CHICAGO — To succeed in this rapidly changing landscape, snack companies must act now in order to capitalize on potential growth, according to IRI.
Sally Lyons Wyatt, executive vice president and practice leader of client insights for IRI, recommended that snack companies balance price with quality and wellness attributes to capitalize on growing sales during the coronavirus (COVID-19) epidemic.
She also advised leveraging targeted media to reach consumers in their homes and developing online strategies to attract and retain snack consumers.
Despite the economic uncertainty, Ms. Lyons Wyatt said snack companies that create an experience for their customers through innovation and communication can look forward to opportunities in 2020 and beyond.
“If COVID recovery is quick, we could see more snack innovation in the second half of the year,” she said.
Ms. Lyons Wyatt spoke to snack companies March 26 in a Best of SNAXPO webinar by SNAC International. She outlined industry trends from 2019 and how they will be affected by COVID-19 in 2020.
The snack industry saw significant increases in purchasing in March as consumers stocked up on food supplies to prepare for stay-at-home orders, she said, and the temporary increase because of the coronavirus (COVID-19) pandemic may have lasting impact on snack trends for 2020, and potentially the years to follow.
IRI tracked snacks purchased over the month of March to see how consumers were reacting to the COVID-19 outbreak in terms of spending on snacks.
For the period between Jan. 20, when the first COVID-19 case was reported in the United States, and March 15, when 158 million Americans were told to stay home, dollar sales skyrocketed compared to the same period a year ago.
IRI calculated the total dollar change by taking the dollar sales during this period and comparing it to the full year of 2019 sales data. The COVID period of growth in sales comes after a strong 2019 for snacks that saw core snack categories grow 3% in dollar sales. But after Jan. 20, snack sales began an upward trajectory that piqued during the week of March 8-15.
In that week, core snacks saw a 39% increase in dollar sales. Potato chips saw a 2.9% sales bump, while crackers experienced a 10% increase. Snacks trailed behind overall food and beverage in terms of increase dollar sales, but Ms. Lyons Wyatt predicted that snacks will rise over the coming weeks.
“Snacking will continue to see increased sales through COVID-19 and into the impending recession period since it is an expandable consumption food,” she said. “Consumer snacking for those employed may actually increase with a reduction of restaurants and kids at home for the rest of the school year in some areas.”
She compared the current situation to the 2007-09 recession, when snacks fared well. However, she cautioned that nobody knows the total economic fallout from the current pandemic.
She referenced some of IRI’s 2009 State of the Snack Industry report to provide context for the current, unprecedented time. The messages in 2009 were that value is key, and snack companies need to reach consumers in the home. The advice in 2009 was to align strategies with new consumer rituals, educate and communicate.
“These are relevant again, so deepen your connections with consumers now,” Ms. Lyons Wyatt said.
Growth in 2020, she added, will come from several strategies. She said snack companies may lose traditional impulse purchases because more people are ordering online and avoiding time spent in stores. She said there may also be a switch to private label snacks because of their value proposition. She advised that snack companies should make brands more available online and communicate this shift to consumers.
Even with an increase in online purchasing, Ms. Lyons Wyatt also said snack companies should determine which channel is best for them. That’s because mass market stores, value stores and club stores should see a continued boost in sales through COVID-19. Already in the United States, core snack sales in mass markets grew 3.3% since January, while snack sales in club stores grew 10.5%.
By targeting consumers in these various channels, and by balancing price with quality and health, snack companies who take action now still stand to have a strong 2020 in terms of dollar sales.