Going Beyond Chips in Europe and North America
Since the 16th century when potato first reached Europe, it has come to reign supreme among vegetables. From the start, this vegetable seduced consumers through its sweet taste and the enlarged landscape of possible recipes.
By By Alan Deane, founding partner and Ana-Maria Tatucu, head of research Food for Thought
Potato Snacks, in the modern format we know today, became progressively more attractive over at least the past 20 years. It is a powerful market, versatile, innovative, and benefitting from a high indulgence level on the part of the consumer.
- Frozen Potato are the traditional part of the potato snacks.
- Potato Crisps are at the heart of the concept.
- Extruded Potato Snacks are the spicy end of the market.
The 2017 Potato Snacks Market in North America and Europe
Potato Snacks market size and structure
The total retail and foodservice market for Potato Snacks in Europe and North America reached EUR33.3 billion in 2017, or some 36% of the total end-potato market of EUR63.2 billion (including Fresh Potato, Potato Chips, Frozen Potato and Dehydrated Potato, but not intermediate industrial consumption).
The 2017 All Potato Snacks Market by Country *
26 countries covered: Austria, Belgium/Lux, Bulgaria, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Mexico, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovakia, Spain, Sweden, Switzerland, United Kingdom, United States.
It is striking that the USA (36%) and the United Kingdom (16%) represent over 50% of the total market. Other developed countries similar to the United Kingdom in size contribute only 5-6% to the total market, thus offering considerable potential for future development.
Snacking – a social phenomenon
Snacking has become part of a nomad lifestyle, very attached to the environment and also very active. A new generation of young people are moving away from the classic way of taking meals. The marketing industry has not been slow to target this market. Actual visuals in an advertisement campaign feature people in a cafeteria, or in a park with the headsets, or with their fingers on a smart phone, all the while with a snack bag right next to them.
A variety of situations now lend themselves to snacking. To mention just a few:
- The ban on smoking inside public places has in fact opened a new avenue for tasty snacks to replace a repetitive action in a social context. Thus, you don’t invite your colleague to take a break for a cigarette, but to share some snacks and have a chat.
- Watching a movie or spending time with the dearest ones seems to be a new moment for sharing tasty snacks.
- Single people, unfortunately, seem to find in snacking a new way of eating all alone, with potato crisps or other snacks replacing classical meals.
Extruded Potato Snacks
Extruded potato snacks have grown to reach 18.2% of the Potato Snacks market in North America and Europe, or some EUR6.1 billion.
The extrusion process knows no limits in terms of ingredients and taste, and potato is one of its key elements. Currently, and for the purpose of this article, potato-based extruded snacks are reckoned to represent about 33% of all extruded snacks, the rest being covered by corn, wheat starch, rice and many others basic ingredients. Thus, the potato business can be developed in this niche as well.
Extruded snacks have been booming over the last few years, impacting on actual food trends such as “healthy eating”, “eat on the go” and even on “baby foods”. Who would have thought that classic baby biscuits can be easily replaced by extruded cereals or vegetables? Who could believe that practically any vegetable can be translated into an extruded snack?
The largest product market (among the 3 products currently selected) is Potato Crisps, which makes up 43% of the total 2017 Europe and North America potato snacks market worth Euro 36.4 billion, or Euro 15.7 billion.
Potato snacks have grown to reach nearly half, or 47.1%, of the Potato Snacks market in North America and Europe, or some EUR15.7 billion.
Potato Crisps have always been a growing market due to the temptation of this snack. You cannot avoid it! When medical studies recently revealed that potato crisps are not as unhealthy as some believed, even with a healthy and active lifestyle, the medical profession in general ceased to discourage their patients from consuming potato crisps.
Frozen Potato Snacks
Potato snacks have grown to reach nearly half, or 34.7%, of the Potato Snacks market in North America and Europe, or some EUR11.6 billion.
Elsewhere, creativity in the kitchen is being encouraged by innovations in all kinds of potato snacks. Frozen potato products for example now come in lots of formats and shapes, balls, croquettes, even smiley faces.
- Varying “tastes”, give producers a large spacie in which to innovate and develop new snacks. Consumers are looking for natural taste as well as for spiced varieties.
- The “visual” aspect of the product, with producers working on the natural look of potato, attractive packaging, and so on.
- The “form and aspect” of frozen snacks are also a consumption trigger. Different shapes cover more consumer expectations.
Potato Snacks – a consistent and steady growth market
The North America and Europe potato snacks market grew at an annual 2.4% rate during the 2012-2017 period, taking it from Euro 29.6 billion in 2012 to Euro 33.3 billion in 2017, representing an average annual increase of Euro 740 million.
The best ranking in term of market size are UK, US and Mexico. The top 3 in per capita expenditure UK, Ireland and Canada. Regarding the five-year value growth rate, Romania comes first, followed by Bulgaria and Poland, with all 3 markets showing high potential for future growth.
The underperforming markets are not a surprise. Market growth in Denmark, Slovakia and Russia are more conservative in terms of food diet and general lifestyle. In Denmark there is a social movement against all unhealthy foods or at least those seen as such.
Innovation is pushing the potato snacks market everywhere. Producers are able to adapt this versatile product to local tastes. In Romania and Bulgaria for example, over the last five years specialty potato chips with traditional aromas have been introduced, boosted by strong media marketing. In the United Kingdom, Mexico and the USA, excellent steps have been made to adapt to exotic Latin American and Asian. And in Russia, premium potato snacks with caviar aroma have been introduced.
The Major Players by Value Market Share
The North American and European market is very concentrated, with the Top-5 companies taking close to 50% of the market, and the Top-10 companies 60% of the market, based on 187 companies surveyed:
Company market presence across the 26 countries and 3 products surveyed, or 78 country & product markets altogether, shows that only PepsiCo is present in a significant number of countries, 47 altogether out of a possible total of 78. Other companies are present in less than half of these markets (see inset table), and with significantly less market share, demonstrating the potential to improve or develop new markets.
Whether for frozen potato snacks, potato crisps or extruded potato snacks, the taste of this special vegetable will remain both a constant challenge and an opportunity for food manufacturers as well for the modern consumers.
The popularity of potato snacks is encouraging retailers to develop their own private (own) label products a sure sign that this is a profitable market.
The future over the next few years for the Potato Snacks market is promising, featuring continued steady growth and intensive innovation.