Australian consumers spent $1.8 billion on salty snacks in 2017, a 5.9% increase from the previous year. Manufacturers drove growth through joint branding partnerships between snack brands and other companies, as well as innovations in packaging including a shift from bags to more space-efficient boxes. Alternative snacks like nuts, popcorn, and vegetable chips saw increased popularity as consumers sought healthier options, with the popcorn category growing 70% since 2015 through new product flavors. Shoppers also moved spending from traditional snacks to healthier options found in the health food aisle.

1. n 2017, Australian consumers spent $1.8
billion on salty snacks, equivalent to $73.70
per capita. This resulted in overall category
growth of 5.9 per cent year on year. In an
environment where the average grocery
performance is relatively soft at 1.9 per cent
(IRI Market Moves, 2017), such remarkable
growth is by no means an accident.
Joint branding
Who can forget Tim Tam Messina from last
year? It was an instant classic that yielded
both commercial and branding success. In
fact, in the latest IRI Market Moves report, the
Tim Tam Messina new-product development
was highlighted as a standout performer.
In the ice-cream aisle, Peters Ice Cream
teamed up with Arnott’s to create ice-cream
versions of Caramel Crowns, Wagon Wheel,
Mint Slice and Iced Vovo.
When Peters and Arnott’s announced their
partnership, there were 12,000 comments
posted on their Facebook pages within 24 hours.
Joint branding is not an exclusive marketing
tactic seen in sweet-snacking categories.
In salty snacks, Smith’s linked with heritage
brands Heinz and Bega to launch two new
chip flavours: Smith’s Heinz Tomato Sauce
chips and Smith’s Bega Cheese chips were
the second and fifth most successful NPD,
respectively, in chips, contributing $10.7
million in growth for the category.
Pack strategy
It’s no secret that suppliers have been tapping
into packaging types or sizes to drive growth
in the snacking category. Throughout 2017, we
continued to see examples where the pack
levers were being pulled to deliver growth.
Multipacks have been performing better than
their monopack counterparts in recent years.
While multipacks made up only 25 per cent
of category sales, they also accounted for 41
per cent of category growth. Much of this was
driven by the Arnott’s packaging relaunch,
with the biscuit maker switching from the
traditional multipack bags to a much more
space-efficient cardboard-box format in 2017.
As a result, the Arnott’s multipack portfolio
grew 15 per cent year on year. Interestingly,
Smith’s was the first supplier to make the
shift from bag to box, back in 2008, and still
maintains a line of five SKUs.
Alternative snacking
It’s impossible to ignore the growing
presence of nuts, popcorn and vegetable
chips in both the snacking and health-food
aisles. At IRI, we consider these products
‘alternative snacking’ and they can sometimes
be branded as healthier alternatives to
potato-, wheat- or corn-based snacks. At
other times, manufacturers inject innovations
into an otherwise stable segment (eg,
popcorn, nuts) and give these products a
new lease of life and a gourmet identity.
Many of these successful new products tap
into consumer needs for healthier snacking
choices and indulgent treats.
For a long time in Australia, popcorn has
been synonymous with butter flavour and
eaten either in the cinema or at home while
watching a movie. However, in the past two
years, this traditional notion of popcorn was
challenged when Kettle brand launched
a ready-to-eat range of “familiar yet new”
flavours including the on-trend options Salted
Caramel, Honey & Butter, and Sea Salt. Other
flavours, including Sweet & Salty, Cinnamon
Sugar, and Chocolate Crackle, soon followed.
Cobs is another major growth contributor in
this segment, but the product offers are more
focused on a natural message and therefore
have a more traditional flavour profile.
A competitor to watch out for this year is
Red Rock Deli, which came to the popcorn
segment in October 2017 by leveraging the
brand’s credentials in gourmet flavours. Red
Rock Deli brought three imaginative flavours to
the market: Red Chilli Salt, Maple Butter & Sea
Salt, and Manuka Honey & Cinnamon Butter.
Since 2015, the size of the popcorn segment
has grown from $46 million to $78 million,
representing an increase of 70 per cent. With
new brands such as Red Rock Deli and Kettle
entering the market, we expect that popcorn
will continue to be the new battleground for
manufacturers to fight for market share.
Heart Foundation Australia has endorsed
nuts and seeds as healthy snack options and
claimed that “regular consumption of nuts is
linked to lower levels of LDL (bad) cholesterol
in the blood, and doesn’t lead to weight gain”.
Therefore, it’s no surprise that suppliers
are capitalising on the health-benefit claims
and consumers are responding to the trend.
Nobby’s, a Smith’s Snackfoods Company
brand, has been a supermarket staple for
years and has a traditional flavour profile,
eg, Salted, Salt & Vinegar, etc.
The disruptor in this segment, however,
is once again Red Rock Deli (also owned
by Smith’s), which entered the segment in
February 2017 with flavours such as Sweet
Honey & Sea Salt, Sweet Chilli & Basil, and
Red Pepper & Roast Garlic. These NPDs
not only capture the attention of consumers
looking for healthier alternatives, but also
stand out from the pack with the strong
gourmet flavour credentials of Red Rock Deli.
Cross-aisle shopping
Snacking products can be found in multiple
store locations, including those featuring
chips, salty snack nuts, biscuits, flavoured
snacks and even health food. It follows that
shoppers distribute spending across the
category. IRI’s Shopper Panel estimates that
about $5.2 million has been lost from the chips
category to salty snack nuts alone.
Another trend that IRI’s Shopper Panel
revealed in 2017 was shoppers moving away
from the more traditional snacking categories,
such as chips and flavoured snack biscuits,
instead spending more on snacking options
found in the health-food aisle. Combined with
the growth in alternative snacking segments,
it’s reasonable to assume that more shoppers
are seeking healthier snacking options.
The ultimate challenge for manufacturers
is to get into the heads of shoppers and
understand their potential motivations to leave
the category. Only then can the right strategy
be developed to disrupt shoppers from leaving
certain brands.
Snacking: the year in review
We look at the growth pillars that manufacturers have leveraged in the past year to grow their brands and, subsequently, the snacking
category overall.
By Senior Account Manager Rex He and
Account Manager Amanda Eggers.
About IRI
IRI is a leading provider of big data, predictive analytics and
forward-looking insights that help FMCG, OTC health care,
retailers and media companies to grow their businesses.
With the largest repository of purchase, media, social, causal
and loyalty data, all integrated on an on-demand cloud-based
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clients around the world in their quests to remain relentlessly
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deliver market-leading growth.
I
Another trend that IRI’s
Shopper Panel revealed in
2017 was shoppers moving
away from the more traditional
snacking categories, such as
chips and flavoured snack
biscuits, instead spending more
on snacking options found in
the health-food aisle.
IRI INSIGHTS – SNACKS
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