Executive Summary

This Key Note Market Report Plus examines the UK snack foods market, which comprises potato
crisps, other savoury snacks (including tortilla chips, baked snack biscuits and rice- and corn-based
snacks) and snack nuts. It excludes sweet snack items, such as chocolate, which are covered in
Key Note’s Confectionery Market Report Plus and the Sweet & Salty Snacks Market Assessment.
Key Note estimates that, in terms of retail sales, the total value of the market increased by 12%
between 2005 and 2009 to reach £2.39bn. An especially strong growth of 8.4% was seen between
2008 and 2009 as manufacturers passed on steep rises in commodity costs for items such
as potatoes, sunflower oil and nuts.

Manufacturers of snack foods continued to respond to health issues in 2008/2009, reducing salt and
fat content in their foods through the introduction of ‘light’ and low-fat variants. Emphasis has been
placed on the use of more ‘natural’ ingredients, as well as on baked, rather than fried, goods.
Seabrook Crisps has admitted that when celebrity chef Jamie Oliver advised people against eating
crisps because of their fat and salt content, it decimated its sales ‘almost overnight’. However,
despite most snack foods being relatively low in nutritional value, consumption of them on a regular
basis is very high. A Target Group Index (TGI) survey carried out by BMRB International Ltd
found that 84.1% of respondents had consumed potato crisps, tortilla or corn snacks in the 12
months ending March 2009, indicating that consumers look upon such foods as indulgent treats.

As well as being indulgent, savoury snack foods such as crisps are also an affordable treat. Even at
the premium end of the market, products are cheap in comparison to other food treats, such as
premium chocolate. In fact, the current recession has helped demand for upmarket products, as
there has been an increase in consumers staying in rather than going out and replacing luxuries such
as eating out in restaurants with eating snack foods at home. This has also led to retailers giving
more shelf space to snack foods, particularly large sharing packs.

The hike in commodity costs in 2008/2009 led to hefty price rises in the industry, and there have
been corporate casualties as a result. For example, Natural Crisps Ltd was close to administration
when it was bought by Tayto Crisps of Northern Ireland in a ‘distress deal’ completed in a week
over Christmas 2008. The deal was Tayto’s fourth acquisition in 3 years, following its purchases of
Golden Wonder in 2006, Real Crisps in 2007 and Red Mill Snack Foods in 2008. Germany’s
Intersnack purchased a 15% stake in Largo Foods (the owner of the Tayto brand in the Republic of
Ireland), and is thought to be considering making more acquisitions in the UK market. Further
consolidation in an industry currently dominated by Walkers Snack Foods seems likely in the
future, especially as the recession continues and companies struggle to survive.

Key Note forecasts that the retail sales value of the UK snacks market will increase by 3.6% to
£2.48bn in 2010, and will grow by an overall 5.3% between 2010 and 2014 to finish at £2.61bn.

Fuente: http://www.keynote.co.uk/market-intelligence/view/product/10341/snack-foods?
utm_source=kn.reports.browse

UK Potato Crisps & Snacks Market to Hit £2.61bn by 2014 Says New Report
Posted on 20 May, 2010 by reportbuyer
Potato Crisps & Snacks Production in the UK provides a detailed analysis of potato crisps and
snacks production in the UK, including key growth trends, statistics, forecasts, the competitive
environment including market shares and the key issues facing the industry.

The 30 page report covers companies that manufacture and preserve frozen and dehydrated
potatoes. This includes companies who produce potato snacks, crisps, flour and meal. Industrial
potato peeling is also included in the research.This report examines the UK snack foods market,
which comprises potato crisps, other savoury snacks (including tortilla chips, baked snack biscuits
and rice- and corn-based snacks) and snack nuts. It estimates that, in terms of retail sales, the total
value of the market increased by 12% between 2005 and 2009 to reach £2.39bn. An especially
strong growth of 8.4% was seen between 2008 and 2009 as manufacturers passed on steep rises in
commodity costs for items such as potatoes, sunflower oil and nuts.

Manufacturers of snack foods continued to respond to health issues in 2008/2009, reducing salt and
fat content in their foods through the introduction of ‘light’ and low-fat variants. Emphasis has been
placed on the use of more ‘natural’ ingredients, as well as on baked, rather than fried, goods.
Seabrook Crisps has admitted that when celebrity chef Jamie Oliver advised people against eating
crisps because of their fat and salt content, it decimated its sales ‘almost overnight’. However,
despite most snack foods being relatively low in nutritional value, consumption of them on a regular
basis is very high.

The report forecasts that the retail sales value of the UK snacks market will increase by 3.6% to
£2.48bn in 2010, and will grow by an overall 5.3% between 2010 and 2014 to finish at £2.61bn.

Fuente: http://www.mycompanypr.com/uk-potato-crisps-snacks-market-to-hit-2-61bn-by-2014-
says-new-report/pr/409/

marketing strategies - case study: uk snack food market

Changing lifestyles create growth opportunities in the snack food market

Introduction

The decline of formal lunchtime eating is creating new market segments and strong growth in the
snack food market.

Research suggests that more of us eat lunch at our desks and spend all night playing computer
games. The snack market is enjoying strong growth due to a range of new products that are
positioned to exploit these changing lifestyles.
It has been apparent for some years that increasing time pressures on consumers have been the main
force behind a shift away from traditional mealtimes. Meal consumption is now fragmented into:

• More frequent and smaller "meals" (the term “grazing” is often used to describe this behaviour)
• Taken in more diverse locations

Datamonitor's new report, “Hand-held Snacks”, examines the UK hand-held savoury snacks sector.
It reveals that "on-the-go" eating and snacking are on the increase.

On-the-go consumption can be split into three key categories:

• On-the-move
• Multitasking (for example, eating while working), and
• Leisure

Hand-held snacks are well suited for consumption in all three situations and there is high consumer
demand. As more consumers take to eating while engaged in other activities, such as office work,
playing computer games or commuting, hand-held snacks are ideally poised to exploit this trend.

Datamonitor's research finds that consumer choice in the hand-held snack sector has increased, with
a proliferation of flavours and variety, and more substantial snacks.

Segmentation

The report examines product launches across six segments of retail hand-held snacks: filled bread;
pastry-wrapped; unwrapped; pizza snacks; snack kits and others.

The filled bread segment has experienced a very high level of new product development over the
past 18 months, as sandwich-type snacks continue to enjoy high popularity. The main innovation
trends are exotic alternatives and "big eat" options.

Exotic alternatives to traditional sandwiches - wraps, ciabattas, pittas, and fold-overs - have become
increasingly popular in recent years. Traditional sliced bread is making way for more "exciting"
breads, in order to raise the profile of the sandwich and appeal to consumers' adventurous tastes.
Many of these new breads are stronger, both structurally and in flavour, than sliced bread and allow
for more filling and the combination of unusual ingredients.

There has been strong innovation in more substantial filled bread products, aimed at people with
heartier appetites. Many of these "big eat" sandwiches are aimed at the male population, which has
a higher level of sandwich consumption than females. Such products include deep-fill sandwiches
and thick-cut sandwiches, such as Sainsbury's "The Big One", which makes a bold claim to be "the
UK's biggest pre-packed supermarket sandwich". Many big eat innovations contain bacon, egg,
sausage or other meats, and some have specific lunch themes.

Pastry-wrapped snacks witnessed the second highest levels of innovation, according to the report.
Ginsters have been prominent in developing the pastry slice, and other manufacturers in the UK
have been attempting to benefit from its success.
Unwrapped snacks, usually meat or cheese sticks such as Peperami, and "other" snacks, which fit
into none of the other sectors and include products such as scotch eggs and filled potato skins, have
also diversified (it is now possible to buy scotch egg bars among other things).

Emerging trend for healthy eating

A significant emerging trend in the pizza snack market has been the introduction of "low-fat" and
"healthier" versions. These snacks appeal both to parents concerned about children's health and to
weight-conscious adults.

Datamonitor's analysis of new product trends finds that snack kits have changed comparatively little
recently. However, as an emerging sector it is dynamic and the fast growth of certain brands, such
as Kraft's Lunchables, demonstrates its growth potential. Snack kit trends have focused on two main
product types - lunchbox packs for children and dipping products.

The success of Lunchables can be attributed to the high interactivity of the product for its mainly
young consumers. Such interaction allows children to be responsible for their own meal, while
parents feel satisfied that their children are eating nutritious food. The fact that packs include games
or puzzles ensures that the concept is a firm favourite with children.

Dipping is the other main trend in the snack kit sector, with a variety of products available. The
element of fun has been central to the popularity of the dipping snacks, especially among children.
The idea of dipping food and mixing flavours is more interesting than a simple home-made
sandwich or a piece of fruit.

Analysis of hand-held snack product development has shown this sector to be very dynamic and as
more food manufacturers enter the market it is no longer simply enough to launch "convenient
savoury snacks". Consumers demand additional benefits - such as health and interesting tastes and
textures - beyond fulfilling basic nutritional needs. By offering these extra benefits manufacturers
will be able to expand the appeal of hand-held snacks to a broader consumer base.

Fuente: http://tutor2u.net/business/marketing/casestudy_snackfoods.asp
Premium sector drives UK snack market but growth expected to
slow - YouGov

By Oliver Nieburg, 06-Jul-2010

Related topics: Markets

Booming sales of premium products such as Kettle Chips helped the UK crisps and
snack market grow by 6 per cent in 2009, according to YouGov SixthSense research.

The report valued the UK crisps and snacks industry at £2.68bn and noted a sales increase
of 17 per cent over 2008-09 with Kettle Chips an "important factor" for market growth in
the category.

Value sales were also said to have risen due the success of a number of brands including
Walkers, whose sales were seen to increase by around 8 per cent between 2008 and 2009.

However, growth during the next year is expected to slow, bringing overall market value to
around £2.73bn. Earlier Mintel research, which valued the current market at a lower rate,
forecast figures to reach 2.25bn in value by 2013.

Premium highlights

Researchers from YouGov found the premium sector grew by 10.3 per cent between 2008
and 2009, but have anticipated reduced growth of 6.2 per cent in 2010.

The boost in sales is believed to come not just from handcooked crisps, but also from the
smaller vegetable sub-sector, which by 2009 was estimated to be worth around £30 million.

Large sharing packs, such as Doritos, were also reported to have experienced strong
growth, which the study argued could be explained by the increase in home-based
entertainment – a long-term trend augmented by the recession.

However, researchers warned that rise of the premium sector slightly negated the fact that
volume sales declined by some 0.5% in 2009, and cautioned "the rise in value of the
market is also a result of price inflation due to rising potato and oil prices."

Meanwhile, the snacks sector was found to have grown at a slower rate than crisps. Sales of
Pringles in particular were found to have declined. No growth is expected in the snacks
sector which was considered to remain at a value of £1.11bn.

The study attributed the reduced growth rate to greater consumer health consciousness but
added that people may also be choosing quality over quantity.
Growth of Kettle Foods

The report regarded Kettle Foods as "an increasing important player," with around 3% of
revenues in 2009.

Kettle Chips were said to be the UK's top selling hand-cooked crisp, and its growing
popularity (sales rose by some 18% in 2009 on 2008) is thought to have driven the
expansion of the premium sector.

In March 2010, it was announced that Kettle Foods was to be acquired by US-based
Diamond Foods. The company has said that it plans to invest in the brand to position it for
long term success. Mintel research similarly found that Kettle had grown in value from
2006-2008 by 55.8 per cent.

Walkers' premium struggles

Though Walkers were seen to dominate the market, accounting for 60 per cent of total sales
in 2009, the company's main premium brand 'Sensations' struggled to compete with Kettle
Chips. In 2009, Walkers Sensations suffered a 12% sales decline despite packaging re-
launch, new flavours and a TV advertising campaign. The study suggested that consumers
no longer viewed the product as premium enough to tempt them.

Walkers launched a new brand, Red Sky, in March 2009, aimed at health conscious
consumers -the first crisp brand in the UK to use packaging partly made from paper, in a
bid to reassert market dominance.

The decline of Pringles?

Procter & Gamble were found to have a market share of just 6 per cent, based solely on its
Pringles brand.

Researchers said the development of P&G's only edible brand has long been hampered by
the lack of a wide-reaching distribution network, such as that available to Pepsico’s
Walkers. Furthermore, increased consumer choice in this area was believed to have resulted
in declining value sales in 2009.

Fuente: http://www.bakeryandsnacks.com/Markets/Premium-sector-drives-UK-snack-market-but-
growth-expected-to-slow-YouGov