Where Are Micro Market Snacks Heading?

January 17, 2018

By Hillary Ashley, assistant editor

Woman working on a laptop at a table in a restaurant Snack foods are increasingly replacing meals. The NPD Group reports that snack foods eaten at a main meal represent 24 percent of all snack food consumption – up from 21 percent five years ago, according to the NPD's continued tracking of U.S. consumers snacking attitudes and behaviors. This trend is led by Gen Z and Millennials. Those older in these groups are more comfortable eating alone than previous generations, and snack food offers low cost, smaller-portioned alternatives that fit that lifestyle. The annual consumption of snacks is forecasted to increase by 12 percent by 2024, according to NPD's Generation Study: The Evolution of Eating. This will make micro markets even more important to businesses in the next five years.

Include traditional options

Even though snack trends are evolving, traditional salty and sweet snack foods still remain the biggest players in the game. The 2017 State of the Industry Report stated that 2017 revenue of chocolate products was $1.8 billion, which was 74.9 percent of total sales for candy. Chips also did well in the snacks category, with $2.9 billion and at 46.6 percent of total sales for its category. This supports the idea that Millennials still like indulgent items, and spend more money outside the home on these types of products. In fact, according to the USDA, consumers under 25 spend 6 percent of their food budget eating out. With more Millennials in the workplace and more of them spending their money on food outside of the home, perhaps it isn't surprising that they would tend towards traditional sweet and salty options. The Millennial is very nostalgic, thus candy and single serve snack brands reminiscent of their childhoods are a perfect option to substitute as a lunch or mid-day meal.

Include trending options

Consumers today have more information than ever. They want to know what's being put into their food, including snacks, and it's becoming more important to them that what they're eating is "healthy." According to survey results by Nielson and Label Insight, 39 percent of U.S. consumers would switch from brands they currently buy to others that provide clearer, more accurate product information. Knowing what's in their food is important to consumers. Of consumers surveyed by Nielson, 68 percent said they're willing to pay more for foods and beverages that don't contain ingredients that they perceive are bad for them. What does this mean for operators? It means the "why" and the "how" are just as important as the product itself, and are the primary drivers behind purchases. As consumers focus on transparent labels, claims like "natural", "organic" and "gluten free" have become common and ever popular on the packages of products. The "clean" label trend – or labels that are easy to read and contain simple ingredients, has taken this a step further to include how products are made, such as Fair Trade, and become a factor in consumers' purchasing decision. Sales of products making organic claims are up 10 percent from a year ago, proving that transparency and label claims are doing more than just providing insight – they truly are driving sales. Although "clean label" is a spectrum, one thing is clear: consumers want to know what's in the product they're buying and that includes snacks in the micro market.

It's not just labels driving snacking change, but also how it's prepared. What consumers are really driven to is fresh food, explained Nielson consultant Todd Hale at a National Association of Convenience Stores (NACS) State of the Industry Summit. Consumers are interested in products that are closer to the point of consumption, and are choosing meals and meal components over ingredients. Products that make eating quick and healthy for consumers are also a huge opportunity, such as pre-sliced and packaged foods like sandwiches, wraps, fruits and veggies. Micro markets are very specific; in order to get consumers on board, make it easier for them by having a collaborative mobile app that allows you to work cashless and them to use their mobile wallet.

Snacking is growing with more fresh food options in the micro market and also with the growth of candy and chips. Micro market patrons are interested in fresh food, consumers want to know if their food purchase is sustainably sourced and "clean," but the typical shelf-stable items are still the best-sellers. It's important to know what's coming around the corner so you can prepare or choose products accordingly.