Innovation and new markets: How snack firms can ride the recessionary wave

Trends for 2013 include high-fiber and bean-based snacks, says SFA president

Snack makers must continue to innovate and develop new markets to succeed in a tough and increasingly competitive marketplace, says the president of the Snack Food Association (SFA).

Speaking exclusively to BakeryandSnacks.com at Snaxpo 2013 in Tampa Bay Florida, James McCarthy said that while the snacks sector had not been hit hard by recession, challenges remained.

“Recessions are not terribly bad for snacks and candy and consumable products that people enjoy as a treat. They are generally inexpensive and so, throughout the recession our industry has generally done okay,” McCarthy said.

He said the sector had not been “extremely successful” but had maintained strong, steady sales.

However, the SFA president said the environment remained tough. “The margins in sales are really quite small and there is a lot of innovation going on in the industry.”

“With commodity prices being high, there are a lot of challenges for companies to develop and maintain products in the marketplace that still allow for a profit at the end of the day.”

“…It’s a very competitive marketplace and I think the manufacturer that focuses on value, quality and making sure the retailer is happy with their service is the one that will win the day.”

Innovative beans, fiber and reduced fat

Developing ‘better for you’ snacks that deliver on taste continues to be the trend for 2013, he said.

“There is an emphasis now on bean ingredients and other fiber in snacks that deliver a better overall nutrient profile in snacks.”

Despite this, there is still room for the traditional potato or tortilla chip, McCarthy said, although he noted that even the number one selling potato chip varieties with 40% less fat 25% less sodium.

“There’s a lot of innovation in the traditional potato and tortilla chip products – there again, there’s an emphasis on diet, health and ‘better for you’ products.”

In the US, the snack pellet – a form very popular in Europe – is now starting to gain traction as companies look to develop new styles and variants, he said.

New markets, broader horizons

When developing new markets, there are good prospects to do so by moving production to foreign markets, McCarthy said. “Exporting is usually very difficult because of the freight and perishability.”

With production shifted to markets like China and India, an emphasis on quality can boost business, he said.