Premium sector drives UK snack market but growth expected to slow - YouGov

By Oliver Nieburg

- Last updated on GMT

Related tags Kettle chips Diamond foods Lay's

Booming sales of premium products such as Kettle Chips helped the UK crisps and snack market grow by 6 per cent in 2009, according to YouGov SixthSense research.

The report valued the UK crisps and snacks industry at £2.68bn and noted a sales increase of 17 per cent over 2008-09 with Kettle Chips an "important factor"​ for market growth in the category.

Value sales were also said to have risen due the success of a number of brands including Walkers, whose sales were seen to increase by around 8 per cent between 2008 and 2009.

However, growth during the next year is expected to slow, bringing overall market value to around £2.73bn. Earlier Mintel research, which valued the current market at a lower rate, forecast figures to reach 2.25bn in value by 2013.

Premium highlights

Researchers from YouGov found the premium sector grew by 10.3 per cent between 2008 and 2009, but have anticipated reduced growth of 6.2 per cent in 2010.

The boost in sales is believed to come not just from handcooked crisps, but also from the smaller vegetable sub-sector, which by 2009 was estimated to be worth around £30 million.

Large sharing packs, such as Doritos, were also reported to have experienced strong growth, which the study argued could be explained by the increase in home-based entertainment – a long-term trend augmented by the recession.

However, researchers warned that rise of the premium sector slightly negated the fact that volume sales declined by some 0.5% in 2009, and cautioned "the rise in value of the market is also a result of price inflation due to rising potato and oil prices."

Meanwhile, the snacks sector was found to have grown at a slower rate than crisps. Sales of Pringles in particular were found to have declined. No growth is expected in the snacks sector which was considered to remain at a value of £1.11bn.

The study attributed the reduced growth rate to greater consumer health consciousness but added that people may also be choosing quality over quantity.

Growth of Kettle Foods

The report regarded Kettle Foods as "an increasing important player,"​ with around 3% of revenues in 2009.

Kettle Chips were said to be the UK's top selling hand-cooked crisp, and its growing popularity (sales rose by some 18% in 2009 on 2008) is thought to have driven the expansion of the premium sector.

In March 2010, it was announced that Kettle Foods was to be acquired by US-based Diamond Foods. The company has said that it plans to invest in the brand to position it for long term success. Mintel research similarly found that Kettle had grown in value from 2006-2008 by 55.8 per cent.

Walkers' premium struggles

Though Walkers were seen to dominate the market, accounting for 60 per cent of total sales in 2009, the company's main premium brand 'Sensations' struggled to compete with Kettle Chips. In 2009, Walkers Sensations suffered a 12% sales decline despite packaging re-launch, new flavours and a TV advertising campaign. The study suggested that consumers no longer viewed the product as premium enough to tempt them.

Walkers launched a new brand, Red Sky, in March 2009, aimed at health conscious consumers -the first crisp brand in the UK to use packaging partly made from paper, in a bid to reassert market dominance.

The decline of Pringles?

Procter & Gamble were found to have a market share of just 6 per cent, based solely on its Pringles brand.

Researchers said the development of P&G's only edible brand has long been hampered by the lack of a wide-reaching distribution network, such as that available to Pepsico’s Walkers. Furthermore, increased consumer choice in this area was believed to have resulted in declining value sales in 2009.

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