Australian snack makers face continued stagnation and economic pressures and must innovate further in niche healthy sectors to ride the current wave of challenges, a report says.
In its updated report Snack Food Manufacturing in Australia, IBISWorld Australia concluded that at the start of 2013 the sector continues to be plagued by the same challenges it faced in the last two years.
Volatile commodity prices, changing consumer trends and market saturation were cited as ongoing hurdles facing the A$2.93bn sector.
The report forecast that revenue will decrease by 0.8% over 2013 but noted that over the next five years to 2017-18 it should see growth.
Continued health focus will drive sector
“The nutritious snacks segment represents a beacon of hope for the industry as consumers become increasingly time poor and health conscious,” Naren Sivasailam, senior industry analyst at IBISWorld, said.
The report said that health and wellbeing continues to drive consumption choices and will thus shape the future market.
Sivasailam did however note that prospects remain modest in the sector.
“While the industry has shown glimpses of promise in the five years through 2012-13, rising commodity prices, turbulent economic conditions and rapidly changing consumer trends have restricted its true potential,” the report said.
Last year IBISWorld identified movements from manufacturers to plug the healthy consumer trend such as snack-size packs, yoghurt cereal bars and low-fat, low-carbohydrate versions of popular snacks like potato chips.
I also noted that the health trend was set to intensify as ongoing public education increased health awareness among Australian consumers.
In its latest report update, IBISWorld maintained a recommendation for industry to continue with new product innovations, aggressive marketing strategies and work to strengthen brand loyalty.