DALLAS -- Has the growing salty snack food category peaked? "In the future, there is a real good chance that salty snacks might not be a real star kind of category," claimed Todd Hooper, a director of Swander, Pace & Co., a San Francisco-based consulting firm. He addressed an audience of snack food makers and their suppliers at the SNAXPO '96 snack food industry convention here in late March. The snack food industry is currently in a state of turmoil, he said, with Eagle and Keebler exiting the business and Borden Inc. and Lance regrouping. That leaves Frito-Lay as the only national player.
"Retailers are looking for partners to work with them in category management. That Frito is the only viable partner has become a concern for retailers, and it has become a concern for Frito as well," he said.
"What happens to the space when Eagle is no longer on the shelf? It may be spread out evenly over what players are already on the shelf. "Are retailers going to search for a new No. 2 to challenge Frito-Lay? That is probably in the retailer's best interest to happen."
With two of the leading players gone from the category, he said Frito-Lay may feel it does not have to spend as much on promotion, or at the very least it may become more selective about where it spends its money, and put less in the retailer's pot.
"If retailers see it as a less profitable category, they will start supporting it less," Hooper said, adding that the category's growth may begin to slow.
"Will regional players, small players and niche players be given a fair shot with retailers? If the answer in the future becomes 'no,' then it is quite possible that the category growth is going to diminish in the retail channels," he said.
