Snack sales surge as quarantine measures blur meal occasions

30 Apr 2020 --- While out-of-home channels have taken a battering by the coronavirus pandemic, the at-home market is boosted by legions of locked down home workers and families turning to snacking. These trends are benefiting the likes of Mondelēz International and PepsiCo, which have both seen strong growth in the snacking segment, resulting from the blurring of meal occasions. Indulgent snacks such as chips, popcorn, cheese and bakery products are particularly popular. Meanwhile in Asia, snacking has taken what analysts call a “short-term hit,” as consumers are prioritizing staples over more high-end and festive snacks.

“Consumers are snacking more as a result of stay-at-home orders,” Jessica Vogl, Global Media Relations Manager at Mondelēz tells FoodIngredientsFirst. “Consumers are taking back control by seeking comforting goods that make us feel better about ourselves and bring normalcy to our lives.”

According to the snacking and confectionery giant, 40 percent of people say they have been eating more snack foods since the outbreak began. Meanwhile, 25 percent of those are finding comfort in chocolate, 25 percent are drinking more soda, and 20 percent are consuming more alcohol.

According to Mondelēz, 40 percent of people say they have been eating more snack foods since the outbreak began. “Snacking occasions are up 51 percent in the US. Overall, crackers, cookies and cheese – as well as fresh fruits and vegetables – are the categories consumers seem to increase most. The increase in snacking is driven by the replacement of out-of-home occasions; the increase in family snacking moments as schools are closed; the need to relieve stress/bring ‘normalcy’ to our day; and the drive to create a moment of indulgence, or even a sense of nostalgia,” details Vogl.

Snacking and quick meals were already gaining ground through the trending “Fourth Meal” culture, as demonstrated in Innova Market Insights data. This is seeing renewed momentum since the coronavirus outbreak. Mondelēz data also reveals that 60 percent of people have changed their food purchasing behavior in the past 30 days.

Vogl notes that in particular, consumers are going “back to basics” by seeking foods and brands they’re familiar with and seeking a sense of comfort and nostalgia. Globally, three in five consumers say they are “turning more to brands that they can absolutely trust,” she highlights.

Meanwhile, a new Rabobank analysis on the subject suggests that emphasizing antioxidants in dark chocolates, the immunity building benefits of nuts and seeds, and fortification with micronutrients are some examples of claims that will gain acceptance in an environment where consumers are worried of falling sick.

Prior to the coronavirus, “less-sugar” and “less-salt” snacks were considered as healthier by consumers. However, with the current developments, and the resulting change in consumer behaviors, attributes such as “immunity building” or “improving overall well-being” will also come to the fore.

PepsiCo warned that the spike in demand for Lays and Doritos during the pandemic would only partially offset a hit to business in the second quarter from lockdowns that have shuttered restaurants, theaters and sports venues key for its soda sales.White spaces in the competitive landscape
Notably, the competitive landscape for snacking is set to change as coronavirus-related business closures weigh down the overall economy, Rabobank underscores. Food has been classified as an “essential good” in all countries, and most mid-to-large-sized snack manufacturers are expected to weather the storm, albeit operating at reduced capacity. 

However, the analysis forecasts that some small and medium snack producers and retail bakeries will be unable to recover from closures and business slowdown. Start-ups are similarly expected to face hiccups as liquidity tightens, R&D is delayed, and they are unable to display or sample their products to trade or to consumers. “As consumers turn cautious, they are more likely to choose tried and trusted snack brands,” the report concludes.

But that is not to say that businesses with larger, more diversified portfolios are spared entirely from the economic impact of COVID-19. Earlier this week, PepsiCo warned that the spike in demand for Lays and Doritos during the pandemic would only partially offset a hit to business in the second quarter from lockdowns that have shuttered restaurants, theaters and sports venues key for its soda sales.

The company reports that it has seen an increase in consumers making breakfast and snacking throughout the day while under quarantine, leading to a surge in sales of snacks, oatmeal and Aunt Jemima pancakes late in the first quarter. Indeed, as indicated by a recent wave of panic buying in the UK that led to an obvious shortage of eggs and flour, more consumers have been trying their hand at home cooking during this period of quarantine.

The main concern for Southeast Asia and India is the economic fallout from the coronavirus, and as a result, consumers are expected to trade down their snacking choices.Snacking in Asia takes a short-term hit as staples are prioritized
As consumers in Asia prioritized their spending and stocked up their kitchens with staples, some snacking product sales suffered, according to Rabobank. However, this is a short-term development which will change once social distancing and mobility restrictions are eased. 

Having stocked up on staples, the analysis forecasts that consumers will shift to spending on discretionary purchases, including snacks. Furthermore, as people are cocooned at home and with schools closed, eating throughout the day is likely to become more commonplace and the lines between fixed meal occasions and snacking further blurred.

The main concern for Southeast Asia and India is the economic fallout from the coronavirus, and as a result, consumers are expected to trade down their snacking choices. As the economy underperforms, consumers are expected to switch to cheaper snacking products and brands, notes Rabobank. “For example, in India, more consumers are expected to purchase plain biscuits instead of the more expensive cookies and chocolate biscuits. Smaller packs and magic price points will also become more important,” the analysts reveal.

Another key fallout of the current situation is flagged as a decline in Ramadan-linked festive sales and corporate gifting of food products in Southeast Asia, including snacks such as biscuits and chocolates. The impact will be more significant in Indonesia than a more religiously diverse Malaysia, although both have a population that is over 50 percent Muslim, concludes Rabobank. 

For more pandemic-related industry updates, readers may visit our new daily news feed entitled “COVID-19 updates” for relevant insights needed to guide your business through this challenging period.

By Benjamin Ferrer