REPORT: STATE OF SNACK FOOD INDUSTRY HEALTHY

RICHARD TURCSIK

ATLANTA -- The state of the snack food industry is terrific, and that is good news for supermarkets.

Snack foods remain one of the strongest consumer packaged goods categories in the supermarket, despite health concerns and stepped up competition from other classes of trade, according to a "State of the Snack Food Industry" report from Information Resources Inc., Chicago.

According to Larry Fisher, an IRI vice president, 97.7% of all U.S. households in the 48 contiguous states purchased at least one bag of salty snacks during 1998. Since IRI tracks only scannable purchases in the food, drug and mass merchandiser channels, the actual figure is probably even higher.

"That is an extremely high number, and it also tells you that to build the business you cannot get many more households. The question is how to deliver more volume to those households that are already showing an interest in your product," Fisher said when he addressed an audience of snack food industry executives last month at the 62nd annual Snaxpo snack food convention here that was sponsored by the Alexandria, Va.-based Snack Food Association.

Sales in the three channels last year totalled $14.9 billion, up 6.3%, with almost half of the increase coming from salty snacks.

Fisher said snack foods remain among the most popular of supermarket categories, exhibiting a 21% growth rate over the last four years. Only shelf-stable juice drink concentrate, shelf-stable non-fruit drinks, butter, dinner sausage, creams and creamers, and isotonic drinks grew at a faster clip.

"The growth is coming from the buying rate. Households are buying more of the product than they were a year ago as measured in dollars, and not necessarily measured in volume," he said. He derived that consumers are willing to spend more for product, and may be trading up to healthy alternatives, typically more expensive than a standard bag of chips.

IRI's figures show that New York, Los Angeles, Chicago, Baltimore/Washington and Philadelphia are the top-five markets for salty snacks, while Des Moines, Wichita, Spokane, Little Rock and Boise round out the bottom-five markets.

Over the last four years the amount of snacks being sold in the food channel increased from 10.6 billion pounds to 12.3 billion pounds. The mass merchandiser channel has also grown, but pound volume in the chain drug channel is essentially flat.

"What is really interesting is that the proliferation of volume in mass appears not to be having a dramatic effect on food," Fisher said.

"Typically when we see this kind of growth in mass we see a commensurate decline in food. This is a category that can sustain growth on several fronts," he said.