SHAPING THE MARKET IN 2013/14

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© 2013 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel

SHAPING THE MARKET IN 2013/14

David Jago, Mintel

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Everyday at Mintel

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Today’s presentation

• Key challenges facing the snacks industry now and for the

future

• How companies in different parts of the world are addressing

those challenges through product and package innovation

• Key drivers for growth, and how consumers behave and think

around issues including health, pleasure, naturality,

provenance, and affordability

• Growth areas and opportunities for the future

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Important factors when choosing snacks, February 2013

Price and “on special offer” rank among the most important factors in all countries; brand loyalty is especially high in the UK; natural

ingredients are key to at least 1 in 4 consumers

What drives consumer choice?

0

10

20

30

40

50

60

Price On special offer

A brand I trust

My usual flavour

Natural ingredients

(eg no additives)

France %

Germany %

Italy %

Spain %

UK %

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Walkers Deep Ridged Potato Crisps, UK

Lay's Xtra Onduladas Potato Crisps, Spain

The overall best-selling new snack products in Europe

include these PepsiCo products, featuring ridges

twice as deep for a bold flavour

Reported record sales of £19m across the range in

first twelve weeks

For just two variants, already sales of €3.5m in

13 weeks

Flavour is key to best-selling new products

http://www.gnpd.com/sinatra/gnpd/images/newzoom&id=1847735&pic_num=2&destWidth=400&destHeight=400&origWidth=400&origHeight=400


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Bénenuts Twinuts flavoured biscuit

coated nuts, France

Lorenz Nic Nac's Flavoured Coated Peanuts, Germany

For best-selling new nut products in

Europe the emphasis is on

texture and strong flavour

Five variants (cheese, tomato, barbecue, bacon, Mexican) have first year

sales of €8.7m

€4.7m sales in 45 weeks, or average weekly sales of

€105,000

Flavour is key to best-selling new products



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Key challenges facing the snacks industry:

• Many snacks are not inherently healthy

• Consumers do not perceive snacks as “health food” but the

risk-reducing consumer wants balance and compromise

• Natural values are part of the health & wellness picture

• Snacks consumption is largely impulse- and pleasure-driven

• The experimental and experiential consumer wants variety,

novelty, new flavours and textures (up to a point)

Health versus pleasure

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Attitudes towards crisps, nuts and other salty snacks, February 2013

Flavour is more important than health factors for consumers in most markets; in fact, likelihood to buy healthy snacks is over-stated…

Health factors: a secondary driver

64 65

50 55

27 31

46

37

0

10

20

30

40

50

60

70

France % Germany % Italy % Spain %

Flavour is more important to me than calorie content

I always try and buy healthy (eg reduced fat/calories) crisps/salty snacks

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Snack introductions by claim category, as % total NPD, Europe

About a third of all snack introductions in Europe carry some form of natural positioning, significantly higher than “minus” (low-in) claims

or “plus” (high-in) claims; note growth in “suitable for” group

“Natural” is the primary driver in NPD

0%

5%

10%

15%

20%

25%

30%

35%

40%

2008 2009 2010 2011 2012 2013

Natural

Suitable for

Minus

Plus

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Funny Frisch Natürlich, Germany

Grefusa Snatt's NatuChips, Spain

Natural values can be simple as “no

artificial additives”, but that leaves little

space these days for differentiation

Products increasingly

emphasise clean labels and controlled ingredients

Potato crisps made only with natural ingredients, without artificial flavour

enhancers

100% natural baked snack made from cereals, potato and soy, with 70% less fat

“Natural” values expressed in snacks



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Snack introductions by top 5 claims, as % total NPD, Europe

The “no additives” claim has declined as it became ubiquitous;

Vegetarian and gluten-free claims have shown growth;

Organic remains surprisingly strong, while low/no fat is downward

Overt health values are low on the list…

0%

5%

10%

15%

20%

25%

2008 2009 2010 2011 2012 2013

No Additives

Vegetarian

Organic

Gluten-Free

Low/No Fat

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Snack introductions by low-in claims, as % total NPD, Europe

Overall decline in generic low fat claims; despite industry focus, few new products are labelled as having low or no transfats, saturated

fats or sodium

Overt health values are low on the list…

0%

2%

4%

6%

8%

10%

12%

Low/No Fat Low/No Transfat Low/No Saturated

Fat Low/No Sodium

2008

2009

2010

2011

2012

2013

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Walkers Baked Hoops and Crosses, UK

Funny-Frisch Chipsfrisch

Schwerelos, Germany

Wholegrain, source of fibre, 30% less fat

Uses 100% best sunflower oil, 30% less fat

Baked for a lighter, crispier texture, made with sunflower oil, less

than 10% fat

Kettle Baked Crisps, UK

Lighter oils, baked not fried




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Croky Air Pops, Netherlands

Metcalfe's Skinny Topcorn, UK

The use of lighter oils and “baked not fried” remain the

core focus

But key growth areas include

popped chips and popcorn

Potato chips “puffed with hot air”, 70% less fat

Popcorn made with all natural ingredients, 0.4g saturated fat, ideal with lunch or after the gym

Innovation in “better for you” snacks



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For these four major European markets, at least a third of consumers think that healthy options are better than they used to be

Innovation in “better for you” snacks pays off

34

48

37

43

0

10

20

30

40

50

60


Healthy crisps (eg reduced fat/calories) are tastier than they used to be

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Attitudes towards nuts, February 2013

At least 40% of consumers see nuts as a healthier option, and understand the nutrient benefits;

but salt content remains a hurdle for many

Consumers have better health perceptions of nuts

40 42 40

63 63 57 57

81

46

26

47 40

0

10

20

30

40

50

60

70

80

90


Roasted nuts are healthier than crisps/other salty snacks

Roasted nuts are a good source of protein and vitamins

I would buy more nuts if the salt content was lower

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Duyvis onion & garlic peanuts, Netherlands

Blue Diamond Smokehouse almonds,

France

“Naturally rich in” message tends to

be subtly communicated in nuts; the main

emphasis is still on flavour

Naturally contain vitamins E, B1, B3,

phosphorous, magnesium & good unsaturated fats

Rich in vitamin E; contain 50% less fat than peanuts

and cashew nuts

Health positioning in snack nuts



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• Retailers’ private label and discount brands have grown their presence in recent years

• Price is an important factor for consumers

• But treating and occasional indulgence are strong in a pleasure-driven category

• Strong opportunities exist for premium, occasional treats

Affordability versus the premium opportunity

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Note the consistent gap between consumers who prefer branded snacks and those who are prepared to pay more for brands;

Significant numbers of consumers buy into premium snacks on offer

Consumers prefer brands but don’t want to pay more

38 32 32 34

52

42 43 40

44 42 48

33

0

10

20

30

40

50

60


I am prepared to pay more for branded crisps/salty snacks

I prefer the taste of branded crisps/salty snacks to private-label ones

I only buy premium crisps/salty snacks when they are on offer

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Walkers Sensations peanuts, UK

• Seasoned with real ingredients

• Available in five varieties:

• Tuscan Sun Ripened Tomato & Basil

• Mexican Smoked Chilli

• Californian Honey & Salt

• Chinese Szechuan Pepper

• Bengali Spice

• Sold in 165g packs with a reseal tape

• Sales of £5.2m in first year

Massmarket premium appeal

Walkers extended its successful Sensations premium brand into nuts


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Tesco Finest Restaurant Collection,

UK Lidl Deluxe, Spain

Premium private label snacks are

found at a variety of price points

The focus is on accessible,

affordable treats, often using artisanal

cues

Hand Cooked Chicken & Tarragon Crisps made with

selected potatoes from Cornwall & Hampshire

Chilli Flavoured Home-Made Potato Crisps, €0.99

for 125g

Private label still strong in premium snacks



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Pata Patatine Da Vinci Chips, Italy

Aldi Pirato Boer‘n Chips, Netherlands

Most brands using provenance as a

“story” are artisanal, specialist

brands…

But 34% of UK consumers state British-origin as a key factor when choosing food

products

Artisan product using Italian potatoes & extra

virgin olive oil + Himalayan pink salt

Made with 100% Dutch potatoes and Equisun

sunflower oil

Provenance is a key route to premium



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Provenance makes the everyday more premium

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Casino Tous Les Jours Snacks, France

Edeka Gut & Günstig Chips, Germany

Messages such as “everyday” and

“essentials” reinforce a more positive message

Private label offers “value with values”

Private label “everyday” snack, 125g at €0.61

Crinkle cut chips baked with pure sunflower oil,

175g at €0.89

Value positioning moves beyond simply low price



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Borges flavoured nuts, Spain

Lay’s crisps, Spain

Resealable packaging is much more common in nuts than in other

snacks

Relatively few feature a zip

closure, most are just a reseal label

90g pouch pack with zip reseal closure

300g resealable “savings” pack

Resealable packaging and value positioning



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Consumers in the more recession-hit markets show greater interest in snacks in resealable packaging – an issue of convenience? Or

value and food waste?

Resealable packs: convenience or value?

69

48

63

71

0

10

20

30

40

50

60

70

80


I would be more likely to buy crisps/salty snacks in re-sealable packaging

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• Older consumers are fast becoming the most coveted

demographic

• By 2015, Europe will have twice as many 55-74 year olds as

15-24 year olds

• Their needs may be different, but an inclusive approach can

work

The impact of changing demographics

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Focus on a “clean” label, identify and explain ingredients

Tell the story of provenance and the production process, from field to pack

Baked not fried and use of lighter oils for familiar product forms

Natural ingredients

Low fat content

Quality of ingredients

Key attributes sought by older consumers

In Europe consumers aged 45+ are significantly more motivated by:

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Kraft Foods’ Planters NUT-rition Men's

Health

Kellogg’s Special K Cracker Chips

Major players in the USA develop

products that have attributes

appropriate to the health concerns of

seniors: heart health, low sodium,

low cholesterol…

Mixed nuts, low sodium, natural source of vitamin E which may reduce risk

of heart disease

Baked, reduced calorie snack chips with sea salt

Appealing to seniors: USA



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Bourbon Calbee

Imaginative products in Japan

target health-conscious older

women via subtle health cues as well

as flavours and ingredients that will

appeal

Potato chips with 20% content from five

vegetables, added fibre and calcium

Wheat snack with crispy baby sardines, naturally

rich in calcium and reduced oil content

Targeting seniors: Japan



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For the consumer, it will (still) be about taste, not health

Moves towards healthy positioning will be covert, not overt

Natural will remain a key factor, focusing on the positives of what is in a product, not the negatives of what is not

Provenance will become a mainstream issue, building particularly on “local” for emotional, economic and environmental reasons

Taste over all

Provenance

Points for the future

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Consumers are conservative and want familiar flavours, but there is significant opportunity for variety among experimental & experiential consumers

Value will be key, but value at both the premium and economy ends of the market

Consumers look for value with values

The familiar and the less

so…

Value with values

Points for the future

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© 2013 Mintel Group Ltd. All Rights Reserved. Confidential to Mintel

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DAVID JAGO

Director of Innovation and Insight

+44 20 7606 4533

[email protected]

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SHAPING THE MARKET IN 2013/14