Will H&W snacks sell during times of economic difficulty?

Author: Ewa Hudson

Date published: 3 Jul 2009

Health and wellness-positioned snacks are faced with a double whammy: on the one hand, the economic downturn is driving consumers towards comfort eating and economy options, and on the other, manufacturer reformulation activities are diminishing the distinction between standard and health and wellness products. Euromonitor International asks what can manufacturers do to keep consumers interested in H&W snacks.

Put more emphasis on premium, not less

At the end of May 2009 Kellogg announced that it was withdrawing its FruitaBü range of fruit-based products in the UK. FruitaBü was launched in October 2007 and included healthy snacks such as apple crisps made from 100% fruit. Predictably, Kellogg blamed the economic crisis for driving consumers away from premium-priced healthy snacks.

Although high-profile failures like this one are bound to give makers of H&W-positioned snacks the jitters, there is no need to panic. As it turns out, premium positioning does not turn consumers off, nor have they given up on health. There are plenty of premium and/or healthy snack products which are performing rather well. In the UK, these include Tyrrells high end potato chips (made by Tyrrells Potato Chips Ltd), which feature healthy options such as no-added salt Naked Chips. Another star performer is Walkers SunBites wholegrain snacks (owned by PepsiCo), and the super-premium Red Sky brand, launched by Walkers in February 2009, at a time when credit crunch woes were at their worst.

The brands most at risk from credit crunch annihilation are those with a mid-market positioning, ie products which are neither economy-priced nor considered to be a “special treat”. In order to garner a premium price for healthy snacks at times when consumers are looking for a bit of affordable luxury, manufacturers need to up their game, for example by adding an indulgence dimension. In a fruit and nut mix product, this could entail the addition of premium Australian lexia raisins, or some well-publicised superfoods, like blueberries, cherries or goji berries.

UK snack maker Whitworths, which specialises in dried fruits and nuts, went even further down the indulgence route with the launch of Nibl in May 2009, a line of dried fruit and nut mixed snacks, some of which feature chunks of chocolate. Nibl Jaffa Berry Choc, for instance, consists of orange-flavoured cranberries, golden raisins and dark chocolate, while Nibl Berry Cherry Choc contains attractive white chocolate chunks.

Germany's fourth-ranking snacks manufacturer Ültje GmbH & Co KG is tapping into the premium end of the market by positioning some of its naturally healthy Ültje-branded nut products as “Edelnüsse” (noble nuts). This range includes cashews, macadamias, peanuts and pistachios, with the wording “ohne Fett geröstet” (roasted without fat) as an integral part of the brand name. Cashew-Splits ohne Fett geröstet even come coated in herbs, adding a premium flavour dimension.

Incidentally, nuts and fruit snacks are driving growth in sweet and savoury snacks. Euromonitor International data shows that in 2008 global value sales of nuts increased by 8% and fruit snacks by 10%, compared to 6% for overall sweet and savoury snacks. The health and wellness trend, which refuses to be culled by the recession, plays no small part in this.

Give consumers what they want – a good deal

Inevitably, as consumers are looking to economise, impulse sales of single packs are giving way to more economical multipack purchases. This is being driven by a rising number of consumers taking packed lunches to work, and also by increased snack consumption at home, often sharing with friends and family, instead of going out. There is no reason why makers of H&W-positioned snacks cannot respond to this trend and make their products more economical by offering them in multipacks.

A cleaned up product does not a H&W product make

A much more tricky issue is presented by the (albeit very positive) trend of health-oriented reformulation across entire product portfolios, which most snack manufacturers have been engaging in for a number of years. Measures include the reduction of saturated fat content in fried snacks by replacing palm oil with sunflower oil and lowering salt content. The removal of trans-fats is also a very important trend, especially in the US, where a product's trans-fat content has to be declared on its label.

Another key strategy is the removal of “artificial” additives, such as MSG. UK snack maker United Biscuits, for example, reformulated the iconic Hula Hoops brand (the UK's third-ranking brand of extruded snacks), removing all artificial colours, flavours and MSG. It also cut the saturated fat content by 55% and added a multigrain component.

And although these developments are very positive in terms of looking after consumer health, they make it very hard for time-pushed shoppers to differentiate between reformulated standard snacks and “real” H&W options. Virtually every snack product's packet now screams “all natural”, “zero trans fats” and “30% less sat fat”. Considering that standard snacks are now, by and large, healthier than ever before, it is entirely understandable why many consumers have started to question the need for H&W snacks.

Hence, this is where much of the impetus for more conscientious premiumisation efforts comes in, as discussed earlier on. “Low fat” or “organic”, etc, are simply no longer enough to ensure sufficient differentiation from standard products. In addition, consumers still need to be educated. For example, many believe that “30% less saturated fat” is the same as “30% less fat” and that “all natural” is the same as “organic”. It would be nice to see advertising campaigns focused on clearing up such lamentable misunderstandings.

Leveraging functionality and fairtrade for added value

Aside from in snack bars, functionality does not yet feature as a key strategy for adding value to sweet and savoury snacks. Alas, there is plenty of room for development. Californian-based Snacktrition (part of Mellace Family Brands Inc), for instance, offers an innovative range of nutritionally enhanced nut snacks. The Snacktrition range includes Calcium Sea Salt Almonds, in which the almonds are oven roasted and sprinkled with calcium, Calcium Smoked Almonds, Fiber Sea Salt Cashews (dusted with fibre), and Calcium and Fiber Fruit & Nut Mix.

While Snacktrition enjoys a primarily female and family-positioning, other functional products are squarely aimed at a male audience, for example Dakota Valley Products' Energy SumSeeds. This product, which consists of in-shell sunflower seeds doused in caffeine, taurine, lysine and ginseng, is marketed on the premise of being superior to energy drinks, based on its very low sugar content and more sustained energy delivery system.

Child-targeted snacks are another prime opportunity for adding value with functional ingredients, such as calcium, probiotics, omega-3 and vitamins. And while some manufacturers are already onto this, the opportunity remains poorly exploited by others. For example, Pom-Bär, one of Western Europe's top-selling children's snacks and Germany's second-ranking extruded snack brand overall (from Intersnack Knabber-Gebäck GmbH), does not currently feature any fortified/functional options, although Pom-Bär Prawn Cocktail, sold in the UK, contains cod liver oil for flavouring.

Another way to offer consumers extra value, or rather, in this case, “value for money”, is by switching to fairtrade sourcing. Remarkably, and unlike the organic category, sales of fairtrade products seem not to have suffered much from the effects of the economic downturn. And although going fairtrade is not a feasible option for potato-based snacks, those made from nuts, dried fruit, chocolate and rice may lend themselves perfectly to a fairtrade repositioning. Sherriffs Fairtrade Rice Cakes (owned by UK-based Balance Foods) is a good example. Indeed, this product could be made even more appealing, for example by adding an indulgent dark chocolate-covered rice cake option. Additionally, the combination of fairtrade and organic has the potential to be particularly powerful.

For more insight, please contact Ewa Hudson, Head of Health and Wellness Research, at ewa.hudson@euromonitor.com.