Refrigerated snack sales are growing

December 26, 2018

Fresh snacks, those that require refrigeration, exude a sense of healthfulness that shelf-stable snacks often do not.

Healthy snacking is an important component of the modern diet. Sitting down for a few large meals is not a luxury many with busy work schedules and long commutes can afford. Instead, many of us consume numerous small meals to fill up and maintain energy and focus throughout the day. A snack is no longer just a mindless indulgence, but functions as a meal in its own right.

Fresh snacks, those that require refrigeration, have become an important aspect of this new way of eating because freshness exudes a sense of healthfulness that shelf-stable snacks often do not. According to a report by Mintel (London, UK), titled “The Future of Fresh,” there is also a strong association between “fresh” and no preservatives or additives.

The growing demand for fresh snacks is measurable. According to SPINS (Chicago, IL), in the three years ending April 2018, the $17.5 billion U.S. health and wellness snacking category grew 6% annually. As a subset of this category, fresh snacks, making up $6.8 billion, grew 8% annually, while shelf-stable snacks, a larger portion of the category at $10.7 billion, grew 5%. Compare this to the $40.3 billion conventional snacking category, which declined 2% annually. (Of note, fresh snacks do best in the natural, organic, and specialty-focused channels. In the conventional channel, shelf-stable snacks still reign supreme.)

“Diet tribes and trends around whole-food nutrition (Paleo, Whole30, etc.) are bringing consumers back to the perimeter in search of fresh snacks, and brands are responding,” says Jessica Hochman, natural insights and innovation research manager for SPINS. “We’re watching areas like refrigerated ready-to-eat eggs and refrigerated snacking kits.”

One brand that is really taking advantage of the growth in this space is Organic Valley (La Farge, WI). Products like their two-packs of hard-boiled eggs and recently launched snack kits speak to the desire for snacks as healthy meals. “With the snack kit category, we saw that it was rapidly growing and that it’s an attractive category, but we also identified that there wasn’t anyone else on the market that was doing an organic snack kit option with meat,” says Ellie France, Organic Valley’s brand manager for meat, snacks, and prepared foods. “What was really exciting, too, was knowing that adult-focused snacking options were really driving the growth in the category, and that kind of helped us develop our snack kits through the lens of the adult.”

Snack kits aren’t a particularly novel format, reminiscent of the childhood favorite Lunchables, but here Organic Valley presents an elevated version that feels mature for the adult audience. An adult audience also includes parents, and thus these snack kits are also being served to children. “We’re finding now that there is this secondary market for this new item…especially with young families where moms are focused on the nutrition density of a snack and wanting to give their families the very best,” says France.

Protein is a huge nutrient driving refrigerated snacks. “Protein content is still being highlighted as a primary functional ingredient in multiple snacking segments…Products with some form of protein as a primary functional ingredient are up 9.4% in the U.S. to an annual market of $1.3 billion across channels,” says Kim Kawa, BSc, natural products specialist for SPINS. “This may coincide with the strength of Paleo-positioned products, which report 86.4% growth overall across the same categories.”

According to Mintel, surveys show that 54% of U.S. consumers believe they need more protein in their diet, and 49% of consumers over the age of 18 who purchased better-for-you snacks in the previous three months cited “good source of protein” as an important factor in their decisions.

This demand is also translating to a transformation of the perimeter in brick-and-mortar retail. With the competition from e-commerce, where shelf-stable foods are purchased in large quantities, fresh snacking presents an opportunity for brick-and-mortar in their refrigerated section, where they have the upper hand.

Mintel reports that the fresh perimeter is growing at 3.8%, much more than any other area, which means that shelf-stable snacks will have to yield space to their fresh counterparts as the perimeter moves inward. Products that are typically shelf stable have even broken into the fresh set-most prominently, refrigerated bars. “One product set driving growth in refrigerated is wellness bars,” says Kawa. “Compared to the growth rate of the shelf-stable wellness bars/gels segment, the refrigerated set is up double digits, up 93.6%, totaling $37.8 million in annual sales.” 

In September, Perfect Bar launched Perfect Kids, which the company claims is the first refrigerated kids’ snack bar. “The launch of Perfect Kids comes just after Mintel’s study, ‘The Future of Fresh,’ reported that ‘fresh’ is the number-one purchase driver for Millennials and iGen consumers when shopping for food,” said Leigh Keith, co-founder and president of Perfect Bar LLC, in a press release.

 

Trends in Shelf-Stable Snacks

Still, there are times when fresh, refrigerated food is not particularly convenient for consumers. As France points out, shelf-stable snacks such as Organic Valley’s Mighty Organic line of meat bars, sticks, and jerky are more activity-centered. “What we’re finding, especially with meat snacks, it’s a perfect thing to take on your outdoor adventures,” she says. This also influences where Organic Valley chooses to concentrate its sales. “With the Mighty line we really try to be online, where people are normally shopping, but we are also trying to build out our presence in the convenience store as well because we know especially in the summer, when people are road tripping or getting out in nature, we want to be there when they’re trying to figure out what snacks they want to pack for their hike or weekend away.”

Because shelf-stable is a bigger category and subsets in the category can be particularly saturated, brands have to be very deliberate in the way they make and sell their products to make sure they hit their mark and stand out in the crowd. “We know that there are over 500 different brands of meat snacks, so at Mighty we really try to innovate with what’s on trend, do it organically, do it in a way that’s ethically sourced, but also bring in big bold flavors or new varieties that a consumer will never think of,” says France. “Mighty is this constant innovation pipeline for us where we’re really trying to bring people to the brand with all these different formats and do it in a way that no one else is.”

This is particularly important when launching a new product. Rooted Food Co., based in the United Kingdom, for example, plans to launch a popped lotus seed snack by the end of 2018. This is a delicacy popular in South Asia, but pretty new to the Western marketplace. Cleverly, they’ve made this exotic ingredient accessible to Western consumers by incorporating familiar flavors such as Salt & Vinegar, Salt & Pepper, and Cheese & Chives, to name a few. Not only that, but the product also meets consumer demand for nutrient-dense snacks by being rich in protein (3 g) as well as amino acids, copper, manganese, and fiber (4 g). It’s also vegan and gluten-free.

“A label of vegan, organic, non-GMO, Kosher, gluten free, cholesterol free, Halal, etc., has more advantages over another product that doesn’t clearly include that phrasing on their labeling,” says Bushra Noorulain of Rooted Food. “More and more people are becoming aware of eating healthy food and therefore we do not want to have any shortfalls when it comes to customers’ requirements.”

Rooted Foods also understands the place of shelf-stable products in the lives of active adults and has a broad marketing strategy that extends beyond just the retailer. “We like to promote by offering free sampling of Rooted in salons, fitness centers, yoga studios, spas, and retail stores since it is a healthy snack,” says Noorulain.