Cereal and dairy snack innovations that respond to lifestyle changes will be key to the future profitability of these sectors, according to Leatherhead Food International.
The market analyst says that product development has increasingly focused on new formats that allow greater availability, improved portability, portion control and ease of eating.
And they are increasingly being marketed as nutritious, convenient, tasty and fun alternatives, suitable for lunchboxes or for anytime snacking.
The cereal snacks market encompasses cereal bars, rice snacks and newer products such as cereal bites, and had a value of nearly $3.37bn, while the dairy snacks market, made up of cheese snacks and hand-held yoghurts and desserts, was worth a lesser, but still significant, $2.67bn.
Innovations in both these sectors are covered by Leatherhead Food Internationals two new reports in its New Generation Snack Foods series. The reports are designed to highlight market and product trends and evaluate the current status and future growth potential of certain products.
The International Market for Cereal Snacks
The International Market for Cereal Snacks reports that total sales of cereal snacks covering cereal bars and rice snacks in the eight countries under review (the US, Japan, Australia, France, Germany, Italy, Spain and the UK) were worth $3,366m in 2005, of which the US accounted for 42 per cent or $1.4bn.
Other significant markets were Japan (thanks to its sizeable and established rice crackers market) and the UK, which accounted for 20 per cent and 17 per cent of the total value, respectively. In per capita terms, however, Australia has by far the highest expenditure, at $15.32, ahead of the UK on $9.57.
Cereal bars is much the larger of the two core cereal snacks categories, worth $2.37bn in 2005, equivalent to 70 per cent of the total cereal snacks market.
Furthermore, the cereal bars market is continuing to show very strong annual growth, having risen 9.6 per cent in the seven countries under review in 2005, and is expected to increase a further 7.2 per cent to $2.54bn in 2006. In contrast, the rice snacks market is now static and is even showing some decline in certain countries, with sales development largely hindered by a lack of recent innovation.
Leatherhead says that global cereal bar markets are generally led by companies with existing interests either in breakfast cereals, or confectionery or other baked snacks (e.g. biscuits or cakes). Although the sector also supports a multitude of specialist health and natural food suppliers, the products sold through mainstream supermarkets tend primarily to be those manufactured by major food groups.
The support of such significant businesses and their sizeable advertising and promotional budgets has been instrumental in creating the strong growth rates seen by the market in recent years. Intense levels of competition are also advantageous for the overall performance of the market.
The rice snacks market, on the other hand, is contested by a fairly diverse range of businesses, including a global cereals business, various Asian rice cracker companies, a biscuit market leader in the UK and a rice market leader in Germany.
The International Market for Dairy Snacks
The International Market for Dairy Snacks reports that sales of cheese snacks and hand-held yoghurts and desserts were worth $2,665m in 2005, of which the US accounted for a dominant 54 per cent or $1.4bn. The UK, French and Japanese markets were of a broadly similar size, taking 16 per cent, 14 per cent and 13 per cent of the total, respectively, while Australia and Italy had small markets of less than 2 per cent each.
In per capita terms, the UK and France lead in terms of overall expenditure, with $7.11 and $6.30, respectively. This is well above the $4.87 spent in the US and $3.03 spent in Australia.
Cheese snacks is by far the largest sector of the market, taking over 91 per cent of total market value in 2005, leaving less than 9 per cent for hand-held yoghurts and desserts. Cheese snacks is also growing faster than hand-held yoghurts and snacks in most countries, with growth of 4.4 per cent likely to take sales from $2,429m in 2005 to $2,537m in 2006, while sales of hand-held yoghurts and desserts is growing more slowly from a much smaller base, with a 3.8 per cent increase likely to take sales from $236m to $245m over the same period.
Furthermore, the cheese snacks market is seeing much higher levels of product activity from a range of different types of company, and is tending to segment into clear target markets, such as adult and childrens cheese snacks, with a range of products including dips, lunch kits, strings, sticks, shapes and mini portions.
With high levels of interest and ongoing product and promotional activity, the market seems set for future growth, particularly in markets that are traditionally high cheese consumers, but have yet to really embrace the snacking concept in this area.
These alternative snacks markets are likely to see varying fortunes over the next five years, with sales of cereal bars and cheese snacks set to see consistent growth, of 4.8 per cent and 4.9 per cent, respectively, to take them both over the $3bn market by 2010, while hand-held yoghurts and desserts is likely to grow more slowly from a much smaller base, with a 2.5 per cent annual growth rate to 2010, while sales of rice snacks appear set to fall.