Marketing Intelligence
...her savoury snacks such as pretzels and popcorn gained dynamic growth due to their very low fat content. On the other hand, some traditional savoury snack products, particularly in the crisps/chips sectors, will always be perceived as high fat products by some consumers and these consumers are more likely to turn to fruit and salads for their snacks. 3.2.3 Lunch box meals and multipacks According to Key Note---Snack Foods (1998), lunch box meals at work or at school are becoming more popular and this has increased the demand for snacks, especially multipacks. Snacks are now part of the regular weekly shopping for most adults, and the large supermarkets have been encouraging increased spending on snacks through bigger display areas and the shift towards multipacks and larger pack size. By 1998, multipacks account for an estimated 80% of volume sales though grocers. 3.2.4 Taste for ethnic and Premium Savoury Snacks Due to increased foreign travel and a growing incidence of eating out, consumers sought to experiment more adventurous exotic and ethnic flavour from snack foods. In addition, as stated above, with a growing awareness of healthy and nutritional issues, demand for adult-orientated indulgent or premium savoury snacks was also growing. Moreover, as savoury snacks are increasingly used for home entertaining, premium savoury snacks and indulgent flavours are being used to differentiate the products offered from those that might be purchased on impulse. 4. SECTOR SIZE AND COMPETITIVE STRUCTURE As stated in the Section 2---“Definition”, the savoury snacks market was divided into four broad sectors: chips/crisps, extruded snacks, nuts, and other snacks. In addition, the figures in the following subsections are based on the report Savoury Snacks in the UK (2000). 4.1 Chips/Crisps Chips/crisps, the traditional savoury snack of the UK, is the largest market sector, accounting for around 49% in 1999. Volume and value sale of chips/crisps are 186.6 thousand tons and £1349 million respectively in 1999. As to the competitive structure within this sector, Walkers Snack Foods Ltd continued to command the single highest value share of chips/crisps in 1999, at 57.8%, with its strong brand portfolio including the sector leader --- Walkers. Other leading manufacturers in the sector include Golden Wonder Holdings (4.8% in value) and KP Foods UK (4.5% in value). Walkers enjoyed strong sales growth in 1999 with value sales driven by the successful launch of Walkers Max in August 1998. The brand was just under £33 million by the end of 1999. Other major brands consist of Golden Wonder (4.8% in value) and Walkers Lites (3.4% in value), and Kettle Chips (2.7% in value), which in particular increased value sales through product innovation, led to the launch of a new flavour in June 1999. Golden Wonder in 1999 experienced the decrease in value sales due to lack of innovation and product ideas. Moreover, within this sector’s competitive structure, private label lost share as consumers moved up to more premium crisp brand. 4.2 Extruded Snacks In 1999, the extruded snacks market totalled 131.5 thousand tonnes in volume terms and £1127 million in value terms respective. The majority of extruded snacks are potato or cereal based and this type of accounted for 85% of value sales in the extruded snacks sector in 1999. The main brands in this subsector type are Pringles (Procter & Gamble, 22.4% in value), Hula Hoops (KP Foods UK, 11.4% in value), Quavers (Walkers Snack Foods, 8.8% in value) and Wotsits (Golden Wonder Holdings, 7.8% in value). Manufacturers capitalised on the growing demand from adults for snacks to form a lunchbox addition. Tortilla chips and corn chips constitute smaller sector types of extruded snacks with 3.8% and 11% shares of value sales respectively. Walkers Doritos Dippas and Phileas Fogg are the market leaders of the tortilla chips sub-subsector and are responsible for much of the value growth. On the other hand, Doritos is the prominent market leader in the corn chips sub-subsector, with 41.2% share in value terms. 4.3 Nuts Consumer demand for nuts remained stagnant due to widespread lack of innovation during a large part of the last few years. Volume and value sales of nuts sector are 18.1 thousand tons and £110.5 million respectively in 1999. Within the competitive structure in this sector, KP is the market leader, with its premium products’ launches such as KP Nutsters in 1998 and a range of premium tree nut in 1999. In addition, other major brands in the sector include Big D (Trigon Snacks), Jungle Fresh (Golden Wonder Holdings). As an area of future growth within the nuts sector is the organic niche, Whole Earth launched Organic Peanuts in an attempt to capitalise on the rising consumer demand for organic products. 4.4 Other Snacks The “other snacks” sector was totalled 17.4 thousand tonnes in volume terms and £140.5 million in value terms in 1999. Popcorn took a 52% share of the value of “other snacks” in 1999, making it most important subsector overall. In this subsector, ready-to-eat, sweet popcorn accounted for the majority of value share, with Butterkist the market leader continuing to drive growth through strong sales. Microwave popcorn is a lighter and savoury alternative to ready-to-eat versions, increased in popularity over the last few years as a result of the rise of in-home entertainment. On the other hand, the pretzels subsector was still in its infancy in 1999, following its arrival in the UK in late 1996. The major manufacturers within this sector as a whole are Van Den Bergh Foods with the brand Peperami, and The Jacob’s Bakery with Twiglets. 5. OPPORTUNITIES AND THREATS IN THE MARKET According to Key Note---Snack Foods (1998), the major opportunities and threats within the savoury snacks market are as follow: 5.1 Opportunities Ø The snacks market is starting to polarise between budget priced products and premium products, and the latter market offers growth opportunities. The premium market enables suppliers to target the adult market. Ø The rapidly developing low-fat snacks market offers further growth opportunities. Ø More adventurous eating habits should open up the market for more exotic snack flavours, such as Thai, Mexican, Caribbean, Indian and Chinese. Ø Merchandising and tie-ins with television, cartoon and film characters will continue to boost children’s snack sales. Ø The line between snacks and meals is likely to become blurred and line extensions to some snacks products such as dips will mean that more snacks can become meal substitutes. Ø Per capita consumption of savoury snacks is still relatively low in a number of European countries and there are clear growth opportunities in many of these countries. Ø New sales outlets, such as petrol station forecourts and more vending machines, should encourage more impulse buying of snacks. 5.2 Threats Ø The competitive nature of industry, and the rela...