or more bags within the past 30 days.

Of potato chip-consuming households, 50% of those with children report consuming three or more bags in the past month, while 85% of the potato chip eaters prefer regular potato chips. Despite the abundance of new flavor introductions over the last several years, plain garnered the most consumer dollars, with barbecue and sour cream & onion tied for second, enjoyed by 54% of households where potato chips are eaten. Although plain chips were purchased by 81% of households, manufacturers continue to launch potato chips featuring exotic and sophisticated flavors, notes Mintel.

While consumers may enjoy their potato chip, few have a tangible brand allegiance, for only 22% of the group eat only one brand. A mere 2% opt just for the store brand, so 78% of potato chip consumers vary their brand purchases, based on taste, price or other factors.

A Flavor Twist

Among respondents to Mintel's consumer research, 63% eat pretzels, and the largest percentage of those reported eating one bag within the past 30 days. Some 66% of households headed by 35- to 64-year-olds consume pretzels, making that the largest demographic enjoying the twisted treat. Only 54% of those 65 and older partake, while 57% of 18- to 24-year-olds do.