Dive Brief:
- Tortilla chip sales overall grew 3.8% to $4.7 billion in 2015, while flavored tortilla chip sales fell 18% for the 52 weeks ending April 30, according to Nielsen data.
- Consumers continue to reject baked tortilla chips as a better-for-you alternative because of the difference in flavor between baking and frying. This has led to three straight years of double-digit sales declines for the baked sub-segment.
- Overall dollar sales for flavored chips are down, but manufacturers still bet on flavor as a way to innovate and differentiate their tortilla chips from category leaders like Doritos and Tostitos. According to IRI, those brands pulled in about $2 billion and $645 million for PepsiCo's Frito-Lay division, respectively.
Dive Insight:
Balancing the demand for better-for-you products with maintaining or enhancing a product's flavor and texture continues to be a challenge for all manufacturers, not just those who work with tortilla chips. Only about 40% of consumers said they'd be willing to sacrifice flavor for a better-for-you option, according to Nielsen.
Tortilla chips are ultimately still considered an indulgence for many consumers. Making a healthier version can extend a product's reach to health-conscious consumers. But if the flavor isn't on par with previous varieties or other brands on the shelf, manufacturers could waste their reformulation efforts on a product that doesn't sell.
Instead of focusing on the processing method, manufacturers may be able to offset health concerns about frying by using ingredients that resonate with consumers' perception of what is healthy. That might include non-GMO or organic corn, oils and seasonings, or ancient grains and beans that deliver additional health benefits. Here too, manufacturers also have to remain focused on any flavor impact these ingredients might have on the final product.
Playing up the indulgent side of tortilla chips and complementing with exotic flavors could be another option for boosting sales. Manufacturers can consider brand and product partnerships with dips, a common counterpart to tortilla chips. That could mean creating a simpler flavor profile for the chip itself that consumers can enjoy in a new way when paired with the right dip.
Frito-Lay has taken both flavor-driven and health-driven approaches with its tortilla chip brands. With Doritos, Frito-Lay focused on flavor and even shapes with products like Doritos Collisions and Doritos Jacked 3D, a three-dimensional version of the legacy chip brand. The Tostitos brand has pursued healthier versions aside from baked varieties, including organic Tostitos under the Simply line, which boosted revenue for the Frito-Lay segment in the most recently reported quarter.