Snacking is definitely where it’s at right now in the confectionery industry.
As big brands try to keep up with consumer trends and the shift in taste from conventional snacks to superior or organic options, comes another threat.
The rise of private label, or store brands. "The US trails Europe in private label market share with only 16%, compared to 52% in the United Kingdom, 42% in Spain, 40% in the Netherlands and 38% in Germany," said Ryne Misso, director of product marketing at Market Track, at the recent Sweets & Snacks Expo in Chicago.
At the Chocovision 2018 conference in Davos, Peter Schwartz, senior vice president for strategic planning at Salesforce, warned representatives: “Amazon is the end of brands – and soon it is likely to be producing its own brand of chocolate too.”
Amazon is already a major snack seller of course, through its Wickedly Prime and Whole Foods’ 365 Everyday brands. “Amazon sold $518m worth of snacks over the past year, with category sales climbing 22% over the past six months," said Mike Black, global vice president of marketing and analytics at Profitero, speaking at the Sweets & Snacks Expo.
Private label healthy snacking
According to research by amplifysnackbrands.com, the millennials are driving sales and innovation in private label healthy snacking.
The in-demand demographic is gobbling up everything from meat snacks to candy to granola bars, 24/7, with much of the purchasing online, says analysts fooddive.com. The study found that millions of millennials intentionally miss meals in order to snack.
Millennials and Gen Z consumers are expected to keep up their snacking habits as they age, with per capita snacking at meal times expected to rise by 12%.
Speaking at Chocovision 2018, Pladis CEO Cem Karaka said the successful launch of its Flipz brand in the UK was proof that the snacking trend is no passing fad.
The launch follows a surge in popularity in the US, where the chocolate-covered savory pretzels snack has experienced double-digit growth over the past three years and is worth $61m to Pladis.
The brand’s modern packaging, playful character and American heritage have caught the eyes of young shoppers in the UK, and Pladis is expecting first-year sales of £9m in Britain.
Key acquisitions
With Hershey, Nestle and Mondelez making key acquisitions in the snacking space, retailers need to stay on top of trends and demand. Datassential has found that most consumers eat an average four to five snacks a day outside of their regular breakfast, lunch and dinner times.
Misso said the arrival of German discounters Aldi and Lidl in the United States is also a significant factor.
“These are largely private label focused grocery stores,” he told the Sweets & Snacks Expo. “As we’ve seen, even outside of Aldi and Lidl, other US grocery stores are looking to expand not only the quality of their private label but also the diversification of their private label offerings.”
Last month’s Private Label Manufacturers Association (PLMA) show in Amsterdam attracted a record 2,600 own label exhibitors and proved retailers can rival brands in both innovation and quality.
“As the Amazon generation becomes used to having everything shaped around personal preferences, PLMA president Brian Sharoff named customization as a key future trend. The question is how retailers can tailor products to individual likes while producing on a mass scale,” said The Grocer’s Emma Weinbren.
Definition of snacking
In addition, the very definition of snacking is changing, according to the Datassential report. It found 62% of consumers in its survey said virtually any kind of food could qualify as a snack — ‘from yesterday's entree to sandwiches and wraps, pizza or a bowl of cereal.’
“The benefit retailers have is they can make some decisions of what goes on the shelves and what doesn't,” said Sally Lyons Wyatt, executive vice-president of thought leadership at Information Resources Inc, during a presentation at Sweets & Snacks. “They’re leveraging all aspects of the store to drive some convenient and tasteful options that consumers are gravitating toward.”
Consumers, especially the younger generation, are already gravitating online for their snacks, where they “can count on something almost always being available," Black said. "Amazon is creating the endless shelf."