From The March 2004 Issue of Natural Foods Merchandiser

Salty snacks mean sweet sales

Lynn Ginsburg

When they’re not reaching for the sweets, Americans are clearly giving into their cravings for salty snacks. In fact, salty snacks make up more than half of all snack sales, according to a 2004 report from the Mintel International Group. Salty snacks, including such crunchy favorites as potato chips, corn and tortilla chips, pretzels, nuts, trail mix, popcorn and extruded cheese snacks, constitute a $21 billion U.S. market that grew 23 percent from 1998 to 2003, according to the Mintel report.

Among the fastest-growing segments of this market are natural and organic salty snacks. According to SPINS, the natural foods industry analyst firm, Americans spent almost $436 million on natural and organic salty snacks last year. Of that total, more than $315 million was spent in conventional stores, an increase of 16.6 percent from the previous year.

“There has been an explosion of variety in the natural and organic salty snacks market, particularly with the expansion of Hain Celestial products and the movement of mainstream brands, such as Frito-Lay’s Tostitos, into the organic and natural space,” says Don Montuori, acquisition editor for Packaged Facts, a market research firm. “Mainstream brands entering this market is a particularly important change, since it marks a recognition on the part of big food that natural and organic foods are an important, growing market it needs to serve.”

According to Jared Dougherty, a Frito-Lay spokesman, Frito-Lay entered the natural salty snacks market in order to offer products that would be of interest to new organics customers, as well as to traditional customers who might want an organic or natural option for their favorite Frito-Lay products. In 2003, Dougherty says, Frito-Lay introduced Organic Tostitos Tortilla Chips, Natural White Cheddar Cheetos, Natural Lay’s Potato Chips, and Natural Ruffles Reduced Fat Potato Chips. In 2005, the company added two new flavors of Lay’s Natural Kettle Cooked Potato Chips. Dougherty says that Frito-Lay’s natural and organic products are made with all-natural or organic ingredients and without artificial flavors, colors or preservatives.

The healthier salty snack
According to Mintel’s report, one of the biggest factors driving the introduction of new products to the salty snack market is health—about 34 percent of new salty snack products introduced in 2003 featured some type of healthy positioning.

“One of the most important changes we’ve seen since Garden of Eatin’ was founded 34 years ago is the public’s change in attitude toward natural and organic foods,” says Adam Levit, general manager of the snacks division at The Hain Celestial Group, which now owns such natural snack brands as Garden of Eatin’, Terra Chips and Bearitos. Garden of Eatin’, which manufactures a variety of natural and organic tortilla chips, was one of the early pioneers in the natural salty snacks market. “Today it’s commonplace to eat organic tortilla chips, drink chai tea and take yoga classes,” Levit says. “Thirty-four years ago, when Garden of Eatin’ first started producing high-quality organic snacks, these things were still considered to be obscure.”

Montuori thinks that attitude shift occurred because of consumers’ increased focus on health. “Removing trans fats, reformulating to whole-grain content, reducing sodium—all of these are trends that are making snacks healthier,” he says.

Dougherty says that making the snacks healthier has been an important factor in Frito-Lay’s new natural line of salty snacks. In addition to removing trans fats and introducing products with lower fat and calorie content, Frito-Lay, as part of PepsiCo, also introduced the “Smart Spot” on packaging, a label that makes it easier for consumers to identify healthier snacks across the PepsiCo portfolio, he says.

Low-carb salty snacks are one of last year’s health trends that are rapidly losing favor, according to David Browne, director of content development at SPINS. “We’ve seen a steep drop across all lines and all types of low-carb salty snacks,” Browne says. “Consumers really seem to not be taking carbohydrates into consideration when making a salty snack purchase, but instead seem to be much more focused on quality and flavor.”

One high-protein, low-carb exception that seems to have sustained high growth is nuts. “We’re seeing high growth across all kinds of nuts, not just the less expensive ones like peanuts, but more expensive nuts like almonds,” Browne explains. Nuts’ health benefits, such as their high omega-3 fatty acid content, could be driving the steady increase in natural nut sales, he theorizes.

Montuori agrees. “I think we’re going to see more new nuts in the natural market—nuts have a great health advantage, owing to their high-fiber and low-carbohydrate content,” Montuori says. He expects to see increased sales, “as nut marketers begin to realize that their products, when stripped of the sodium and saturated fats that go into the processing, are a great healthy snacking alternative.”

Besides health, new flavors and a new emphasis on gourmet products seem to be driving growth in the natural salty snacks market. “We’ve seen big growth in new flavors—consumers are looking for new twists on old favorites, like new flavors of potato chips, tortilla chips, even new products like spicy wasabi peas seem to be selling very well,” says Browne. “And the perception that a product is small-batch and gourmet—more upscale—is clearly proving popular with the natural foods salty snacks customer.”

Montuori identifies specific taste trends that are poised for growth: “Bold flavors, Latin flavors, and this year, Asian-influenced flavors will be the hot buttons in snacks, as these are the flavor drivers throughout the food industry, and snack products can easily be adapted to take advantage of that.”

The other big trend in the natural salty snacks market is convenience.

“Convenience packaging will always be a winner,” Montuori contends.

“Convenience and portability will play a key factor as the rise in on-the-go lifestyles continues,” says Levit. “This has been slower to peak in the natural snacks industry, but it’s already a hit in the mainstream market.”

Lynn Ginsburg is the author of What Are You Hungry For? Women, Food and Spirituality (St. Martin’s Press, 2003).