SFA: SALTY-SNACK SALES ARE SOARING IN 1999

WILLIAM SMYTH

ALEXANDRIA, Va. -- The salty-snack-foods category is performing well due to a variety of products, according to the Snack Food Association's annual report for 1999.

The 1999 State of the Industry Report, entitled "The Right Stuff," was issued by the SFA here in conjunction with Snack Food and Wholesale Bakery.

As stated in the report, the snack-food industry saw sales increase in all three markets -- food, mass merchant and drug. Total FDM sales indicated a 7.3% increase to $18 billion in 1998. While some segments stumbled, several snack-food lines helped push category sales upward.

Potato Chips:

Potato-chip dollar sales jumped 15.1%, while volume grew 6.5%. The most prominent word in the potato-chip segment in 1998 was olestra. This new fat substitute rode a wave last year, but the jury is still out on whether olestra will continue to move the category or will become just another niche within the industry.

Lay's WOW! and Ruffles WOW! generated sales of $128 million and $102 million respectively in 1998. Brands like Utz's Yes label and Herr's Rave are trying to squeeze into the potato-chip olestra market, and a Canadian company called Old Dutch introduced an olestra product called Rave mostly into convenience stores in March.

Tortilla chips/corn snacks:

Potato chips are not the only staple carrying olestra, and tortilla-chip sales indicate that the ingredient is also faring well for this category.

Corn snacks and tortilla chips were big sellers in 1998, with tortilla chips generating $1.6 billion in supermarkets and capturing 44.8% of the tortilla-chip industry's sales. Corn snacks in supermarkets generated $371 million, taking a whopping 49% of the industry. According to Information Resources Inc., Chicago, food, mass and drug saw a healthy 3% increase in volume growth for the year and a 4.8% increase in sales for tortilla chips. Doritos once again dominated the category with $693 million in sales, a 4.9% increase over 1997 sales. Tostitos came in a close second, with $526 million, a 5.7% increase.

Despite the growing health consciousness of many consumers, healthier tortilla snacks didn't perform as well, with Baked Tostitos seeing a 30.7% decrease in sales and Guiltless Gourmet, Austin, Texas, experiencing a 5.1% drop.

A new trend in 1998 within the tortilla chip/corn snack industry saw brands start to "dock" or combine salsa and dips with chips. Frito's Chili and Scoops and E-Z Dippin's from Jay Foods Inc. in Chicago are two companies that are experimenting with combination products. Frito's Scoops were second in the corn-snack category with $98 million in sales for the year, following Frito's, which once again dominated the category with $208 million in sales. Frito-Lay is based in Plano, Texas.

Extruded Snacks:

According to the report, manufacturers are trying to figure out what to do with the extruded-snack category, which includes puffed-cheese snacks and other similar items. The category's sales were relatively flat in 1998, with FDM sales increasing a slight 1.4% as volume fell 0.1%.

Cheesier- and hotter-tasting items are carrying the category, and various manufacturers are trying to create a niche in ethnic and urban areas by marketing flavors like jalapeno cheese and cheddar sour cream. Frito-Lay remains the dominant player in this area as well.

Supermarkets are still the primary outlet for extruded snacks, taking $353 million of the $810 million in total category sales for 1998. Chee-tos led FDM by a landslide, with $228 million in sales, while private-label came in a distant second, with $45 million. With new multimillion dollar advertising campaigns from Planters, East Hanover, N.J., and Frito-Lay, and the introduction of spicier and cheesier products, the category is expected to pick up steam this year.

Pretzels:

The flavored-pretzel arena was dominated by private-label presence in 1998, which accounted for $71 million in FDM, a 10% increase from the prior year. Pretzels generated $1.2 billion in 1998, with supermarkets retaining a 43.5%, or $542.7 million hold on the category.

With companies concentrating on other markets of interest, pretzels attempted to keep up consumer interest by introducing new flavors. Frito-Lay's Rold Gold line launched mustard-honey and cheddar flavors; Snyder's of Hanover, Hanover, Pa., offered chocolate-dipped minipretzels; and Herr's Foods, Nottingham, Pa., came out with a honey mustard and onion pretzel-piece line. Manufacturers are also attempting to combine dips and sauces with pretzels to create a niche within the segment.