Hello Forecasters,
Welcome back to The Inflection Point.
This week, we’re talking snacks.
TL;DR:
- ‘Indulgent snacking’ is on the rise, but without the food dyes.
- Erewhon smoothies are a TikTok status symbol for Gen Z.
- Walmart’s Better Goods is driving the wave of in-house, affordable, private-label food brands.
So, why are snacks such a nuanced topic?
Because no matter your age or income, everyone eats ‘em...
...but the challenge is understanding trends that seem contradictory at first glance.
For example:
Is inflation pushing Gen Z to eat more at home?
Yes.
But they’re still increasing their spending year over year on premium grocery stores– especially social media-famous ones like Erewhon.
Shopping at Erewhon has evolved into a status symbol, signaling both affluence and health consciousness for the TikTok generation.
And what to make of the increase in people considering ‘indulgent snacks’ a reward?
Does that mean people are avoiding healthier options?
No, they’re not– we see both indulgence and wellness coexisting.
And if we know that people tend to use food as comfort, especially in uncertain or emotionally turbulent times, could the U.S. election trigger a rise in indulgent snack sales?
The data suggests yes. Interest in the signal for ‘indulgent snacks’ is forecast to rise in the next 12 months, creating a key opportunity for brands to capture evolving snack occasions.
F&B brands must continue diversifying their product offerings to reach this broader customer base.
Take Hostess, for example, which J.M. Smucker’s purchased for $5.6B last year. This acquisition was a strategic move to cater to indulgent and health-conscious markets.
“Many people jumped to the conclusion that if better-for-you is growing, it must be at the expense of indulgent snacking. I’m here to say that is a false choice,” said Dan O’Leary, Hostess Brands’ Chief Growth Officer.
He explained that snacking occasions have multiplied, and consumers now take a ‘balance sheet’ approach.
“For example, consumers may choose a healthy snack at one point in the day, and then treat themselves with something sweet later, feeling great about both choices because everything is in balance.”
Using proprietary research, Hostess built an “occasion-based snacking framework” to understand and target consumer needs.
This framework segments snack categories based on when and how people snack throughout the day:
- Morning sweet start: $6.7B market size
- Lunchbox worth: $7.2B
- Afternoon reward: $15.1B
- Immediate consumption: $9.8B
- Afternoon sharing: $26.1B
The bottom line: The perception of ‘indulgent snacks’ is evolving as consumers seek healthier versions of the treats they love.
For instance, Hostess purchased Voortman Bakery last year, known for its sugar-free wafers and cookies, aligning with the growing demand for better-for-you indulgence.
Private-label offerings are also booming as inflation and consumer stress rise.
After Walmart launched Better Goods, a brand explicitly targeting value-conscious Gen Z shoppers, Kroger Co. announced it expects to add more than 800 new private-label products this year.
Private labels are becoming a trusted, affordable alternative to traditional brands, catering to the demand for quality at a lower cost.
Though the fastest-growing snack trend is high-protein, we’re keeping an eye on these notable brands.
1) PopUp Bagels: Known for its cult-like following and exclusive, limited-edition releases.
2) BelliWelli: An indulgent, gut-friendly snack bar that aligns with health-conscious values.
3) Petit Pot: Elevating indulgence with its French-inspired, organic desserts.
4) Skinny Dipped Almonds: A healthier take on chocolate-covered snacks, with less sugar.
5) Noor Salad Dressing: Bringing bold, natural flavors to the health-conscious shopper.
6) Zacks Mighty: Organic tortilla chips focusing on simple ingredients.
7) Graza: Fresh, high-quality olive oil designed to complement your snack routine.
8) Cholula: A go-to for adding flavor to many snacks.
9) Alec’s Ice Cream: Dairy ice cream made with regenerative ingredients.
10) Stuzzi: A new how sauce brand.
11) GoNanas: A banana bread mix brand that offers indulgence in an allergen-friendly way.
‘Indulgence’ snacking has taken on a new and health-conscious form.
After the health boom triggered by COVID, we saw a sharp rise in conversations around ingredients like:
- Seed oils
- Glyphosate
- Aspartame
- Food dyes
- High fructose corn syrup
Consumers are more aware than ever of potentially harmful ingredients.
They now want snacks that indulge their cravings but align with their values and health goals.
Ok, that’s all we’ve got for now.
Thanks for spending time with us on this week’s Inflection Point.
We’ll see you next time.
++ PS: We’d love to hear from you!
What trends or topics should we cover next?
Let us know what’s on your mind at hello@nwo.ai.
