NIQ: Private Brands Growing Within Snack Segment
According to new data from NielsenIQ (NIQ), the snacking business in the United States generates about $135 billion in sales annually.
The new Snackonomics report shows that Snack category dollar sales have increased 12.8%, driven by increased retail prices. Inflation in the snack category is higher than food overall, according to NIQ. Prices rose 18% over the last year, resulting in a slight volume sales decrease of -1.7%.
Due to increased snack prices, many consumers are shifting to private label options to fill their refrigerators and pantries with. Lorelei Bergin, VP or North American Retail at NielsenIQ, detailed the Snackonomics report at the recent Groceryshop 2023 event in Las Vegas.
“Within snacking, value retailers are dominating in the total market. So when I say value retailers, that is going to be mass, that’s dollar, as well as club,” said Bergin. “In candy and sweet snacks and salty snacks, they have an increase year-over-year and they’ve also recognized this growth [within snacking] is helping them and assisting them. So they’ve been able to create more assortments on the shelves to make sure that their consumers continue to keep shopping in that space."
Bergin added that snacks are becoming a large area where consumers trust private label products and are willing to switch. According to the NIQ data, 44% of consumers believe that private label has good value, if not equivalent, to branded items, and that it’s a good alternative to branded items. More than a third (35%) said that private label snacks are “higher quality for equal value.”
Like categories across the store, price is playing a big role in what consumers purchase. For the potato chip, tortilla chip, popcorn and crackers sectors within snacking, NIQ noted price as the lead driver of growth. Cookies and pretzels had price as the second driver of growth, behind trends and distribution, respectively.
“Overall, private label is up across all departments. It's up 13.5% total market and 16.7% in that value channel that I was indicating,” said Bergin. “Snacking is no different. It's definitely an increase in this space. But what's important to note here is that if the branded items do not start coming with more strategic ways of combating private label, they're going to lose out."
Bergin said that 82% of snacking occasions are consumed at home, and 42% of those surveyed said that they have changed in the last 12 months to incorporate smaller meals or snacks during the day.
“Here's what I leave with you as key takeaways: Pricing is still number one for consumers. Brand loyalty is weakening. So set your strategies well, and develop a really good, robust segmentation and personalization offering,” she said. “Buying online performs in all other categories, so look for those ways to provide convenience with multipacks or better-for-you options.”