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Snack mainstays undergo change.

NEW YORK - The top three segments in the snack food category are undergoing change, but their appeal among Americans endures.

For example, the salt and fat content of many potato chip brands is not only changing but in some cases disappearing. Nevertheless, the products remain the favorite snacks of U.S. consumers, according to the Snack Food Association (SFA), with 30.6% of all pound volume. They are followed by tortilla chips (22.1%) and pretzels (11.8%).

The SFA reports that 1994 dollar sales (the last full year for which the association has figures) of potato chips totaled $4.67 billion and that pound volume for the year was 1.74 billion, increases of 2.5% and 2.4%, respectively. These strong results were posted despite the price cuts and deep discounts that prevailed in that segment as well as the category as a whole.

Although plain potato chips lead the segment, such flavors as Cajun, dill and cheese are helping drive the business, despite the fact that such old flavors as barbecue and sour cream and onion have recently been less attractive to many consumers. For example, Wise Foods added a pair of flavors (buffalo wing and barbecue wing) to its potato chip line last summer. The move followed the company's launch of spicy Crazy Calypso chips a year ago.

Just as the segment is marked by a wide variety of flavors, it has a range of what an SFA spokesman calls potato chip types. Regular products lead the market in pound volume, with 47.4% (despite a 4.2% slide). Sales of ridged potato chips rose 10.4% for a 37.2% share. Kettle-style products, which generated strong growth in the latter half of the 1980s, now constitute just 4% of the market, according to the SFA.

Top potato chip brands include Lay's and Ruffles, both of which are made by Frito-Lay Inc; Pringles, manufactured by Procter & Gamble Co.; and Eagle Snacks, made by the company of the same name. A Frito-Lay spokesman claims that the Lay's brand registered about $1.5 billion in sales in 1994 to lead the segment.

"Consumers are looking for great-tasting, low-fat snack alternatives, and baked Lay's and baked Tostitos fit the bill perfectly," notes Frito-Lay vice president of advertising and public affairs Tod MacKenzie.

Baked Lay's, which were unveiled late last fall, have 1.5 grams of fat per 1-ounce serving (around 11 chips). The new product, which comes in original and barbecue flavors, was the first item in the line to sport a new look that's highlighted by a bold red-and-yellow color scheme and an icon that the company calls "Banner Sun."

"This launch is directly linked to our commitment to accelerate Frito-Lay's low- and no-fat snack business to $2 billion over the next three years," says senior vice president of marketing Brock Leach.

The Frito-Lay spokesman adds that the company's low- and no-fat snacks generated about $600 million in sales last year, an increase of over 10% compared with results in 1994. He notes that the company believes that the low- and no-fat segment will represent a third of its business within two years.

One trend in the snack food industry, particularly in the potato and tortilla chip segments, is the introduction of spicy ingredients. For example, Eagle Snacks Inc. has had success with Spice Fiesta Thins, potato chips with such ingredients as cheese, garlic, green pepper, onion and tomato. And Snyder of Berlin has buffalo wing-flavored potato chips.

ATGTBT (Almost Too Good To Be True), a company that the SFA identifies as one of the fastest-growing suppliers in the industry, debuted mesquite barbecue potato chips last spring which contain only 1 gram of fat per serving.

Tortilla chips are closing the gap on potato chips. In fact, according to the SFA, sales in 1994 topped $3 billion for the first time.

Again, Frito-Lay leads the field: its Doritos brand garnered about $1.5 million in sales. The company also markets Doritos Thins, Tostitos and Santitas in such flavors as queso, salsa and taco.

The SFA spokesman says that Keebler Co. did better in the tortilla chip segment than it did with potato chips, thanks to its Chaco's collection of crispy tortilla chips in several flavors, including salsa verde.

Bachman Co., which is perhaps recognized more for its pretzels, brought out black bean tortilla chips with Mexican salsa as part of its 110th birthday celebration in 1994. Even Nabisco Brands Inc. has joined the fray, offering reduced fat chips in salsa ranch and cheddar taco flavors under the SnackWell label.

While manufacturers in other segments of the snack food category are constantly seeking ways to develop low-fat products, pretzel makers may be wondering what all the fuss is about. Pretzels have always been nearly fat-free, and they have traditionally been among the top 10 snacks among consumers. The SFA expects the segment to grow from its current market share of nearly 12% to about 15% within two years.

Still, pretzels can be difficult to define. Today's versions come in such varieties as low- and no-salt pretzels; flavors that include butter, honey mustard and onion; and shapes that are thick, thin and twisted.

Sales of pretzels are particularly high in the mid-Atlantic region, where such states as Pennsylvania are home to a significant number of pretzel makers.

Pennsylvania-based Bachman recently rolled out Kidzels, a pretzel targeted to children. The company touts the brand as the first vitamin- and mineral-fortified salty snack of its kind (10 essential vitamins and minerals) as well as being fat-free.

Frito-Lay is addressing consumers who prefer pretzels with its Rold Gold brand. According to the SFA, the line posted a 73.6% increase in sales during 1994, while the company's overall pretzel volume jumped nearly 60%.

As impressive as the increase posted by Frito-Lay's Rold Gold was, on a percentage basis it was outpaced by Eagle Snacks, which saw pretzel sales rise 83%. Other major players in the pretzel segment include Sunshine Biscuits Inc., Nabisco and Keebler.

Overall sales of pretzels have grown for six consecutive years. SFA figures for 1994 show dollar sales totaling $1.27 billion (up 15.4% over 1993) and pound volume at 671.7 million (a climb of 13.4%). The association spokesman says that just as many snack food suppliers now make pretzels as potato chips.
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Title Annotation:potato chips, tortilla chips, pretzels
Publication:Chain Drug Review
Article Type:Industry Overview
Date:Feb 12, 1996
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