Hot/Spicy Flavours "Heat Up" the Market
Within sweet and savoury snacks, manufacturers are introducing new products aimed at consumers' increasing affinity for hot/spicy flavours.
In April 2011, for instance, Frito-Lay partnered with the Tapatio hot sauce brand to release Tapatio-flavoured Doritos, Fritos, and Ruffles chips/crisps (tortilla, corn, and potato, respectively).
The company also launched its Cheetos Crunchy Fiery Fusion line in 2011, while other manufacturers worked with major hot sauce companies like McIlhenny Co (Tabasco brand) to produce spicy-flavoured snacks.
This trend follows what we have seen in related categories like spicy chili/pepper sauces, which have seen dramatic growth in recent years.
These spicy flavours are especially popular with younger consumers.
Unique Snack Formats Reshape the Industry
New product launches that offer consumers something new and unique in terms of format/taste continue to appeal to consumers.
The success of brands such as Stacy's Pita Chips (Frito-Lay Co) and Kettle Chips (Kettle Foods Inc) has generated new products such as "Popchips" and "Pretzel Crisps."
Frito-Lay also looked to capitalise on these trends by launching its Tostitos Artisan Recipes line in February 2011.
With innovative flavours like Roasted Garlic and Black Bean, Frito Lay hopes that this unique introduction can build on this trend and help spark sales for Tostitos.
"All-Natural" is Key
Frito-Lay, the dominant player in the US sweet and savoury snacks market, has made a push to convert half of its entire US snacks portfolio to a natural-ingredient-only composition in recent years.
Company advertisements featured a chef handcrafting Lay's chips from fresh/natural ingredients in a kitchen, and Frito-Lay even set up a "flavour kitchen" in New York's Times Square in which visitors were invited to observe the company's snack-creation process from natural ingredients and sample various new snack flavours.
Merger/Acquisition Activity Grows
The snacks industry has seen important M&A activity in recent years.
In 2010, a merger between Snyder's of Hanover and Lance Inc created a newly-formed Snyder's-Lance Inc, which was able to leverage its combined distribution network to expand sales.
Then, in April 2011, Diamond Foods announced that it was acquiring Procter & Gamble's iconic Pringles brand in a multi-billion dollar deal.
For Diamond, this acquisition brings one of the largest and most important brands in sweet and savoury snacks to its portfolio and increases the company's stature.
These types of blockbuster deals have reshaped the competitive landscape of the snacks market.
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