Baked snacks rise as crisp sales crumble

Crunch. That’s the sound of baked snacks heavyweights encroaching on crisps’ territory, leaving a trail of crumbs in their wake as Brits swap to healthier alternatives. 

Mondelez has expanded its Ritz brand into bagged snacks this year, launching potato flour-based Crisp & Thin - uncomfortably close to home for its premium crisp rivals. United Biscuits delved further into the category with Jacob’s Cracker Crisps. 

“It’s placed noticeable pressure on fried snacks and with continued focus in the market, it’s unlikely to abate next year,” says Ted Linehan, director of savoury brands at UBUK. “Competition will only increase. Baked snacks have seen consistent growth throughout the year, and it’s not just us recognising the opportunity to expand savoury biscuits into this arena.”

It’s difficult to measure their contributions to bagged snacks as a whole, though for further proof of their growth see our biscuits report on p91. But if Walkers sales are anything to go by, the impact on the humble potato chip is not a good one. Sales of its core range fell 3.9% resulting in a loss of £18.7m, while Deep Ridged suffered further deep losses along with Extra Crunchy. However, it’s not all bad news in the Walkers camp. Despite baked snacks, crackers and popcorn moving in on its territory, it has found success with NPD in the form of MixUps - now worth £17.2m, one of the best pieces of NPD in the category. “The MixUps launch has taken the nation by storm,” says Thomas Barkholt, marketing director at PepsiCo. “In the first seven months it drove 11.7% penetration.”

One of the reasons for the success of MixUps could be that it taps into one of this season’s key trends - sharing. The only format to achieve growth, it’s been incremental to the success of Walkers and others. “Specific snacking occasions such as a ‘big night in’ has helped fuel growth for the sharing category while providing a huge sales opportunity for retailers,” says Barkholt, with Doritos Roulette a prime example as it helped double last year’s growth for the brand.

Standout performances from premium ranges Sensations and Market Deli, which have added a cool £14.1m between them to Walkers portfolio, also helped counteract the losses felt by the core range. 

Pringles, the number one sharing snack, gained the most in value terms thanks to the launch of Pringles Tortillas in April, which owner Kellogg’s believed would drive ‘explosive growth’ in the market. It was right - it added £13.5m to brand value. And with new festive flavour Pigs in Blankets hitting shelves in time for Christmas, Kellogg’s isn’t resting on its laurels.

“We continue to target specific dates in the calendar when people will be socialising and sharing snacks: when they’re around the TV watching X Factor, when they’re planning a new year party, when they’re having a picnic outdoors,” says Alison O’Brien, Kellogg’s commercial strategy director. “Next year we’re planning more on-pack initiatives, releasing exciting new flavours and targeting the massive national and international sports events that’ll have everyone popping till they can’t stop.”

Promotions

But the category’s heavy reliance on promotions is taking its toll on a subsector that has been used to driving value in the past. Average prices are down for Sensations by 3.8%, Market Deli by 4.3% and Kettle Chips by 6.8%. “Over the past 12 months the snacks market has continued to be exceptionally competitive with increasingly aggressive headline promotions,” says Kettle Foods marketing director Andrew Slamin. “Kettle Chips has had to promote heavily in line with the rest of the snacks market.”

These deep discounts have helped shift 400,000kg more Kettle Chips, but have wiped £3.2m from its value. Conversely rival Tyrrells has seen prices increase by nearly 5%, driving an 8.9% increase in volumes but maintaining value growth worth and adding an extra £5.1m for the brand. 

But Slamin remains optimistic, noting penetration has increased to over 30% and Kettle Chips handy packs have grown by 10.1% in a declining market.

It doesn’t have to be this way, insists Will Bowler, general manager Europe, Popchips. “With the frequent deep discounts in sharing crisps, there is the perception that shoppers expect a premium bag to be £1,” he says. “Sainsbury’s has shown that taking a strong category approach can change this. Through streamlining promotions and prioritising the deals that drive incrementality, they have simplified the value message for the consumer and made the fixture easier to shop. The result of which is starting to show in the latest half, with sales growing while volume on deal has remained flat.”

Despite a deep cut in average price, Popchips has achieved a 40.1% increase in value on volumes up 49.8%. Walkers’ reduced focus on Pops, which lost 32.9% in value, has also helped. “We think the Pops launch really helped to further define and establish the ‘popped’ category. However, as with many products launched by the big snack companies, once the launch support was taken away the brand has struggled to keep momentum,” claims Bowler. 

Walkers chose to focus its marketing on its 1 in 6 wins a Free Lunch - its biggest ever on-pack lunch promotion - and Bring It Back campaigns, which saw the beloved Beef & Onion return to the Walkers stable. 

Such support is crucial. The £3m Jacob’s threw into a media and instore campaign for Crinklys helped it avoid the same fate as other ridged bagged snacks such as Walkers Deep Ridged and Crinkles, whose combined loss totalled £14.4m. “Jacob’s Crinklys has seen exponential growth this year following its re-branding under the Jacob’s masterbrand and new packaging design,” says UBUK’s Linehan. 

Jacob’s has struggled in other areas though, with sales of Mini Cheddars relatively static. “We had to promote slightly harder than we had planned to support Mini Cheddars while we resourced Crinklys, which generated a small value decrease despite selling more volume,” explains Linehan. “The good news is we’ll be getting squarely behind Mini Cheddars in early 2016.”

While value for money is high on the agenda, health consciousness is also steering the category. Popcorn is one area benefiting, with Butterkist, Metcalfe’s Skinny Topcorn, Propercorn and Tyrrells’ Poshcorn all in double-digit growth. “The popcorn category is booming, but with only 43% penetration it still has enormous potential for growth,” says Propercorn co-founder Ryan Kohn. But, like its fried brethren, popcorn is being forced to promote hard. 

“It’s in everyone’s interest to reduce dependency on promotions and create more value within categories and it’s the role of new brands like Propercorn to ensure we’re providing value for consumers. This isn’t necessarily just about price.”