Bagged snacks: Pringles miss out on £66m snacks surge

It’s good to share. The bagged snacks category has added an extra £66.6m as Brits get stuck into larger packs of crisps and popcorn with friends and family. That’s a 2.4% rise on volumes up 1%, driven, at least in part, by the ‘big night in’.

Somebody’s not been invited. Pringles has lost £29.1m as extensions (most notably 2015 launch Tortillas) have been axed. Its 14.6% decline is the fifth-greatest loss in this report and halts five consecutive years’ growth following Kellogg’s acquisition of the brand in 2012. This year’s loss has wiped out more than half of Pringle’s overall value gain since 2011, when it was still under P&G’s stewardship.

Yet marketing director Clare Furlonger is upbeat about the coming year. “We’re in a great position as we embark on one of our busiest periods: Christmas,” she says. “We have strong plans, from limited-edition festive packaging and seasonal flavours to exciting TV and social activity. As we move into 2018, we’re keen to drive desire at key social snacking occasions, such as the World Cup 2018. Plus, our first marketing campaign for our new 40g can will go live.”

The World Cup is indeed a key opportunity for snacks. In 2014 Pringles grew by £15.5m (the greatest gain in snacks that year), partly as a result of in store activity and deals aimed at fans looking for something to nibble on during the matches. After all, nights in don’t get much bigger than when your national team is playing a World Cup match.

Big nights in require bigger packs, of course. “It’s a growing consumption occasion in which consumers are looking to spend on sharing treats and snacks to entertain family and friends at home, with 48% reporting that the size of packs plays a key role in buying decisions” says Matt Mill, head of snacking at Kraft Heinz, owner of the Planters nuts brand.

“This had a positive impact on the performance of the snacking category, with most grocery and convenience stores now dedicating a permanent fixture that caters to this increasing demand for sharing bags.”

Austerity has also played its part in driving sharing occasions, believes Tony Goodman, CEO of Ten Acre owner Yumsh Snacks. “Consumers are tightening their belts, and this has led to an opportunity for the snacking sector to grow,” he says. “Snacks are perfect to accompany a big night in.”

Dafna Bonas agrees. The founder of startup Indie Bay Snacks, which rolled out its healthier pretzel bites in the autumn, says money-saving shoppers have swapped trips to the cinema for evenings in front of Netflix. “Streaming services have created a fantastic snacking occasion that we are capitalising on,” she says. “Audiences are still looking to replicate that classic cinema experience and are turning to healthier snacks.”

But, hey, size isn’t everything. There are, of course, a number of factors driving growth of the bagged snacks category, claims Andrew Allen, CMO and co-founder of The Snaffling Pig Co. “Big night in is certainly one, but there are other areas too, whether that be consumers looking for a dietary-based reason such as protein or the occasional on-the-go treat.”

Food to go is “a massive opportunity” for snack brands, says KP Snacks sales director Andy Riddle. “Research suggests that meal deals can also unlock further sales potential for the food to go occasion, with half of shoppers prepared to spend £3.50 or more at a time. When buying crisps, snacks and nuts in the meal deal, 82% of shoppers cite ‘brand’ as their top consideration of purchase.”

The ongoing health agenda has certainly benefitted popcorn in recent years, says Matthew Smith, group marketing director for Tayto Group, the parent company of the Portlebay brand. “Popcorn is seen as a healthier and hearty alternative snack even beyond the health sector with convenience stores, supermarkets, cafés and restaurants all offering popcorn as an accompaniment to a main meal or lunchtime snack.”

That said, three of the four popcorn brands in Nielsen’s top 50 bagged snacks (Butterkist, Metcalfe’s Skinny and Tyrrells Poshcorn) are in value and volume decline, with only Propercorn in growth (of 6.8%). Riddle at KP, which completed its acquisition of Butterkist in the summer, says multipacks are of growing importance despite the rise in sharing and on the go. “Multipacks have overtaken single-serve to become the second-biggest format in the popcorn category. Multipack popcorn is in growth of 9.8%, with a 22.1% share of total market.”

The difficulties of some popcorn brands can be partly explained by the growing number of health-orientated alternatives on the market. “Health-conscious shoppers continue to look for healthier snacking options, and this trend continues to grow, with the better-for-you (BFY) segment in 10.5% growth,” says Sharon Barraclough, marketing director at PepsiCo, owner of Walkers.

“Walkers has a diverse snacking portfolio that offers genuine choice and continues to bring new, healthier options to the market such as Sunbites nuts. These healthier snacking options have seen strong growth, showing that shoppers are increasingly looking for better-for-you products.”

The August addition of a nut mix to the thriving Sunbites portfolio (up 14%) was just one snacking NPD in 2017 from PepsiCo, which introduced the UK to 10 new lines including US veg crisp brand Off The Eaten Path (Top Launch). Combined sales of Walkers’ nine biggest products are ship shape, up 5.9% on volumes up 4.4%. Ridged variant Max and Stax (packaged in tubes and a clear rival to Pringles) have contributed £25m to the portfolio’s £31.8m growth.

The other big contributor to category growth has been own label, up 6.6% on volumes up 5.9%. “This year has been the year private label made its big splash in the premium sector,” says Adam Draper, marketing director at Amplify Snack Brands Europe, owner of Tyrrells (down 22.7% on volumes down 20.3%). “Redesigns and reformulations have gone some way to drive this, but the deflationary strategy was the pivotal force.”

In other words, consumers are trading down to offset inflation. With prices still rising, brands will need to innovate hard to counter this trend in 2018.

TOP LAUNCH

Off The Eaten Path by PepsiCo

This four-strong range of veggie crisps arrived in June from the US, marking the latest step in PepsiCo’s 11-year-long drive to make its products more palatable for health-conscious consumers. Made with ingredients including white beans and green peas, the crisps are positioned as ‘wholesome’ and ‘guilt-free’. They were, arguably, the most significant move by a major snacks supplier in 2017 to retain relevance in a category facing continuous pressure for healthier options.