Rabobank has published a new research report on the tremendous increase of the U.S. snack bar market over the past ten years, which has grown at twice the rate of other snack foods and nearly three times the rate of the overall packaged food sector. The bank forecasts strong continued growth in the category in the years ahead, powered by favorable consumption trends and expanded distribution channels.
In a new report titled "Never Eat More Than You Can Lift," Rabobank's Food & Agribusiness Research and Advisory group examines the drivers behind the strong growth of the U.S. snack bar market over the past decade, weighs category leaders as well as stragglers, and identifies trends and opportunities that promise an even rosier future for the U.S. snack bar market.
"Snack bars are one of the few bright spots in today's U.S. processed food market," says Nicholas Fereday, author of the report and Rabobank analyst. "By capitalizing on consumer trends and evolving demographics, snack bars have found broad appeal among a large consumer base that ranges from athletes to couch potatoes, from working mothers to professionals on the go. Even so, not every brand is a winner and there are some surprising names on the list of 'must try harder'."
A broad range of factors have helped drive the category's success:
• Snack bars are multi-purpose and thus appeal to a broad range of consumers: i.e., high protein bars work for athletes looking to bulk up and for dieters trying to suppress appetites.
• Flexibility in where and when to eat snack bars makes them attractive, relevant and convenient or today's consumers.
• Increased snacking between meals creates more eating occasions - the USDA estimates that snacks now provide adults with about one-third of total daily calories.
• Broad retail distribution - from delis, dollar stores, gas stations and grocery stores - encourages impulsive consumption, a key driver in many snack and candy purchases.
The U.S. market for snack bars has more than doubled to almost $6 billion over the last decade, with an average CAGR of 6.4%. That far outpaces the 3.5% CAGR of the $34 billion savory snack market (i.e. chips and pretzels), and modest 2.4% growth of the wider packaged food segment. Neither of the past two recessions had much impact on snack bar category sales.
Within the snack bar market - comprised of breakfast, energy and nutrition, fruit, granola/muesli, and other bars - Rabobank estimates that energy and nutrition bars account for more than one-third of sales, which grew at a 9% CAGR between 2007 and 2012.
"Most of that explosive growth is attributable to just one maker, Clif Bar & Company," says Fereday. "Clif's socially conscious credentials, hip image, and emphasis on taste and quality ingredients have made their Clif, Luna and Mojo brands a hit with consumers and a market leader since 2008."
In the concentrated U.S. snack bar segment, three companies - General Mills, Kellogg's, and Clif Bar - own almost 60% of the market and boast seven of the top ten brands. General Mills alone owns about one-quarter of the market, and its high profile campaign to improve nutritional content has led to strong growth of its Nature Valley, Betty Crocker, Fiber One, and Larabar brands.
Kellogg's, the leading category brand, has successfully expanded its iconic breakfast brands - Kashi, Rice Krispies, Nutri-grain, and Special K - across multiple snack bar formats. The 20-year old Clif Bar rarely advertises in mainstream media, preferring to rely on sports sponsorships, social media and word-of- mouth to secure its lead in the energy bar segment.
On the "must try harder" list, however, are a few confectionery companies which have not found success in extending their candy brands into the snack bar space, suggesting there is a line between snack bars and candy that cannot be crossed.
Says Fereday, "Candy is perhaps too much of a challenge to the wholesome, active image of the snack bar, particularly energy bars. Snack bars are perceived as contributing to better health and, up until now, have been less associated with the empty calories of soft drinks and candy."
The U.S. snack food market has taken off tremendously since the launch of PowerBar in the late 1980s, but still continues to offer significant room for growth. Four main drivers will fuel that:
1. Persistent consumer trends toward greater convenience, portability, and health and wellness show no signs of waning and will drive the energy and nutrition and breakfast bar classes in particular.
2. A la Kellogg's, there is huge potential for companies to expand their strong brands from the wider food and snack categories into the snack bar segment.
3. As the food service industry takes a larger slice of the consumer food dollar, there is strong opportunity for partnership with QSR companies who seek to open up new day parts to boost sales.
4. Like the humble potato chip, snack bars are an excellent platform to launch new flavors and functional food ingredients.
