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Healthy Food
Catherine Colbert

Healthier Snacks Making Food Companies Fat

by Catherine Colbert | Dun & Bradstreet Editor

August 31, 2015 | No Comments »

Healthy FoodBig profits are coming from some of the smallest bites.

Snack foods, particularly the relatively guilt-free kind, are making some food companies fat and happy.

The US snack foods industry, one of the world’s largest alongside Europe’s, according to First Research, includes about 500 manufacturers that generate about $30 billion in combined annual revenue.

While health-conscious consumers tend to eschew traditional types of potato and tortilla chips, more people — even the picky ones — are picking up the industry’s “better-for-you” snacks, which include oven-baked options, organic varieties, and pita chips.

“Better for you” also means “better for companies’ bottom line.” Healthy foods promote healthier profits.

The healthy-snacking trend has made food makers hungrier.

Looking to appeal to a wider audience, food companies have been working in recent years to diversify their portfolios. They’ve been expanding their businesses — and attracting attention on Wall Street — by acquiring companies that specialize in producing organic/non-GMO chips and by developing their own healthier snacks.

Their strategy is paying off.

Some of the industry’s largest suppliers of snack foods are posting profits in 2015 with the help of healthier products.

While snacks giant Frito-Lay, which contributed about a third of parent company PepsiCo’s more than $3 billion operating profit during the second quarter, still counts on sales of traditional snacks like Cheetos and Doritos, the company’s bottom line is benefiting from its efforts to diversify its portfolio of products. Frito-Lay’s healthier options, such as Stacy’s pita chips, Lay’s Oven Baked chips, and Smartfood Popcorn, are growing in popularity. As a result, PepsiCo this month increased its financial outlook for the remainder of the fiscal year.

Another major snack food maker, Snyder’s-Lance, which is known for its Snyder’s pretzels, Cape Cod Kettle Chips, and Toast Chee crackers, reported $431 million in second-quarter sales, up about 8% from the same quarter in 2014. Snyder’s-Lance attributes the robust sales growth to making and marketing more “better-for-you” snacks.

Healthier snacks, such as gluten-free sandwich crackers, now comprise 27% of the manufacturer’s portfolio, up from 24% in 2014, with an eye on eventually reaching 33%. Snyder’s-Lance has been adding healthier snacking options by acquiring Baptista’s Bakery in mid-2014 and investing in organic chip maker Late July.

One of the industry’s fastest-growing categories, according to First Research, is chips made with blended fruits and vegetables. Sweet potatoes, plantains, black beans, quinoa, and flax are showing up in chip form. It’s likely that the snack foods industry will be encouraging consumers to snack their way to health.

Industry Impact

Companies that make and market healthier snack foods are seeing growth by serving a larger consumer market as shoppers navigate toward better-for-you alternatives.

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Tracking the moves of consumer products makers since 2003, Colbert is a company insights writer and blogger. Before covering companies, she spent ample time in magazine publishing, technical writing, ad copywriting, medical writing, and marketing. Follow her on Twitter.

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