Continued innovation key to a healthy future for crisp sales

Tuesday, 20 March 2018

Overall forecasts for market growth of 18% in value terms for savoury snacks conceal the strong competition for crisps in the latest report from Mintel. The report highlights that continued innovation is key to prevent crisps losing out to alternatives which are perceived to be healthier or more natural.

Research from Mintel predicts the value of the total crisps, savoury snacks and nut market will grow by 18% between 2016 and 2021, to reach £4.3 billion. This is primarily due to inflation returning to the market, linked to higher input costs. Even though value is set to grow, volumes are unlikely to achieve the same rate of growth.  Over the same five-year period, the expectation is for 1.6% volume growth.

Crisps remain hugely popular with consumers, as crisps and crisp-style snacks are eaten by 93% of UK adults. However, future crisp volumes are expected to decline by 3.1% between 2016 and 2021. With AHDB estimates suggesting that crisping varieties today account for around 10% of planted area, changing consumer perceptions impact on growers and producers. The bottom line is that continued innovation will help to convince future customers that crisps can be healthy, helping to ensure a continued market for crisps against intense competition from other snacks.

Chart showing value of savoury snacks market is forecast to grow faster than crisps until 2021

The health trend

Traditional crisps are losing out to alternatives that are perceived to be healthier or more natural. Within the savoury snack mix, some will be potato-based, where manufacturers have innovated adopting different cooking methods and vegetables in order to meet consumer demand for healthier products. However, this consumer need has also made room for alternatives such as vegetable crisps and popcorn. Although these are making good ground, crisps still outsell popcorn by a ratio of 10:1, highlighting just how popular they still are.

With an increasingly health-conscious society, consumers are looking for ways to justify indulgence. Products that still appear tempting but contain ingredients which are perceived to be healthier, can often be consumed guilt-free in the consumer’s mind. This is a trend that crisp and potato snack brands are already capitalising on, removing the guilt of indulging and providing justification for doing so.

Indeed, Cambridge Market Research’s Top 100 Products of 2016 report highlighted that savoury snacks are already doing this. Innovators latched onto the idea of ‘permissible treats’ and responded with new products that are baked rather than fried. Research from Colmar Brunton,for Horticulture Innovation Australia and AUSVEG, found that the UK led the way in global innovation for potatoes, with the UK accounting for 11% of 3,000 global potato product launches between March and May 2015.

When it comes to consumer demands, research findings suggest that they would prefer help moderating their intake rather than making these products ‘better’ for them. Smaller packs or re-sealable packaging could help address this. There are also opportunities for food labelling to highlight healthier options too. For example, research suggests that manufacturers can look to tap into consumer interest in “clean labels”, in the same way they have already increased ‘gluten-free’ claims in response to this growing trend.

Consumers trust big brands when making new choices

Established brands play an important role in the crisp category. Shoppers are more likely to try something new from a brand they know and trust, this could be things like new flavours or pack concepts. Looking beyond the crisp category is key for inspiration in these areas. Cuisines such as those from South America and the Far East are becoming increasingly popular and could be extended to the crisp market. 

Crisp brands and manufacturers are under pressure, owing to fierce retail competition and a move away from multi-buy deals, which has affected volumes. The high branded presence for crisps means that advertising spend is crucial and reports show the industry is reacting. Ad spend has been on the increase more recently; in 2016, £43m was spent on crisps advertising, up £5m from the year before.

Enjoyment remains key to crisps and snacking

Although an increasing focus on health has had an influence on crisps, it’s worth remembering enjoyment has a bigger influence on why people choose to consume a certain food product, particularly when it comes to snacking. To differentiate, the product always needs to offer shoppers another reason to buy the product, relating to the key themes of taste, health and enjoyment. 

With crisp volumes forecast by Mintel to decline over the next five years, the industry needs to ensure there is always a future market for British potatoes in snacking. Fortunately, crisp exports in 2016 were up 12% year-on-year, but as the domestic market is currently seven times the size of the export market, continued innovation is needed to keep British consumers buying into crisps. 

Source: Mintel, Crisps, Savoury Snacks and Nuts UK 2017

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