Bagged snacks 2021: big nights in getting pricier - and healthier

Even before the so-called national crisps shortage made headlines in November, snacks had been getting pricier. The bagged snacks category made an extra £130.6m over the past 12 months. That’s a 4% increase, with large gains for most of the biggest brands. In fact, just 14 of the top 50 suffered value declines.

But volumes rose by just 1.8%, meaning the 2.2% rise in average price was the main driver of that gain. And some of the UK’s most popular snacks have increased their prices at a far faster rate. The average price of Pringles, for instance, is up by 10.3%. Sensations is up by 8.8%, and Quavers has risen by 8.5%.

One factor behind these changes is higher production costs. The price of packaging, energy, deliveries – and, of course, ingredients such as oil and potatoes – is moving upwards.

“As the cost for us to make Pringles increases over time, we occasionally have to make changes to the rrp,” explains Kellogg’s revenue & channel director Ben Simpson.

It’s a similar story at KP Snacks, where the price of its eponymous nuts brand is up by an average of 4%. KP sales director Andy Riddle admits the supplier has “implemented modest cost increases” but stresses that “the category remains remarkable value for money”. Indeed, the price doesn’t seem to have put off shoppers, with volumes up 7.8%.

Plus, formats have also played a role in pushing up prices, Riddle adds, “driven by shoppers trading up to bigger sharing bags”.

That, of course, is due to lockdowns and the subsequent demise of impulse sales, notes Adam Draper, MD of Emily Crisps owner Nurture Brands. “People just haven’t been out and about so there’s been a big swing to sharing bags and multipacks.”

Most crucially, perhaps, promotions have been put on the back burner – both due to the high demand during lockdowns and, latterly, the disruption in the supply chain caused by the lack of HGV drivers. That pushed up prices for brands that typically do a large trade in deals. Take Hula Hoops. The brand is 3.4% pricer after owner KP “focused on maintaining supply of products our customers wanted, despite Covid-related disruption” says Riddle. “We therefore at times made the decision to reduce promotion-related activity to ensure supply, which contributed to value growing ahead of volumes.”

KP wasn’t the only supplier to cut back on promotions to keep products on shelves. In October, an IT system upgrade at PepsiCo disrupted supply of Walkers, Wotsits and French Fries. To prevent bare shelves, the snacking giant was forced to ask retail customers to slash one entire promotional cycle from shelves and remove Walkers products from off-shelf feature space.

It serves as a taste of what is to come next year, when the clampdown on HFSS products kicks in and puts an end to a number of the deal mechanics used to shift bagged snacks.

HFSS rules

The impending regulations could be particuarly bad news for a category that is almost ceaselessly promotable, suggests Draper.

Bagged snacks will sell regardless of much promotional space you give them, he points out. That comes in contrast to other categories, where the benefits of deals level off after a certain amount of space, he says.

“If you put tasty stuff in front of people, they will grab it the more you show. So, if you take that away, will it collapse volumes?”

It’s a question that snack makers will no doubt be pondering as the regulations loom ever closer. The better news is that the threat of the new rules has so far had little impact on ranging in the mults, Draper adds.

“If we really are at a cliff edge of the category being massively disrupted, I’m not seeing massive change from buyers looking to increase the healthy crisps they’re selling.”

Even when the restrictions do kick in, established non-HFSS bagged snacks will continue to lure shoppers through virtue of their popularity, suppliers insist.

Kellogg’s points out awareness of its Pringles brand is at 98% – something it aims to keep up with marketing at point of sale. With that in mind, the brand is “well set up to continue driving incremental sales for the crisps category post-HFSS legislation” says Simpson at Kellogg’s.

“We are also working with retailers to ensure fixtures and future display locations are set up to maintain availability of Pringles, especially as our two bestselling flavours, Sour Cream & Onion and Original, often need to be replenished on gondola ends.’’

Walkers Snacks marketing director Fernando Kahane is similarly bullish. “Despite shoppers’ growing mindfulness when it comes to health, they are unwilling to compromise on taste,” he says. “Savoury snacks, in particular, are growing and well-positioned to thrive amid HFSS regulations.”

That said, Walkers owner PepsiCo isn’t resting on its laurels when it comes to non-HFSS innovation, having added the likes of Thai Chilli & Lime Rice & Pea Chips to its healthier Off The Eaten Path brand in March. The supplier took the reformulation route two months later, kicking off a recipe overhaul of Snack a Jacks to cut unhealthy ingredients across the majority of the brand’s portfolio.

“We believe that our non-HFSS offerings, portion-controlled snacks and consumer-centric campaigns will continue to drive category growth across our total portfolio by connecting with shoppers in and out of store,” Kahane adds.

PepsiCo is far from alone in its activity. Numerous bagged snacks makers have been busy adding healthier products and reformulating lines to stay below the HFSS threshold. Take Seabrook owner Calbee, which added Harvest Snaps in August. The vegetable and pulse-based baked brand would be “the first bagged snack to provide retailers with a viable and scalable solution to meet the new HFSS regulations” said Calbee UK commercial director Jon Wood at the time of launch.

Smaller brands have also been getting in on the action – be it Insane Grain’s sorghum snacks or Simply Roasted crisps from Mindful Snacker (see Top Launch, below).

So, while a big night in is getting pricier, it looks like it’s getting healthier too.