U.S. retail sales of snack bars more than doubled over the past decade, continuing strong growth throughout the recession, according to a new report from Rabobank's Food & Agribusiness Research and Advisory group.
Snack bars realized an enviable compound annual growth rate (CAGR) of 6.4%, and will reach a projected $6 billion this year.
That far outpaced savory snacks (chips and pretzel sales had a 3.5% CAGR, to reach $34 billion in 2012), as well as the 2.4% CAGR of overall packaged foods.
Growth-drivers include snack bars’ broad, multi-purpose appeal and their on-the-go convenience; the shift to snacks replacing as well as supplementing meals (snacks now account for about one-third of adults’ daily calories, according to the U.S. Department of Agriculture); and broad retail distribution (gas stations and delis, as well as mainstream retail food channels) that encourages impulse purchases.
“Snack bars are one of the few bright spots in today's U.S. processed food market,” says Rabobank analyst Nicholas Fereday, author of the report. “By capitalizing on consumer trends and evolving demographics, snack bars have found broad appeal among a large consumer base that ranges from athletes to couch potatoes, from working mothers to professionals on the go. Even so, not every brand is a winner.”
Within the snack bar market (which spans breakfast, energy and nutrition, fruit, granola/muesli, and other bars), energy and nutrition bars account for more than one-third of sales, and had an impressive 9% CAGR between 2007 and 2012.
Most of that energy/nutrition bar growth has been driven by a single marketer, Clif Bar & Company, according to Fereday. “Clif's socially conscious credentials, hip image and emphasis on taste and quality ingredients have made their Clif, Luna and Mojo brands a hit with consumers and a market leader since 2008,” he says.
Twenty-year-old Clif Bar rarely advertises in mainstream media, preferring to rely on sports sponsorships, social media and word-of-mouth to secure its lead in the energy bar segment.
Clif, along with Kellogg and General Mills, have seven of the top 10 snack-bar brands and a combined share of nearly 60% of the total category.
Kellogg, the leading overall category brand, has successfully expanded breakfast brands Kashi, Rice Krispies, Nutri-grain and Special K across multiple snack-bar formats.
General Mills owns about a quarter of the market, and its high-profile campaign around improved nutritional content has driven strong growth for its Nature Valley, Betty Crocker, Fiber One and Larabar brands, confirms Rabobank.
Snack-bar extensions of candy brands have been less successful, however, suggesting that consumers perceive a disconnect between names associated with candy and the wholesome, active associations around snack bars, Fereday points out.
Growth Potential Still ‘Huge’
Although snack bars have been around since the late 1980s, when the PowerBar took off, there’s still plenty of room for growth, according to Rabobank.
Consumer demand for convenient-but-healthier food options shows no signs of waning, and will drive the energy/nutrition and breakfast-bar classes, in particular, points out the report.
In addition, like Kellogg and General Mills, other companies have brands in categories that have potential for extension into the snack-bar category; and snack bars (like potato chips) are an excellent platform from which to launch new varieties.
Further, Fereday sees a significant opportunity for snack-bar makers to partner with the foodservice industry and QSRs in particular, as these chains seek to open up new day parts to drive sales.