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Repositioning Indulgence to Remain Relevant in the Healthy Snacking Era

1/23/2018
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Food companies are adopting healthy snacks through acquisition

CPG companies have started to respond to what has been dubbed “the backlash against sugar”. With increased pressure from lobbyists and governments for people to eat and live more healthily, consumers are slowly starting to change their approach to eating, moving away from (reduced) sugar and fat products to more wholesome foods, alongside being more active. Whilst the demand for indulgent food and drinks will not change overnight, and will remain prominent, health-positioned snacks are outperforming traditional snacks, and their share will increase substantially by 2020.

 

New competitive snack environment favours dairy and savoury

This shift in healthier snacking options has benefited companies active in dairy and savoury snacks. Both Groupe Danone and Groupe Lactalis, which predominately operate in dairy, have made strong gains in the global packaged food ranking. Following the purchase of the milk alternatives specialist WhiteWave in early 2017, Danone is predicted to leapfrog Kraft Heinz as the fifth largest global packaged food company, while Lactalis saw its ranking rise through a spate of smaller-scale acquisitions in several emerging markets, ranging from Brazil to India. Benefiting from its strong presence in savoury snacks, PepsiCo outperformed those companies present mostly in confectionery, such as Mars and Mondelez. Going forwards, confectionery players will have to redefine their indulgence strategy if they wish to remain relevant in this new competitive snacking environment.

Chocolate sales have dipped, but consumers spend more per treat

In recent years, sugar came to be regarded as one of the culprits for weight gain, which contributed to declining consumption of chocolate over 2014-2017. However, a “less but better” approach to chocolate consumption has resulted in per capita expenditure in fact increasing. For future growth, as chocolate cannot compete with healthy snacks from a nutritional point of view, quality over quantity is likely to drive growth, and premiumisation in chocolate will offer plenty of opportunities for manufacturers, as consumers will continue to seek indulgence products, albeit it perhaps less often. Per capita expenditure on chocolate is set to grow by a CAGR of 0.5%, which is above the negligible growth in volume terms globally.

The power of social causes: Good for you and good for the world

In Prague, in the Czech Republic, a portable café called Velobloud was launched in summer 2016. This coffee-serving café-on-a-bike is a new concept in Prague, following concepts such as food trucks and foodservice bikes, which started appearing in 2016. The only difference is that this particular bike offers homeless people a chance to be trained as baristas and earn an income. ‘’Velo” is a prefix used in the ancient form of the word “bicycle”, while  "Velobloud” simply means “camel”, an animal that may walk long distances, often without any particular direction.

This concept not only provides a novel format from which to sell coffee, but also does good in the community by providing homeless people with a path for upwards mobility. The concept has been well-received by local consumers, who support its social goals, but also want a good cup of coffee, and the company hopes to expand the concept to other cities in the Czech Republic in 2017. Similar concepts can be replicated for snacks, where consumers are likely to support one brand over another as it makes them feel good. A snack might not necessarily be nutritious, but at the same time it can help to support a local cause; a concept not dissimilar from lotteries.

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