Big bites: The evolution and future of snacking

With nearly 90% of consumers around the globe concerned about inflation, according to Mondelēz, many shoppers have changed what products they purchase, how often and where. While no food category appears to be immune, there is at least some evidence that snacking may be somewhat buffered.

Mondelēz, with an enviable portfolio of brands which includes Oreo, Ritz and Triscuit, has doubled down on snacking with recent deals, such as its roughly $3 billion acquisition last year of Clif Bar. Snacking is a daily staple as 71% of people around the world snack at least twice a day, the company found, with consumers doing it more during breakfast, lunch and dinner last year compared to 2020.

It stands to reason that with shoppers valuing snacking more in place of a meal, they may be more willing to continue to pay more for it despite the higher cost. Mondelēz announced its most recent round of price hikes in the U.S. and other parts of the world in December. 

An increase in the price of a cookie, bar, cracker or another snack offering may be easier for a consumer’s pocketbook to digest than a similar percentage being applied to something that costs more to begin with, such as meat, dairy or cereal.

Finally, Mondelēz noted that nearly 80% of consumers surveyed said “these days, it’s more important than ever to have moments of indulgence in the day.” With many consumers facing hardships, the need for a satisfying treat could further benefit snack makers such as Mondelēz, Hershey and Campbell Soup.

“Our State of Snacking report confirms that in these trying times, consumers around the world view their favorite snacks as affordable and necessary indulgences,” Dirk Van de Put, Mondelēz’s CEO, said in a statement. “Snacking continues to be a way for consumers to connect or to enjoy a moment of delight in their day, further demonstrating our belief that every snack can be enjoyed in a mindful way.”

Mondelēz’s State of Snacking report found that supply chain challenges have affected many consumers. More than half (51%) of people around the world have experienced a shortage or delay in receiving snacks in the last year, including 57% in the U.S.

The disruption has forced consumers, especially Gen Z and millennials, to be more open to trying new snacks. The flexibility could be a boon for manufacturers who can keep most, if not all, of their most popular brands on shelves as a way to draw, and hopefully retain, shoppers in the long term.

Consumers also reported having more faith in large brands to carry them through this time, Mondelēz noted, with 76% saying, “bigger brands are better equipped to deliver during challenging times.”

Meati’s jerky launch is the latest in a string of plant-based snack options that have arrived on the market as many consumers shift their tastes toward wholesome and natural foods.

The category is projected to grow from $49.5 billion in 2023 to $77.9 billion by 2030, showing a compound annual growth rate of 7.85% during the forecast period, according to a 2023 plant-based snack market report by Market Research Future.

The launch follows a period of change for Meati. In September, the company initiated a round of layoffs in order to focus on profitability. 

Now, the new product offering is being sold on their website, which was also a business decision made in September to improve profitability and respond to the demands of their consumers. 

“The reason we’re launching this product is to offer a delicious, functional snack,” said Ra. 

“We look less at jerky players and the snacking category as a whole — many people are eating meals less and relying on nutrient-dense sustenance, and our jerky delivers terrific protein, fiber and micronutrients very conveniently on the go.”

The jerky is made from the company’s patented mushroom root, and is available in the flavors of original, peppered and sweet chili. In addition to the launch of the jerky snacks, there is more product innovation on the way.

“With snacking becoming more important in people’s lives, we’ll certainly be considering what is possible when and what makes sense for the business,” said Ra.

There are many other smaller players in the plant-based industry already in the space — Krave and Conagra to name a few —  but as Ra said, Meati does not consider themselves to be “plant-based,” as the category has become associated with complicated ingredients. 

“We’re seeing a lot of great, new players in the space lately. But Meati is what it is because of our MushroomRoot,” said Ra.

Beyond Meat is considered a giant in the sector and launched its plant-based jerky in early 2022 as the first product from its joint-venture with PepsiCo, Planet Partnership. 

This was Beyond Meat’s first shelf-stable product launch, and an effort to boost its sluggish sales at the time. As the company continues to see declining sales, however, it may have been a shot in the dark and a testament to how consumers feel about all things considered “plant-based.” 

Another category leader, Impossible Foods, is taking a different approach. It doesn’t have plans to enter the snacks space just yet.

Pat McGuinness, CEO of Impossible Foods said in an interview with Food Dive that the private company was focusing on growth so as to steal a bigger piece of the meat segment. A company spokesperson confirmed that this remained its strategy. 

While inconsistent product quality between different brands has led to declining sales in the plant-based overall, and skepticism around taste and texture of plant-based alternatives remain a barrier to trial, Impossible is keeping a lean eye on improving the products they already have, and making them just as good as animal-based meat.

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By Lee Industries

Today, no category in food manufacturing faces more upheaval than Snacking goods. Driven by several notable consumer shifts, such as rising demand for diverse flavors and products, a heightened focus on BFY (Better for You) options—including those with ingredients that affect production processes, like plant-based proteins—and an intensifying spotlight on social and environmental issues, snack producers must be able to adapt and grow more quickly and seamlessly than ever before.

Key to their ability to do so is the processing equipment, and particularly mixing vessels, they have at their disposal. The right vessels—those purpose-built to match their specific product mix and operations--allow processors to meet demands for quality and flexibility that so drastically influence their success.

The right vessel helps produce the right taste

At the heart of every delicious snack lies the perfect blend of ingredients, textures and flavors. Choosing a custom mixing vessel empowers manufacturers to achieve this precision with unparalleled flexibility. Whether they’re crafting artisanal granola blends or experimenting with innovative flavor combinations for protein bars, manufacturers who work with an engineering-led vessel manufacturer can precisely customize their vessels to best meet specific taste profiles and quality standards.

Fortunately, some equipment manufacturers include the services of experienced food industry Applications Engineers to carefully design a vessel, with consideration given to the snack food processor’s goals and future plans, especially taking into account the need for flexibility. This starts with considering the unique ingredients and cooking requirements of the products to be produced, and their operational environment. A custom vessel should be specially engineered to yield the highest quality and maximize throughput and production efficiency, and it should be able to scale to the ongoing demands of the operation for years to come. 

Building flexibility into the vessel design

For snack manufacturers, flexibility is not only critical to short-term production, but in today’s super-charged product development environment, flexibility for the future must also be factored into discussions about processing vessels. Well-built vessels can operate for decades, which makes it necessary to consider the range of heating and cooling requirements, mixing characteristics, utilization and capacity demands that may eventually arise. For example, vessel systems for corn mix processing will need gentle mixing to evenly distribute water and batch ingredients throughout the vessel, but if there are plans for high volume or multiple product lines, heavy-duty drive units and agitator construction will be necessary to accommodate continuous mixing of heavy batches.

Meeting consumer expectations for the environment

Sustainability is increasingly a priority for consumers, and food processing equipment can help play a role in supporting eco-friendly practices. Mixing vessels, such as stainless steel kettles and tanks, can help optimize resource utilization and minimize environmental impact. Stainless steel is non-degradable and 100% recyclable because it is made of nickel, iron and chromium among other raw materials—metals which are always in high demand and therefore have high rates of reuse. Hemispherical kettles in particular (like the one shown here) can also help reduce waste and material usage, as their shape enables scraper blades to reach the totality of the inside wall, facilitating product discharge after cooking and limiting the waste of ingredients remaining in the vessel. High-performing, stainless equipment helps manufacturers maximize their equipment and ingredient investments while meeting consumer expectations for environmentally sensitive products.

The right equipment can help snack manufacturers keep pace with evolving consumer preferences. By carefully considering the many factors that affect quality, flexibility, efficiency, precision and durability, manufacturers can fully realize their current and future growth opportunities.

Lee Industries has been committed to helping food processors succeed for nearly 100 years, designing and manufacturing the most durable and high-performing equipment in the industry. For more information, or to discuss your particular situation with a Lee Industries Applications Engineer, just contact us. We’re happy to help you think through your needs.

While it’s not surprising that people taking weight-lost drugs buy less food, the Numerator data provides a glimpse of what could happen to CPG manufacturers if more people end up using the medications.

The overall buy rates at grocery stores during the last three months versus a year ago for those not using the medication dropped 3.9%. For those taking the drugs for weight loss of fewer than 15 pounds, the drop in buy rates was 11%, the Numerator data showed. 

Similarly, in ice cream, buy rates rose 3.9% for those not taking the drugs versus rates being down 9% for those using it to lose fewer than 15 pounds. In snacks, the figures were a drop of 2.1% compared to a decline of 8.8%. 

"We are in early stages," Dr. Leo Feler, Numerator's chief economist, said in a statement.

He said a year ago, nearly all the use of these drugs was for diabetes management, with only 10% of consumers using the medications for weight loss. Now, he said nearly half of people are using them for weight loss. 

Feler noted that an additional 20% of households said they are interested in taking the medicines to lose weight but are waiting for prices to come down and for more data to be released on the safety and efficacy of the drugs.

To be sure, this data, and the possibility of other, more effective weight-loss medicines, will go a long way toward providing clarity on how severe the impact will be on food and beverage companies. It’s also uncertain how long people who use the weight-loss drugs will keep taking them.

For now, CPG companies are keeping a close watch and wisely plotting how to change their portfolios once more is known about the drugs’ impact.

It’s not the first time a shift in consumer trends has sparked companies to change their products.

Coca-Cola and PepsiCo have introduced smaller cans in response to consumers cutting back on sugar; snack companies have increased the availability of 100-calorie count snacks for those aiming to consume less; and food makers across the board have reduced how much salt they include in popular offerings to appease Americans cutting back on sodium.

PepsiCo CEO Ramon Laguarta told analysts in August that the impact on his business has been “negligible” so far and that there are “obviously a lot of question marks.” Dirk Van de Put, Mondelēz International’s CEO, said “the whole topic has been overblown,” and that “it’s really not a big concern for us at this stage.” He predicted minimal impact on its volumes of about 0.5% to 1% in a decade. 

Sean Connolly, who oversees Conagra Brands, told investors that the Banquet and Slim Jim maker is pouring over data to assess food consumption patterns and determine which ones need to be incorporated into its product development. He said if consumers look to smaller portions to help them lose weight then the Chicago company could decide to change some of its portion sizes.

While PepsiCo’s snacking portfolio is chock-full of power brands such as Doritos and Fritos, the food and beverage company is putting more resources behind several of its smaller snacking offerings that fill a valuable niche with hungry consumers looking to eat healthier. 

“There’s an opportunity to really scale these brands a little faster,” Rhasheda Boyd, vice president of PepsiCo’s better choice snacking portfolio, told Food Dive. “This has been a priority for the organization. There are definitely resources to help build these brands.”

Boyd oversees about a third of PepsiCo’s roughly two dozen U.S. snacking brands, including SunChips, air-popped PopCorners, Stacy’s pita chips, Bare baked fruit and coconut snacks and Off the Eaten Path vegetable crisps. Together, the eight brands generate about $1.5 billion in revenue annually. Even though they have yet to achieve the $1 billion-plus threshold of Doritos and Cheetos, they “are growing fast,” she said.

In its most recent quarter, PepsiCo said smaller, emerging brands, such as PopCorners, SunChips and Miss Vickie’s, each delivered double-digit net revenue growth.

PepsiCo’s snacking business is composed mostly of Frito-Lay and Quaker Oats, which together generated more than $26 billion in sales in North America during the company’s 2022 fiscal year — accounting for a little less than a third of the CPG giant’s $86 billion in global sales.

To be sure, popular offerings such as Doritos, Fritos and Cheetos that are more widely available are going to get a disproportionate amount of money for innovation and marketing at PepsiCo, Boyd said. These brands cater to people craving an indulgent treat who value the product’s taste and crunch attributes. 

But the New York-based company’s smaller brands play an equally valuable role in attracting and retaining consumers within its snacking portfolio. 

These products allow PepsiCo to provide the shopper with a more diverse portfolio of snacking brands that can meet their broader food consumption needs, such as eating healthier, or that cater to a particular moment during their day. 

PepsiCo observed that roughly two-thirds of its Sun Chips brand is consumed with a sandwich or at a meal. It’s a major reason why Subway restaurants, for example, typically carry it, along with Rold Gold pretzels and Lay’s potato chips — instead of one of PepsiCo’s other brands more commonly associated with snacking. 

In other cases, these niche brands address demand for better-for-you offerings, such as Off the Eaten Path which is made with vegetables, Bare with fruit or Sun Chips with whole grains and sometimes black beans. 

Frito-Lay also is doing more to promote Off the Eaten Path and Bare in places like health clubs and national parks where consumers tend to have a healthier lifestyle. The targeted approach typically requires PepsiCo to spend less money to promote them.

“Those brands probably have fewer consumers, but there still is an opportunity to drive awareness,” Boyd said. 

Brittany Quatrochi, an analyst at Edward Jones, said PepsiCo’s smaller brands tend to grow faster than some of its larger more established offerings because of their size — providing the snacks maker with a valuable platform to expand its business. They also give the CPG giant more opportunities to reach different consumers whose needs and demands are closely aligned with recently popular trends.

“PepsiCo is a great steward of brands,” Quatrochi said. “They want to expand the scope and presence of their products and try to capture new occasions and new customers. One of the ways you can do that is through these emerging brands.” 

While PepsiCo has been increasing its mix of better-for-you snacks for years, it doubled down on the effort in 2021 with its Pep+ sustainability initiative.

The measure included diversifying its ingredients mix and expanding the company’s use of nuts and seeds that were better for consumers and the environment. The move was in response to consumers who are looking for a mix of indulgent and healthier in what they eat, and retailers by giving them more of what shoppers are looking for.

“There is a broad spectrum of consumer needs and snacks. Whether that is snacks that provide a reward or treat or snacks that are more nourishing and provide a balance of nutrition and taste,” Boyd said. “As we think about meeting the needs of consumers, we have to have a portfolio that's broad enough to meet these varying needs.”

PepsiCo has a “huge runway” to grow its multi-billion dollar snacking empire, despite owning a portfolio that includes decades-old favorites such as Doritos, Fritos and Cheetos among its best-selling offerings, a top executive said.

Parth Raval, chief growth officer for PepsiCo Foods North America, said the Texas-based division continues to “experiment and think about different” ingredients, packaging formats, flavors and unique combinations — such as the merging of salty and sweet — to strengthen its already dominant presence in the snacking category.

“We think about what sits outside of our core and that’s where we have a ton of excitement about the business” and our ability to capture a larger share of the snacking market, Raval said.

PepsiCo’s snacking business is composed mostly of Frito-Lay and Quaker Oats, which together generated nearly $22 billion in sales in North America during the company’s 2021 fiscal year — accounting for a little over a quarter of the CPG’s $79 billion in global sales.

Overall, the U.S. snacking market is valued at $115 billion, according to PepsiCo, giving the company roughly 20% ownership of the segment.

Brittany Quatrochi, an analyst at Edward Jones, called PepsiCo’s snack portfolio “a competitive advantage” and praised the work the company has done to keep its classic brands relevant through innovation. She pointed to new flavors, brand extensions such as dips, and the debut of different packaging sizes to better respond to the evolving needs of today’s consumer.

The CPG giant has also done an effective job of taking a global brand and localizing it to make it relevant in many different markets, Quatrochi said in an email, while simultaneously investing in smaller, emerging brands, which cater to faster-growing trends like healthier snacks. 

“The snack portfolio and the investments PepsiCo has made to drive growth within snacks is a key driver in the company being a top-tier growth story within consumer staples,” Quatrochi noted.

Tapping growth from indulgent to healthy

A key part of PepsiCo Foods’ strategy to boost the reach of its snacking offerings came in response to the pandemic. The company created its growth office in late 2020.

The operation, which Raval oversees, was put in place to increase the efficiency of product development by bringing together different divisions throughout the company — from marketing and supply chain to formation and sales.

A “must-have” in today’s environment, the growth office “allows us to be agnostic of any personal agenda” within a particular division at PepsiCo Foods, while helping the company overcome inevitable challenges that unfold in product development to create an offering that resonates with the consumer, Raval said.

“We’re seeing growth from our core of more indulgent products all the way to our much more health-forward products,” he said. “We’re very fortunate that we cover almost every daypart, from breakfast all the way through post-dinner, late-night snacking, across the broader PepsiCo portfolio.”

While PepsiCo Foods is best known for its chips, it also has a deep portfolio of other snacks such as Grandma's cookies, Funyuns, PopCorners, Bare baked fruit and coconut snacks, Cracker Jack and Off the Eaten Path vegetable crisps. These give the company more options to meet an individual’s needs or preferences throughout the day. PepsiCo also deepened its presence in plant-based snacks through a joint venture with Beyond Meat. Jerky, the first product created from the partnership, hit store shelves in 2022.

Owning the day in snack choice

PepsiCo Foods has observed that not only are more consumers turning to snacking in place of meals, but when they choose to eat different options is changing, too. For example, Doritos chips are no longer only eaten around lunch, and Quaker granola bars are not seen as just for breakfast, Raval said. It’s caused the company to be more thoughtful in how it goes about commercializing its brands.

“In the past, we’ve had each of the individual businesses working in, if you will, silos, sort of saying, ‘Hey, listen, I own the afternoon daypart,’ ” Raval said. “Now what we’re trying to do is reorient our portfolio strategy across consumer needs and time of the day.”

Frito-Lay debuted Minis, bite-sized and portable versions of its classic Doritos, Cheetos and Sun Chips, last November. These increased the portability and snackability of the chips by packaging them in canisters. And a few months earlier, it rolled out a line called Tostitos Toppers. These bottles of sauces and dressings for meals brought the snack brand deeper into another eating occasion. 

PepsiCo Foods has also observed more shoppers looking for multi-packs including several different snacking choices — like breakfast, salty, healthy and dessert. This trend gained momentum during the early months of the COVID-19 pandemic, and has accelerated since. 

The company has responded by introducing items such as its Frito-Lay Family Time Mix, which includes Doritos, Munchies Crackers, Chewy Granola Bars and Cap'n Crunch's Oops! All Mega Berries cereal snack pouches.

The company also has doubled down on where shoppers can buy its products.

In 2020, PepsiCo Foods launched two direct-to-consumer websites from which shoppers can order an assortment of products. One of them, Snacks.com, enables consumers to buy more than 100 of their favorite Frito-Lay products, including Lay’s, Tostitos, Cheetos and Ruffles, as well as dips, crackers and nuts. ​

Snacks.com not only provides Frito-Lay and Quaker with another way to reach the consumer, but created an outlet to sell harder-to-find brands or flavor extensions not carried on store shelves.

The platform also offers a valuable way for Frito-Lay and Quaker to observe consumer shopping behavior, such as how people assemble a basket of different snacks, or what they are looking for in a specific product. Executives overseeing the brands have observed from Snacks.com and retailer data that shoppers regularly gravitate toward products that are regionally focused or harder to find on store shelves.

“The way that demand gets generated is looking very different than it did even three years ago, and we expect that to accelerate going forward,” Raval said. Consumers “don’t just walk the aisles.”

PepsiCo’s portfolio of iconic snack brands such as Doritos and Cheetos has carved out enviable niches in the salty chip category. Now, the food and beverage giant's Frito-Lay division is betting it can expand its dominance in snacking by bringing these and other brands into new categories such as pretzels, crackers and beef jerky starting later this year.

“The question in our mind is how far do these brands stretch,” Parth Raval, chief growth officer for PepsiCo Foods North America, said in an interview. “We have strong reason to believe that our brands play in multiple domains and we want to ensure that every time there’s a snacking occasion that the shopper is looking to Frito-Lay.”

PepsiCo’s snacking business is composed mostly of Frito-Lay and Quaker Oats, which together generated nearly $21 billion in sales in North America during the company’s 2021 fiscal year — accounting for a little over a quarter of the CPG’s $79 billion in global sales.

But while the company continues to innovate with new flavors and packaging formats, PepsiCo is thinking broadly in terms of how consumers view its brands. It’s among the leaders in the $115 billion snacking category where it competes with other manufacturing juggernauts such as Mondelēz International, Hershey and Campbell Soup.

Last year, PepsiCo brought Doritos into the dip category with Spicy Nacho and Cool Ranch Jalapeno. The offerings are positioned to be used with foods beyond chips, including pizza, wings and veggies. The company also announced it would sell, starting in 2023, bite-sized versions of its classic Doritos, Cheetos and SunChips snacks, in canisters conducive to sharing with friends or eating on the go.

A key part of this strategy is to bring its chip offerings — a staple of parties, school lunches and quelling late-night hunger — into other snacking arenas. PepsiCo wants shoppers to associate Doritos, Fritos and Cheetos, for example, as brands with multiple ways to consume them rather than solely as chips, Raval said.

Raval added that PepsiCo is looking into rolling out a cracker product with one of its major chip brands, the company’s first foray into the space, as early as the second half of this year. He declined to outline what brand or flavors would be used for the launch. 

The multi-billion cracker category, which is led by brands such as Cheez-It, Goldfish and Ritz, has thrived as consumers have replaced the traditional three daily meals with more frequent bouts of snacking. A cracker would be a logical extension for a brand viewed as a salty snack, Raval said. 

Later this year, PepsiCo also plans to debut Cheetos-flavored pretzels, tapping into the earlier success it had when it launched Cheetos Popcorn nationally in early 2020, the executive said.

PepsiCo also plans to build on its partnership with jerky maker Jack Link’s by bringing the Doritos flavoring into the meat category. The two companies, which first struck a distribution deal in 2009, plan to introduce Jack Link’s jerky with Doritos Spicy Sweet Chili, and potentially other flavors, in 2023 as part of a co-branding deal.

“There's a master brand here called Doritos that has the ability, credibility to extend into other parts of the snacking universe that makes sense,” Raval said. “This is going to be an example of how you start to expand out in concentric circles from your core into other areas and see how high is high.”

The product would provide PepsiCo with a way to tap into growing consumer demand for healthier proteins and meat-based snacks with unique flavor profiles, Raval noted. He added that Jack Link’s is likely “just the first step” of PepsiCo’s presence in animal-based protein.

“We've got a lineup planned in the meat-based arena that ... has shown tremendous progress in the last couple of years and will continue to grow,” Raval said. “When you bring a massive brand like Doritos to this space, we believe that it will really continue to catapult the category’s momentum.”