“Many people will tell you that there is not a lot of growth in the U.S. packaged food market. This is a relatively stagnate space,” but the growth that is happening is coming from snacks, said Jared Koerten, senior food analyst at Euromonitor.
He noted during a webinar hosted by the market research company May 13 that sales of snacks have grown more than 3% a year since 2008 – significantly outpacing staple packaged foods, which have grown mostly around 1.5% during the period.
Most of this growth comes from millennials who snack significantly more than any other generation – chomping on an average of 3.05 snacks per day compared to 2.26 snacks consumed daily by generation X, 1.53 snacks by baby boomers and 1 by adults older than 63 years, Koerten said.
Snacking for meals
When millennials snack also is reshaping the country’s perception of snacks and how manufacturers should market their products, Koerten said.
Specifically, he explained, more than any other generation millennials snack during typical meal times – giving rise to the snack as meal replacement trend.
Millennials eat snacks for breakfast, lunch and dinner nearly twice as often as any other generation, Koerten said, pointing to data that shows 7.5% of millennials eat a snack at breakfast compared to 4.4% of generation X, 2.8% of boomers and 2.9% of adults older than 63 years.
This trend holds true for lunch, when 16.6% of millennials eat snacks, and dinner, when 16.2% eat snacks, according to the data.
“What this tells us is that millennials are not only snacking more frequently, but they are snacking in place of a traditional meal to a degree that we have seen unlike any other age group,” Koerten said.
What this means for CPG sales is that traditional sit down products are stagnating, while grab and go options are seeing sales increase dramatically, he said. As an example, he pointed to the breakfast category, where sales of ready to eat cereal have fallen 0.5% from 2008 to 2014 while sales of snack bars have grown about 5% and spoonable yogurt is up more than 7%.
A snack category that has benefited the most from this trend of snacks as a meal replacement is high protein snacks, Koerten said. He explained consumers perceive protein as more filling and while they are eating something smaller, they still want something satisfying.
CPG manufacturers are responding by incorporating more protein in products and highlighting the amount on the front of packages, he said. For example, Nature Valley sells protein snack bars with 10 gram of protein, Oscar Mayer’s P3 snacks combine cheese, meat and nuts in a portable package, and even Cheerios is getting in the game with a protein product launched in 2014.
Grab and go foods also have benefited from the snack as a meal replacement trend, Koerten said. He pointed to sales of Belvita breakfast biscuits as an example, noting sales of these portable, high energy biscuits have climbed from around $75 million in 2012 to more than $150 million in 2014. This growth has placed the brand smack in the middle of other high selling cookies that have been on the market for much longer, including Grandma’s Cookies, Newtons, Keebler and Pepperidge Farm.
Millennials want healthier options
Another major trend in snacking driven by millennials is a desire for healthier snacks, Koerten said.
“Millennials grew up at an interesting time in U.S. history when the obesity crisis was really exploding in the U.S.,” and the constant media coverage strongly influenced and shaped millennials – pushing them to find healthier options, Koerten said.
As a result, millennials are cooking at home more and looking for fresh, unprocessed ingredients. More than any other generation they are reading product labels to find options that do not have artificial ingredients or have reduced or low calorie counts, no trans fats or hydrogenated oils and no added salt, Koerten said.
They also are reaching for more natural options, such as whole fruits and vegetables, of which they eat an average of 5.12 servings a day compared to 4.71 by generation X, 4.43 by baby boomers and 4.81 by adults older than 63 years, Koerten said.
This trend has driven the significant increase in ready to eat popcorn, which is low calorie, easy and viewed as a healthy, whole food, Koerten said. However, he noted, the sales increase does not extend to microwave popcorn, which is viewed as unhealthy and full of artificial ingredients.
Turning up the heat
Millennials also are significantly influencing the flavors of snacks – demanding more complex, bold and spicy flavors, Koerten said.
“Consumers are looking for new flavors, new diverse products that are different” from what their parents and grandparents ate, Koerten said. This includes novel ingredients, unique mouthfeel, texture and bold flavors.
Example of successful “artisan style and flavoring” includes Tostitos Artisan Recipes roasted garlic and black bean chips, Boulder Canyon’s Rice and Bean snack chips with adzuki beans and chipotle cheese, and Brookside dark chocolate Crunchy Clusters that combine chocolate, fruit and multi-grain clusters, Koerten said.
Manufacturers also are combining sweet and savory more – such as Cheetos Sweetos cinnamon and sugar puffs and milk chocolate covered wavy Lays potato chips, he noted.
Zeroing in on opportunity
Manufacturers looking to capitalize on these trends likely cannot hit all three of these trends with one product, Koerten cautioned. Rather, he said, they will have better luck selecting one or two of the elements and focusing on creating an authentic product that appeals strongly to a subset of consumers.
To help guide firms he outlined the projected growth of snack categories through 2019, noting that snack bars will be a clear winner with a predicted 20% increase in sales followed by savory snacks – sales of which are projected to increase 17% in the period. Tying for third place are bakery snacks and confections, which will grow around 10%, Koerten said.