This year’s snapshot finds that the savoury snacks industry across Europe has continued to deliver a solid performance. It’s a feat that’s especially impressive in the face of a combination of powerful external factors that are creating big challenges throughout all business sectors.
The dark days of European lockdowns have receded, but emerging variants of the virus behind COVID-19 ensure that the pandemic continues to rumble on. Meanwhile, the reopening of the economy exposed industry to supply chain woes and logistics problems. These repercussions were still being felt when the war in Ukraine hit, making everything so much worse. Now Russia’s actions and the resulting sanctions are choking off the supply of food commodities and agrichemicals and there are fears that sanctions may spark retaliatory action from Russia on energy supplies to Europe.
The result is rocketing inflation and an extremely uncertain business environment.
“We are all overwhelmed by the brutal Russian attack of Ukraine and our industry is still coping with the fallout in terms of difficult access to wheat and especially sunflower oil. We have been working at the forefront together with FoodDrinkEurope and the European Commission to allow our members the utmost flexibility when using other oils, as well as on related issues such as product labelling,” says ESA’s Director General Sebastian Emig.
“We have also performed an internal assessment of ESA’s focus areas with regards to other potential challenges that might arise due to the war or from existing or upcoming EU regulations. Our aim is to have members’ businesses ready and prepared.”
It’s a gloomy background picture, but resilient savoury snack makers have kept delivering for consumers and businesses through it all.
HEADLINE FIGURES
Euromonitor International’s headline value sales figures for savoury snacks in Western Europe rose from €29,926.8 million in 2021 to reach an anticipated €32,663.8 million by the end of 2022. That’s extremely healthy 9% growth. The Eastern European markets grew from €6,663.8 million in 2021 to an anticipated €7,310.4 million this year. That’s almost 10%.
Per capita consumption is also a tale of two halves, with Western Europeans munching through snacks worth €64.2 this year (up from €58.9 in 2021) and Eastern Europeans spending a more modest €22.8 (€20.7 last year). This compares to the global average of €24.0 for 2022.
Taking the bigger markets of Western Europe first, Euromonitor’s recent “Passport” report on savoury snacks says: “The region as a whole, as well as most of its countries, saw stronger retail value sales growth in 2020, as more consumption occasions were moving into people’s homes due to lockdowns and working/learning from home. While growth slowed significantly in 2021, it was still positive, with some of the changes seen a year earlier persisting into the new year.”
“Savoury snacks will continue to record positive growth rates in the coming years, becoming stronger as the forecast period progresses. Nuts, seeds and trail mixes will drive actual sales growth, while vegetable, pulse and bread chips will continue to be the most dynamic category, with health concerns remaining to the fore in Western Europe over 2021-2026.”
Similarly, Euromonitor summed up the performance in Eastern Europe as follows: “Although Eastern European countries experienced major disruptions in both 2020 and 2021 as a result of the COVID-19 pandemic, sales have generally continued seeing positive growth. While some impulse or on-the-go sales might have been lost as a result of mobility restrictions, the products in this market represent affordable snacks, with home seclusion actually helping to boost sales in many cases.” The analyst predicts positive market growth across Eastern Europe until at least 2026.
Perhaps it’s worth adding a note of caution that the Euromonitor projections were made at the start of the year, before the war in Ukraine.
PANDEMIC HANGOVER
“COVID is very much our WWII moment in terms of societal shift,” says Alex Skidmore, market intelligence specialist with Griffith Foods. Griffith recently conducted a survey of consumer attitudes to snacking and healthy eating across Europe. “Now we’ve got even more anxiety — job losses, recession, social isolation, lockdown — and these have all given rise to a need for snacking.” The researchers found that exactly what all these anxious consumers hope to get from snacks is slightly different across different age ‘groups. While Gen Z say they are looking for a distraction, Millennials and older groups are craving comfort.
Whatever people were hoping to find at the bottom of the snack pack, the pandemic saw sales surge in 2020 thanks to in-home consumption. Growth then fell back to settle at a lower level in 2021 as the lockdowns eased. Almost all European countries continued to experience some value growth last year, though that was partly thanks to rising prices as input costs and inflation started to creep up. The picture for sales volumes was therefore more mixed.
IRI used its research to break value sales down for some of the main European markets. In local currencies, Italy experienced 11% growth in 2020, fallingback to 9% last year. Germany managed 8% and 5%, the UK 5% and 1%, Greece 2% and 0.8% and Spain 2% and 0.4%. Meanwhile the Netherlands shed value last year with -2%.
“Salted snacks found growth in 2021 across many of the countries due in part to hybrid working models and increased at home occasions. Although different countries often define salted snacks a little differently, one of things that has become apparent is that many countries have seen a positive uptick, with the exception of a couple,” says IRI executive VP Sally Lyons ‘Wyatt.
The global low-cal snacks industry generated €6.5 billion in 2020, and €20.5 billion last year, according to Allied Market Research.”
According to Javier Sanchez, global business development director for Kantar’s Worldpanel Division, out-of-home (OOH) consumption has still not recovered fully since 2020, leaving room for further growth. Following a period that saw OOH drop off a cliff in 2020, followed by a post-lockdown bounce in 2021, Q1 2022 saw overall savoury snacking up 4% compared with two years ago, but this was largely thanks to a 7% rise in in-home consumption while OOH remains 3% down.
Other analysts identified a similar pattern, with rapid in-home growth slowing and only a gradual recovery in OOH. In the UK, for instance, Mintel found that 56% of consumers said in 2021 they had been snacking more since the pandemic. While 88% of people said they had eaten snacks at their home within the previous fortnight, only 44% had done so at work or a place of study, 14% while commuting and 9% in other OOH locations.
“COVID-19 has had a negative impact on the food-to-go market. However, as we are moving towards ‘the next normal’, eating on the move will grow in relevance once again,” says Olivia Placzek, research analyst with Mintel.
There’s a consensus that COVID-19 has left Europeans showing more interest in better-for-you (BFY) snacking. Again, Mintel’s consumer research backs this up, with 55% of German snackers saying they are mostly trying to choose healthy snacks and 48% finding healthier versions of their favourite snacks especially appealing.
“Consumer preferences for clean label products, the popularity of high-protein snacks and plant-based diets are probably the most influential [BFY trends] these days. Today, consumers continue to seek out healthier snack alternatives that are made with more natural ingredients, feature less artificial ingredients, less sugar and less sodium. This is especially since most people were having more sedentary lifestyles during the pandemic and their awareness of how various chronic diseases might reduce their chances of survival if they are affected by other diseases, such as COVID-19, is causing people to pay greater attention to the nutritional content of their diets,” says Petar Reshovski, general manager with analyst, Williams&Marshall Strategy.
“Consumers, not only in Europe but worldwide, are switching from traditional snack products to high protein/low sugar alternatives. This is especially evident among younger generations who are constantly feeling time pressed.”
‘The way people are using snacks is also evolving, with younger consumers more likely to use healthier snacks as meal replacements. “Because of the lack of time, high-protein snacks are increasingly perceived as suitable meal replacements.
In addition, the lines between dayparts are blurring when it comes to consumers’ eating habits, which are moving away from full-size meals to more frequent middle-of-the-day snacks instead,” says Reshovski.
It’s a similar picture across most European markets, but there remain some differences between East and West that are probably the result of affordability. So organic snacks feature more strongly in Western markets, for example.
Euromonitor’s recent report backs up this idea that Eastern Europeans are becoming more interested in healthier snacking, provided their spending power supports it: “Although the health awareness trend may not be as well developed as in other regions of the world, it is still influencing savoury snacks in Eastern Europe… On the one hand, people may be reluctant to eat some of the products, eg potato chips, because of their high fat and salt content, particularly with being overweight or obese possibly worsening the effects of the virus in people who contract COVID-19. On the other hand, this might see them opt for healthier products within the same market, such as nuts and seeds, vegetable and pulse chips or popcorn, or switch to some of the interesting new healthier versions of existing products increasingly appearing on the market, e.g. with reduced salt or fat levels, being baked rather than fried during production, or made using natural ingredients.”
‘Above: KP Snacks estimates that by the time the UK’s HFSS legislation is introduced, over 200 SKUs and a quarter of its portfolio will be non-HFSS.
In 2028, Lorenz became the first German snack maker to apply Nutri-Score on its packs, starting with Saltletts pretzels, Rohscheiben crisps and Erdnusslocken peanut flips.
Below: By 2025, Walkers says halfits snack sales will come from non HFSS products or those in portions of 100 calories or less.
Griffith’s research showed thatconsumers across the board are willing to pay a premium for healthier snacks, provided they’re not expected to compromise on flavour. 75% of those surveyed said they were interested in healthier crisps and 17% would pay more. For pretzels the numbers were 66% and 15%, popcorn showed, 64% and 14% and 63% of people were interested in healthier tortillas and 14% would pay extra. “The key takeaway from this is that finding away to combine health and taste will drive growth,” says Skidmore.
In fact, over 95% of consumers surveyed aspire to eat healthily to some extent, but BFY snacking means different things to different people, with the focus shifting to match people’s specific concerns. For example, Griffith found that 16% of people are looking for snacks to support their mental wellbeing, 25% want product to support their weight management goals and 30% want an energy boost from their treats.
‘The company also uncovered variations between different national markets.
“French consumers are after reduced fat and all natural,” says Skidmore. “It’s all about removal, reduction or elimination. In contrast, Spain is very big on added benefits — more fibre, more protein. This is broadly in line with Spanish food culture. Germany is another interesting one: There’s a really strong lean towards sustainability in Germany.”
Another takeaway from the Griffith survey was that almost two thirds (64%) of consumers are already guided by on-pack nutritional information when choosing snacks, while an even higher proportion look for a Nutri-Score C or equivalent. This leads nicely on to the other big driver of BFY development ~ regulation.
REGULATOR MOVES
“Over the last decade, leading international organisations and governments have been engaged in the development of a healthier environment and support policy measures to achieve better health in Europe. So, it is not a surprise that countries across the region are putting efforts to address the high amounts of fat, sugar and salt in foods and drinks in Europe,” says Reshovski.
“At the beginning of 2022, the World Health Organization announced the launch of a new initiative referred to as the Sugar and Calorie Reduction Network to promote healthier diets across the WHO European Region… Meanwhile, the British government introduced new legislation to restrict the promotion of HFSS products by volume price and location, both online and in store in England.”
The HFSS measures were expected to come into force in October, but concern over inflation in the UK has seen the government hit the pause button for now. Even so, the spectre of increased restrictions has already seen market leaders embark on intensive programmes of NPD and reformulation in the UK.
In the EU, the most pressing concern is the planned imposition of harmonised front-of-pack (FOP) nutrition labelling and nutrition profiles.
“Within the framework of the EU’s Farm to Fork Strategy, the European Commission is now also planning to submit, by the end of 2022, a proposal for harmonised mandatory front-of-pack nutritional labelling scheme and for the setting of nutrient profiles to restrict the promotion of food high in salt,sugars and/or fat. The setting of nutritional profiles can guarantee a high level of consumer protection, since it will introduce thresholds for fat, salt and sugar, above which products will not be allowed to use health or nutrition claims,” says Reshovski.
Again, this has led to a flurry of development work, this time with the aim of delivering products that can achieve a good score in whatever scheme is ultimately adopted. Nutri-Score is a strong contender, but it faces strong criticism from some quarters and its adoption is by no means a foregone conclusion.
“Overall, in the medium term, it is expected snack foods will be impacted by the implementation of more policy measures that are now being designed by governments across the region,” says Reshovski.
SUSTAINABILITY STORY
While sustainability is not directly related to BFY, a ‘better for me, better for the planet’ attitude often sees the two consumer attitudes go hand-in-hand, especially among younger consumers. Organic is a good example, according to Placzek: “Organic foods are viewed as being healthier and safer than conventional products. Whenever there is a food scare or health scare, consumers look to disease prevention and improving nutrition. Aside from subjective elements of superior quality, consumers will pay attention to the impact organic producers have on their local surroundings, national economy and the health of the planet.”
In France, 46% of organic shoppers buy products because they consider them to be better for the environment, while 44% of organic shoppers in Poland choose organic products for health reasons and 23% of German fans equate organic products with high food safety, found Mintel.
“Sustainability trends cross the gamut in snacking,” confirms Lyons Wyatt. “In Germany, it might be Fairtrade, slave-free, child-labour free, traceable origins or tree planting tied to purchases. In the UK Fairtrade product value growth is outperforming grocery and we’ve also seen that the 100% Slave Free’ claim is also trending up.”
or biodegradable by 2025.
“In packaging, we’re seeing increased use of alternative materials such as high- barrier compostables and paper.”
THE PLEASURE PRINCIPLE
So consumers are drawn to BFY products with sustainability credentials, but that doesn’t answer the most important question:Why do people use savoury snacks at all? Placzek highlights Mintel research showing that the most popular reason among German consumers is ‘to treat myself”, which was cited by 45% of respondents. This was followed at 39% by both ‘to satisfy a craving’ and ‘to satisfy hunger’.
In other words, companies must never lose sight of the fact that snacking is ultimately about pleasure. Snacks have to do much more heavy lifting to keep our attention today, argues ‘Skidmore: “We’re always on our phones and iPads enjoying lot of screen time. Our taste senses have a lot more work to do to get our attention. Sharp, strong flavours are becoming much more important as a result.”
ONLINE AND CHANNELS
“Online shopping has influenced pretty much every FMCG segment in the last two years and today shopping behaviours are continuing to evolve. Many of the European consumers have had a generally positive experiences with online grocery ordering and delivery, which means that this is a trend that is here to stay,” says Reshovski.
For a product category that has traditionally relied for a sizeable chunk of its sales on impulse purchases, the fact that consumers might forsake brick-and-mortar shops in favour of online stores might raise concerns. However, Reshovski argues that changing channels has not proved to be the threat that some anticipated.
“With the increasing adoption of online sales channel, Europeans have also been making more impulse purchases online. For many people snacks are becoming regular meal replacements and a way to nourish the body, not just an indulgent treat. So, there are a few things that can be concluded. First, impulse buying is shifting to e-commerce and is not going away, so today it is becoming just one of the several ways in which consumers can purchase snack products. Second, due to the busy lifestyles of younger generations and their stronger preference for flexible mealtimes, consumers are unlikely to stop snacking,” he says.
However, some retailers need to be better positioned to respond to increases in online demand, which needs the right infrastructure to keep pace with changing expectations. The rise of Quick Commerce in urban areas is a case in point.
“We’re looking at convenience redefined thanks to shifts in at-home consumption,” says Lyons Wyatt. “There has been an absolute shift in the way consumers are consuming snacks because they’re doing more in the home than ever before because of hybrid working models. Convenience used to mean convenience for on-the-go, but now it’s actually convenience for on-the-go and at-home.”
“Many traditional retailers, like DIA and Kaufland, have entered into a commercial partnership with fast delivery companies to speed up service and extend their appeal to younger consumers,” says Reshovski.
According to Kantar Worldpanel, FMCG online sales account for 7.6 % of all FMCG in the United Kingdom, 6.2 % in France and just 2.4 % in Spain. This puts European countries far behind their Asian counterparts. In South Korea (20.3 %) and hina (15.2 %), the shares are much higher.
“In Spain, the supermarket chain DIA has reached an agreement with the food delivery platform Uber Eats to launch a new distribution service for food, hygiene and personal care products. In the UK, Sainsbury’s entered into a partnership with Deliveroo, which allows customers to access thousands of products from Sainsbury’s and have them delivered in about 20 minutes.”
While this shift to online and Q-Commerce might indicate the direction of travel, it’s important to recognise that it remains a relatively small part of the overall picture, as Euromonitor explains: “With people stuck at home much more than usual, e-commerce came into its own as a shopping channel during the pandemic. However, savoury snacks remained widely available in an extensive range of retail outlets, with consumers tending even more than usual to pick up their savoury snacks purchases when doing the grocery shopping, given they were trying to minimise trips to different stores because of the virus. This means that, while online sales recorded strong sales and share growth in 2020, they still only accounted for 5% of total regional retail value, and the share even slipped a little in 2021. The e-commerce channel is best developed in the UK, but still only accounted for less than 10% of overall sales here in 2021.”
Euromonitor is clear that most grocery shopping – including for snacks – still takes place in the context of a physical store: “Between them, supermarkets, hypermarkets and discounters accounted for 68% of retail value sales in the region in 2021, rising to 81% for modern grocery retailers as a whole. Although impulse purchases of savoury snacks through convenience stores, forecourt retailers and independent small retailers remain important, snacks purchases are increasingly included in weekly shopping trips at the bigger stores across Western Europe. Supermarkets alone account for 72% of savoury snacks sales in the Netherlands, for example.”
INFLATION PRESSURES.
So far, so positive, but the spectre of inflation could disrupt the best-laid plans of snack producers, according to Lyons Wyatt: “This is not the first and not the last inflation we’ll see but this one is very different. There has never been such a convergence of inflation-driving factors since the great depression in the 1920s. Energy, COVID, the end of government support, ingredient shortages and shortages of components, labour gaps, shipping costs, transport disruption, out of stocks, rising commodity prices and uneven consumer demand are all factors leading to significantly higher input costs.” She adds that the Ukraine war is also having a big impact on the availability of ingredients in general and organic produce in particular.
Placzek agrees that inflation will top the headlines in the coming months: “Although COVID-19 has been the dominant influence on consumer behaviour over the last two years, in 2022, the emphasis will increasingly be on the cost of living. Different markets face their own challenges, but high energy prices, strong consumer demand and supply chain disruptions mean that inflation is a global issue. Rising prices prompt an intensification of savvy shopping habits and greater scrutiny of spending patterns.”
Mintel’s research shows that by 2021, 41% of Germans already said they were making a shopping list and sticking to it and 36% said that the cost of living was driving them to swap branded products for supermarket own label equivalents.
“It all means that inflation is going to intensify in Europe and it’s intensifying in the US as well. We’re very concerned not only about getting products on the shelf but then about consumers being able to afford them,” continues Lyons Wyatt.
She warns that manufacturers will need to weigh the pros and cons of price increases and when to implement them: “I do realise there are massive cost increases just for procuring the ingredients and for the packaging and transportation, but we also have to weigh that against all the sales you might lose.”
“Plan for promotion intensity to increase as consumers are looking for deals. We are all trying to stretch our dollars and you really want to target your loyal cohorts and align your communications to them.
When it comes to innovation, focus on margin accretive innovation and equity building benefits to support higher prices. As inflation bites, add entry-level packs to your Tange to prevent consumers having to walk away. So you might have offered greater value through] sharing packs before, now you’ll need small packs too.”
“High inflation is forcing people to shift their shopping habits at the grocery store. Since many Europeans are concerned about food prices, some of the main things to expect include a decrease in the number of trips to the grocery store, a higher preference for cheaper options (which is already happening), including private- labelled products, and more entertaining at home,” agrees Reshovski.
“Food commodity prices are anticipated to continue surging, which means that affordability will decline. So, we could expect a certain decline in sales of some categories. Consumer demand for high- protein and healthier snacks is expected to be less responsive to price increases, because European consumers, especially those from Western countries, are not expected to compromise on healthy food. In contrast, potato and tortilla chips, for example, are more likely to be affected by the accelerating inflation.”
He also notes that inflation is not hitting all the European markets to the same extent — so far at least. Increases in food prices in countries such as France were less than 3%, compared to increases of more than 10% in some Eastern European countries during the first quarter of 2022. This means that Eastern European consumers may be much more sensitive to price changes going forward.
Unsurprisingly, Euromonitor expects inflation to present an opportunity for private label: “Although consumers tend to look for tried-and-trusted brands during crises such as the pandemic, private label continued to account for a quarter of savoury snacks sales, rising to 38% in nuts, seeds and trail mixes.”
“Private label generally manages to keep pace with the latest innovations across savoury snacks, with some retailers even offering premium private label products, and, given the pressure exerted by COVID-19 on disposable incomes for some households, they remained a popular option during the pandemic. Private label products typically match branded varieties in quality terms, while still retailing at lower unit prices.”
WHERE TO NEXT?
While savoury snacks can’t avoid all the big challenges and uncertainties that lie ahead for European businesses, forecasters still believe there is ignificant room to grow.
Kantar’s figures show why. Even in the UK, which is the biggest market in Europe for savoury snacks, they still occupy just 6% of total ‘stomach share’. This proportion varies with age, peaking at 8.8% among 10-15-year-olds and gradually falling back to 4.8% among those aged 55-64 and just 3.6% for over 65s.
If the industry’s past record is anything to judge by, it seems a good bet that even the current geopolitical headwinds will have to go some way to knock the savoury snacks industry off course.
