Growth Strategies for Snack Foods in a Competitive Market

Current market trends in the snack food industry

Current market trends in the snack food industry reflect a focus on innovation and strategic partnerships to drive growth. Companies like Mondelez and PepsiCo emphasize expanding into emerging markets and managing savory snack categories, while General Mills notes potential volume improvements. Additionally, Coca-Cola's marketing strategies highlight the connection between beverages and snacking occasions.

"Partnering with Lotus will enable us to simultaneously scale our sweet biscuit business in the important emerging market of India while also innovating our strong European chocolate business with new products to grow consumer interest and loyalty.As we strive to lead the future of snacking by winning in chocolate biscuits and baked snacks, M&A and ventures remain an important part of our growth strategy." --- (MDLZ, earning call, 2024/Q2)

"Now as we all know, the U. S. Food industry seems to be at something of a crossroads with high hopes for some improvement in volume trends as the headwinds of 2023 are lapped." --- (GIS, conference, 2024/05/29)

"brands, I think it's our responsibility to manage this category for the long-term, providing value to consumers in different ways and continue to have the savory snacks category growing above food structurally as we have done in the past." --- (PEP, earning call, 2024/Q2)

"The strong Fanta performance in markets from Brazil to Germany to the US this quarter is largely due to this type of innovation, which was supported by marketing messages focused on taste and on tying the brand to snacking occasions and local festivals like Carnival in Brazil." --- (KO, earning call, 2024/Q1)

"The net sales decrease was driven by a volume decrease of approximately 6%, primarily due to a decrease in everyday core U.S. confection and decreases across the International segment, partially offset by an increase in salty snack brands." --- (HSY, sec filing, 2024/Q2)

Shifts in consumer preferences and marketing strategies

Companies in the snack food sector are adapting to shifts in consumer preferences by focusing on innovation, value, and premium options. Mars emphasizes brand-building and better-for-you products, while J.M. Smucker balances pricing strategies. Kellanova shows confidence in executing effective marketing based on positive consumer feedback.

"Mars intends to apply its proven brand-building approach to further nurture and grow Kellanova's brands, including accelerating innovation to meet evolving consumer tastes and preferences, investing locally to expand reach and introducing more better-for-you nutrition options to meet evolving consumer needs." --- (Kellanova, press release, 2024/08/14)

"In fact, the advertising we're running now is directly comparative as I mentioned to you previously and features the clear benefit of our Stay Fresh flash freezing process which basically freezes time for the consumer and keeps our vegetables at the peak of freshness until the consumer is ready. So it's a clear advantage. And in the most recent 4 weeks of" --- (CAG, earning call, 2024/Q1)

"So. Michael Lavery: Sorry. Okay. I misheard that. Robert Vitale: And I think the comment around the consumer behavior going forward is more about the acceptance of the pricing environment that has moved so rapidly and it's taken some time to grow accustomed to -- so it feels like we intentionally use the word that the consumer is in a transitional mode in that we are now going from a super-hot labor market to a cooling labor market, cooling inflation." --- (POST, earning call, 2024/Q2)

"As always, we will continue to manage our coffee business through a strategy that demonstrates a balance between recovering inflationary input costs, while providing consumers with attractive options ranging from value to premium." --- (SJM, earning call, 2024/Q2)

"And again, same thing with the consumer scores, very, very high. And so it's up to us to execute the way that we know we can and in fact have great confidence that we will on both of those brands going forward." --- (K, conference, 2024/06/11)

Innovation in product offerings and sustainability initiatives

Leading snack food companies are prioritizing innovation and sustainability. Mars aims to develop a sustainable snacking business, while Mondelēz accelerates innovation through its CoLab Tech program. Additionally, Kellanova emphasizes equitable food access, showcasing a commitment to sustainability alongside product innovation.

"Poul Weihrauch, CEO and Office of the President of Mars, Incorporated, said: "In welcoming Kellanova's portfolio of growing global brands, we have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future."" --- (K, press release, 2024/08/14)

"CoLab Tech plays an important role in Mondelēz's growth strategy to accelerate innovation in its core categories of chocolate, biscuits, and baked snacks. The selected cohort will provide the R&D team with early access to new capabilities that can help in the development of breakthrough products and platforms." --- (MDLZ, press release, 2024/04/23)

"And I think a lot of that was driven by their innovation, the lap versus prior year with some of that innovation not sustaining and those things do impact the category." --- (HSY, earning call, 2024/Q1)

"We combine a 100-year history of making quality food with agility and a relentless focus on collaboration and innovation." --- (CAG, press release, 2024/08/09)

"We are committed to promoting sustainable and equitable food access by tackling the crossroads of hunger, sustainability, wellbeing, and equity, diversity & inclusion." --- (K, press release, 2024/07/22)

Distribution channels and their effectiveness

Distribution channels for snack foods are evolving, with companies like PepsiCo and Costco emphasizing the importance of both traditional and digital avenues. Walmart's regional networks and Target's digital enhancements further illustrate the effectiveness of diverse distribution strategies in adapting to market changes and driving sales growth.

"How do you think, like we should be thinking about the progress? And perhaps related to that, from a channel perspective the away from home for you growing from what it seems to be like a distribution, what is the like-for-like in sales, basically by channel, if you would think about away from home and at home?" --- (PEP, earning call, 2024/Q2)

"But I think as Ron mentioned in an earlier comment that as technology and data are something that we're sort of building a path towards, I would still say there's significant opportunity for us to grow in that space because of the unique nature of the relationship we have with our members and the ways in which we can deliver value for them and tap into that data and tap into the growth that we're creating both in the warehouse and through digital channels." --- (COST, earning call, 2024/Q1)

"We have our regional distribution network, which is primarily an ambient network." --- (WMT, earning call, 2025/Q2)

"And while these enhancements drive performance in both our stores and digital channels, our most recent Target Circle Week in April drove outsized benefit to our digital performance." --- (TGT, earning call, 2025/Q1)

"We continue to monitor changes in the retail landscape and seek to identify actions we may take to build our global e-commerce and digital capabilities, such as expanding our direct-to-consumer business, and distribute our products effectively through all existing and emerging channels of trade and potentially mitigate any unfavorable impacts on our future results." --- (PEP, sec filing, 2024/Q1)

Competitive strategies among leading snack food brands

Leading snack food brands are employing competitive strategies such as leveraging omnichannel success (MDLZ), maintaining local relevance while benefiting from global scale (KO), focusing on brand strength (GIS), ramping up innovation (HSY), and emphasizing product quality and versatility (PEP) to thrive in a competitive market.

"Among many highlights, the company will present an educational session on proven strategies to help snacking companies success in omnichannel, delivered by Francesca Hahn, U.S. Vice President of Digital Commerce." --- (MDLZ, press release, 2024/05/14)

"We've benefited from global scale while maintaining local relevance by tying our brands to regional meals occasions." --- (KO, earning call, 2024/Q1)

"Our focus is primarily on our game and our competitors' games. We -- honestly, we feel like we have the best brands in the category, and the key job for us to do in cereal is get back to playing our game." --- (GIS, earning call, 2024/Q2)

"So, in addition to value playing a role, there are many other main drivers, I would say, that do make sweets appealing, and it's one of the reasons that we've really ramped up our innovation in that space with Shaq with the launch of a new form in the back half and continued investment in those brands." --- (HSY, earning call, 2024/Q1)

"Made with high-quality ingredients and baked to perfection, Rold Gold can be enjoyed as is or for dipping, from cheese spreads to hummus, to take snacking to a whole new level." --- (PEP, press release, 2024/09/12)

Role of technology in growth strategies

Technology plays a crucial role in growth strategies for snack foods by enhancing market approaches, improving operational efficiency, and driving revenue growth. Companies emphasize the need for robust technology investments to maintain competitive advantages and ensure sustainable growth in a rapidly evolving market.

"I wanted to know if you could talk a little bit about both the opportunities and the challenges of operating at scale in a time like this where there's a lot of technology innovation going on and how you see the elements of trying to strike a balance towards moving the organization forward while still continuing to both invest for growth as well as balance margins. Thanks so much." --- (GOOG, earning call, 2024/Q1)

"So getting more intelligent in how we go to market than ever before. The net of all of this is our pipeline, our revenue growth, our transformation and capability to drive adoption and consumption and ultimately, our ability to do it profitably gives us confidence that as we map forward together with the product strategy that's been described, that we are able to sustain and propel way beyond what we've predicted for 2025, but 2027 and beyond, where an organization will continue to be relevant for our customers well into the future." --- (SAP, event transcript, 2024/06/05)

"We seek to invest efficiently in numerous areas of technology and infrastructure so we may continue to enhance the customer experience and improve our process efficiency through rapid technology developments, while operating at an ever increasing scale." --- (AMZN, sec filing, 2024/Q1)

"Technology spending remains robust as it continues to serve as a key competitive advantage, allowing businesses to scale, drive efficiencies and fuel growth." --- (IBM, earning call, 2024/Q2)

"And so the reason we have a deliberate strategy to govern this technology is so that we can realize the potential benefits of this technology in a way that benefits everyone." --- (MSFT, fireside chat, 2024/08/05)

Impact of health trends on snack food choices

Health trends significantly influence snack food choices, with consumers gravitating towards specific flavors and contexts. For instance, late-night snackers prefer salty and spicy options, while cheese remains a daily staple for many, indicating a preference for satisfying, familiar snacks in their diets.

"While we aren't at all surprised that 30% of people snack late at night, we were surprised to learn where they are doing it – in the bedroom! The survey also found that among those snacking in bed: 66% are snacking alone; 20% of people are eating salty snacks; and, 31% said they were satisfied after finishing their snack. The survey also found that men are more vulnerable to the late-night munchies than women, and that they more often crave spicy, sour, and bitter snacks over sweet choices." --- (K, press release, 2024/04/16)

"According to a recent One Poll survey of 2,000 European adults who consume cheese, one in five said they eat cheese at least once a day, with 46% admitting they couldn't live without it in their daily diet." --- (K, press release, 2024/09/10)

Global expansion opportunities in snack food markets

Snack food companies are actively pursuing global expansion, with General Mills focusing on strategic M&A to enhance their snacking portfolio, Kellanova positioning itself as a global snack leader, and Mondelez reporting positive growth in Europe, indicating successful market penetration and share gains.

"To your second point around criteria for M&A, obviously, the critical filter for us that we start first with our strategic priorities, which leads us to look at critical occasions, which would get us to priorities around breakfast and convenience -- convenient meals and snacking, as well as obviously pet food." --- (GIS, earning call, 2024/Q4)

"Steve is now leading Kelanova as he embarks on a journey as a primarily a snack company with a global reach." --- (K, conference, 2024/06/11)

"But we are gaining shares. Our offtake is good. We had some issues in supplying the market, and now that the system is done, we will really start to work that route to market expansion." --- (MDLZ, earning call, 2024/Q1)

"So, similar movement as I was talking about in North America. If you look at Q2, our biscuits and baked snacks are already positive in Europe." --- (MDLZ, earning call, 2024/Q2)