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| SNACK FOODS |
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| Executive Summmary |
| Snack Foods
Sales of snack foods -- defined in this report as crisps, savoury snacks, nuts and baked snacks -- reached £2.2bn in 1999, with the market increasing in value by 4% in that year. The growing popularity of snacking, increasing work pressures, the decline of family meal occasions, and extensive new product developments by the leading suppliers have all helped to maintain healthy sales growth in the market.
Bagged snacks -- crisps, savoury snacks, and nuts -- account for 90% of all sales and the largest market sector is crisps with sales of £1bn in 1999, or 47.3% of all sales. However, the crisps sector is struggling to maintain growth due mainly to the commodity nature of the market, high household penetration limiting further growth, and low prices. Over 85% of all adults purchase crisps on a regular basis but the majority of these buy standard crisps where there is a strong own-label presence and where new product development activity is limited. However, premium and gourmet crisps are offering some growth potential.
Bagged savoury snacks are the most buoyant sector of the market and these include potato-based brands and increasing numbers of corn-based brands, such as the expanding tortilla chips product sector. Sales of bagged snacks increased by 6.6% to £780m in 1999.
In 1999, 49% of all adults purchased these products regularly and household penetration grew, helped by new product developments. The nuts market was valued at £147m in 1999, growing by just 2.8% compared to 1998. The nuts market is biased towards older consumers but new product developments -- such as new types of nuts and coated nuts -- are being used to try to attract younger consumers. The plain and savoury biscuits market, valued at £113m in 1999, is experiencing limited growth. However, sales of savoury snack biscuits increased by 3% in 1999, helped by the growing popularity of lunch box meals, and brand extensions into the dips market.
Three brand groups -- Walkers, Golden Wonder, and KP Foods --- dominate the UK snack foods market with Walkers claiming over 50% of the UK crisps sector. Other leading suppliers include Bensons Crisps, Red Mill Snack Foods, The Jacob's Bakery, and The Snack Factory.
The household supplies group Procter & Gamble PLC has become a major player in the market in a relatively short space of time through the success of one brand, Pringles. However, overcapacity, particularly in the crisps sector, has led to some rationalisation and restructuring of the market in recent months.
Sales of snack foods are forecast to continue to grow year-on-year over the next 5 years but at a much slower rate than in previous years. Sales are forecast to increase by 2.4% in 2000 and by 13.7% between 2000 and 2004. Crisps sales will continue to struggle while bagged savoury snacks and savoury snack biscuits will be the main growth areas. New product developments in both sectors will increase sales although healthy eating concerns may require more emphasis on low-fat and premium products.
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