- In an effort to grow its snack business, Diamond Foods is shaking up some of its strategies, particularly in bringing its products to more consumers.
- This includes expanding distribution of its Kettle chips brand from the West Coast, where its market share is in the teens, to the East Coast, where it holds a low single-digit market share. This includes a partnership with Snyder's-Lance, which has connections for distribution to certain customers in the eastern half of the U.S.
- Another effort is to emphasize its position in the natural and organic snack foods category and to work with retailers to be placed in that shelf space rather than being lost in the saturated traditional chips section of the snack aisle.
A recent report, "Snacker Nation," showed that the snacking industry is estimated to grow to $47.5 billion by 2015, up from $34.2 billion a decade ago, demonstrating consumers' unceasing love for snack foods. This is despite the fact that consumers are becoming more health-conscious, and much of the snack food selection has tended to be considered junk food rather than healthy food.
Demand for healthier snacks is on the rise. Of the five categories of snackers the "Snacker Nation" report organized, "The Healthy Snacker" was the largest group at 29%.
Altering packaging sizes offers food companies, including snack food companies, a way to improve margins without alerting the consumer to significant price hikes. In 2011, Frito-Lay began reducing its package sizes or amount of chips in one bag by anywhere from 12.5% to 20%. While there hasn't been a huge rollout just yet, Diamond Foods is considering smaller packaging for some of its snack foods as well.
Diamond Foods is also focusing on boosting its marketing efforts to communicate more directly with consumers. One way snack food companies are doing this is through two-way interactions between brands and consumers via traditional TV messaging and now also social media and online mobile behaviors. This is particularly true of the youth demographic, to whom U.S. food and beverage companies target about $1.79 billion in marketing dollars annually, according to 2012 data from the FTC. For example, Oreo's Instagram account grew 39% during April alone and has over 400,000 followers. This type of marketing is crucial for snack food companies to find new ways to reach consumers.