According to IRI’s annual snack report – Snacking as a lifestyle – disruption brought on by COVID-19 has created massive habit shifts.
Last year saw a real surge toward on-the-go snacking as lifestyles got busier and more manic. But nature has a way of righting itself, and the pandemic slowed everything down – spawning a popularity of at home baking, consumers looking for comfort, and convenience with homemade results.
Despite uncertainty around returning to ‘normal’ life, snacking is likely to continue growing, said IRI.
The popular snack categories – like chips, pretzels and popcorn – will remain strong, along with meat and cheese snacks, frozen handheld items, appetizers and snack rolls. The private label category is particularly expected to see increased spend. However, taste and price will be more important than ever before for brands wanting to make a mark.
Last year, IRI’s report found that 86% of consumers prioritised taste in the purchasing decision, while 72% considered price.
“There are too many [snacks] that fit needs across better-for-you, permissible indulgence, indulgence and treats that taste great, so the bar is high,” said Sally Lyons Wyatt, IRI’s executive VP and practice leader.
Conscious consumerism played a big role, said Wyatt, with non-GMO, gluten-free, organic and other sustainable claims in big demand. Although clean label remains prevalent, consumers seem to make an exception for the products they love and IRI found snacks with 30-40 ingredients saw a 3.9% growth, versus a 0.1% growth of those with 1-5 ingredients.
Wellness is still at the forefront, growing by 28% in dollar growth, especially fuelled by meat and cheese snacks and refrigerated appetizers with wellness claims. Protein snacks continue to expand in the meat, bar and plant-based categories, while products offering ‘50% less sugar’ grew 102% in sales. Wyatt noted monk fruit saw an 18% growth and added pearl sugar is the new kid on the block.
Beyond protein and fibre, 54% of consumers want snacks fortified with vitamins and minerals, and 64% want an energy boost. Digestion-focused snacks grew by 16%, and a rising number of consumers – millennials in particular – are on the lookout for snacks with probiotics. IRI said collagen-forward products saw a 46% dollar growth.
A growing number of consumers want plant-based offerings and the category grew 15.2% in dollar sales. Peanut-free items also saw 2.2% dollar growth.
However, the feel good factor is still on the cards and the true indulgence category saw a 27% dollar growth.
“Balance is and will continue to be relevant,” said Wyatt.
“Consumers want to have clean labels and products that are transparent, but at the same time they want some of their more indulgent or permissible indulgence products, and those just have more ingredients.”
Change in consumer spending
In 2019, the convenience channel experienced a 7.6% decline in snacking sales, while online snack sales grew by 46% - a trend expected to continue even after the world tries to get back into regular routines.
“Brands need to make the consumer feel more in control, feel that they have freedom to choose, feel more connected, more engaged, feel that they are part of something bigger, an authentic heart-felt community. Do that, and you are relevant today.” - Ken Hughes
After the pre-lockdown stock-up rush, snacks sales showed a slowdown. Total core snacking dollar sales grew 40% year-over-year for the week ending March 15, and 35% the following week. For the week ending April 5, they grew 7%.
According to IRI, going forward, impulse purchases are likely to decline, but brands can work to ‘interrupt’ consumers shopping online. To engage new consumers, brands should consider attractions like discounts and coupons, and work to cement connections with loyal shoppers via online communities and highlighting at-home celebrations. Engaging is more crucial than ever, said Wyatt.
Ken Hughes, a leading consumer behaviourist, international speaker and CX strategist, said we now live in what he’s named The Captive Economy.
“I think its slowly dawning on most of us that things may never quite be the same again,” he wrote in his blog.
“We are entering a new era, one that has no fixed point as its destination. We are like the adventurous explorers of old, except that instead of sailing out hoping to discover exciting new territories, we are just hoping to hold on to our own. None of us have any real idea how this is all going to play out.”
He noted the world has been building a digital reality for many years, but now it will really kick in.
“As a cyber behaviouralist, my area of interest has always been our digital behaviours and how these impact on our real-world expectations. If we were already on this digital journey before now, we are certainly on it for good now. Without the ability to physically connect with one another or brands, we have all turned to the digital model instead.”
He added, “In this new digital reality, your content has to be so different, so unique, so shareable that the consumers will share it. This is not the time to push out digital content for the sake of ‘doing something digital’.
“Digital engagement is something that now requires significant creativity in the Captive Economy.
“Brands need to make the consumer feel more in control, feel that they have freedom to choose, feel more connected, more engaged, feel that they are part of something bigger, an authentic heart-felt community. Do that, and you are relevant today.”
Tracking consumer purchases
To track changes in consumer spending brought on by COVID-19, IRI recently launched the IRI CPG Demand Index, a proprietary metric measuring weekly changes in consumer purchases, by dollar sales, against the year-ago period across departments, categories and retail formats.
“The COVID-19 pandemic has completely changed consumer behaviour and spending, creating significant challenges for CPG companies seeking to appropriately allocate their resources and effectively meet consumer demand,” said Dr Krishnakumar (KK) S. Davey, president of Strategic Analytics for IRI.
“Access to an up-to-date, accurate and standardised demand measure is more critical now than ever before, as historical trends provide limited guidance to current demand during these unprecedented times.”
The Index – available on IRI’s website – is updated by a daily stream of verified point-of-sale and e-commerce data, enabling companies across the CPG ecosystem to contextualise changes in demand to develop actionable insights and enhance supply chain effectiveness.