New Hope

Sweets & Snacks Expo

May 25-27, 2010

McCormick Place, Chicago, IL

“Snack isn’t a category it’s an eating occasion” – Lynn Dornblaser of Mintel

The early summer heat did nothing to melt the sugar-high of grocery and c-store buyers looking for the latest treats at the Sweets & Snacks Expo in Chicago. The event - overlapping with the National Restaurant Association show – was sold out, with 500 companies exhibiting.

A palpable concern at Sweets & Snacks is the growing rumbling around the legislation of sweets and treats. Keynote speakers encouraged the Sweets & Snacks folks to get ahead of the legislation, before they get themselves legislated out of business.

While it might have some people scratching their heads, the candy and snack folks are sincere about offering healthier options. This jives with the latest trends in snacking according to Lynn Dornblaser of Mintel: value, simplicity and health. And these were well-represented on the trade show floor. Roughly 10% of the exhibitors were either Natural Products Expo regulars, or conventional companies with healthy-for-you products. Other trends in the sweet and snack world are real/natural sugars, and natural dyes. This trend is being driven by savvy moms and kids, and was confirmed by Kim Modolfsky from MomImpact.com – a firm that connects moms to brands. Also noted were trends outside the industry- specifically genome mapping. Michele Bowman from AndSpace says we will be seeing genome mapping being used to develop customized, personalized health products, and challenged the keynote audience to envision candy and snacks personalized to an individual’s satiety profile.

New products at the show demonstrate other trends, as well: twists on classic candy, calorie-conscious portions, and gourmet flavors. Treats such as vegan chocolate truffles, Vitamin Gum, Annie’s Gummy Bunnies, and Honey-Lovers Fruit Chews were favorites of industry leaders. Other items to note — more intelligent packaging and QR codes that engage consumers to go on a company website to find out about nutrition, sourcing, product story, etc. And of course, there is chocolate and a trend on ethical labeling such as fair-trade.

Speaking of chocolate, the last few years have shown an enthusiasm for more complex flavor profiles in chocolate bars (chile anyone?). This show had a handful of candy products taking on these sophisticated flavor profiles – notably in caramels and in the lollipop category — where tea flavors and ethnic spices gussied-up the ol’ sucker.

The show had a gourmet/natural/organic pavilion, but natural, organic, and gluten-free manufacturers were also found in-line next to the chocolate-covered Peeps, and an abundance of jerky products (the NRA show had a natural and organic pavilion, and a gluten-free pavilion, too).

Another strong contingent of exhibitors at the show were fixture companies (lots of POP displays), and companies with recycled/sustainable packaging. The Sweets & Snacks folks did a good job of connecting both products and merchandising with the Merchandising Solution Center.

While it’s refreshing to see the snack and candy world becoming more aware of the value of natural and organic, and products that provide healthier indulgences, Natural Products Expo still remains the place where both the buyers and the exhibitors are ahead of the curve and really understand their products. At Sweets & Snacks, the buyers are just getting up to speed. I overheard buyers asking “what is gluten-free? And even some of the manufacturers are at the beginning of the learning curve – not understanding the organic labeling on their products.

As far as products, I finally got to taste and sniff (yes, sniff) two unique products that I had only read about: Perky Jerky (a guarana-enhanced beef jerky), and Le Whif (a chocolate and coffee product that you inhale). My favorite product of the show was Flamous Organic’s shelf-stable USDA organic hummus. The product had terrific flavor, was organic and had a one year shelf-life – providing it a unique value proposition in the dips category. Other highlights include Nutorious nut blends, Mrs. Mays fruit and veggie chips, Sahale biscotti crisps; Tasty organic superfruit snacks, Peanut Butter & Co. kids snack packs, and DAS caramels.

While the Sweets and Snack industry still has a way to go, it’s encouraging to see the awareness of healthier ingredients and portion sizes. I’m looking forward to what this industry brings to the table in flavor profiles and packaging. While I’m waiting, I’ll be snacking and sweeting.

Industry stats (from the National Confectioners Association):

• Product launches in 2009:

• 2,843 new confectionery products debuted:

o Chocolate : 1,760

o Non-Chocolate: 969

o Gum: 114

• 2,980 new snack, cookie and cracker products debuted:

o Cookies: 808

o Crackers: 159

o Potato Chips: 300

o Popcorn: 96

o Nuts and Seeds: 289

o Cereal Bars: 401

o Other snacks (pretzels, puffed, fruit snacks, meat snacks): 927

• 52 week total confectionery sales:

o 56% chocolate

o 29% Non-chocolate

o 15% Gum

• Confectionery industry sales increased 4% in the 52 weeks ending 4/18/10

• Category Leaders:

o Chocolate:

§ Candy bars – up 11.3%

§ Chocolate Candy Box – 2.8% up

§ Chocolate snack size - 2.5% up

o Non-Chocolate:

§ Licorice – up 4.2%

§ Non-Chocolate Chewy Candy – 14.4% up

§ Novelty non-chocolate candy – 6.7% up

§ Plain Mints – 6.9% up

• Sugarless gum accounted for 87% of all gum sales in Q1

Take a look at the warning letters posted on March 3 on the FDA website and you can see the FDA is getting serious about claims. This batch of warning letters focus on products not meeting the requirements for nutrient claims, and also those making disease (prevention) claims.

As 2010 begins, healthcare reform, childhood obesity, and food safety top the news on a daily basis; consumers – both young and old – are increasingly digital-friendly; concerns for natural resources such as fossil fuels and water are influencing innovation; the current economy has frugality on the consumer mind; and a booming diverse ethnic population is making indigenous ingredients a mainstay of the developing consumer palate. Emerging from all these diverse factors is an overall concern for health – a trifecta of personal health, fiscal health and environmental health – and a new consumer that represents this concern. These are the tenets of the new “triple-healthy” consumer:

Triple-Healthy drives demand. This is already being demonstrated in what products are being introduced into the market. Although recent Mintel research reports food and beverage product launches down nearly 30% in 2009, growth categories include areas that reflect the new triple-healthy paradigm: foods that offer both nutrition and value; sweeteners such as those derived from stevia; gluten-free; ethical; environmentally- friendly; and weight-control. These attributes will continue to resonate.

Exotic is the new norm. Ethnic ingredients and flavors found in Thai, Japanese, and South American cuisine are influencing product development and the taste preferences of the next generation. These geographic areas are also emerging as food and beverage manufacturing hubs. Frozen and aseptic packaging is reducing the need for sodium as a preservative. This and increasing legislation around sodium will reduce the artificial salt palate. Ethnic ingredients and flavors will replace salt satiety.

Scam claims and ingredients are suspect. Increasing regulation on marketing claims, diligence on the safety of ingredients and food manufacturing processes by the FDA and consumer groups, and a growing consumer savvy on what is truly healthy will continue to influence consumer suspicion. Artificial colors, BPA, and fake sweeteners will become obsolete.

Digital delivers. Mobile devices and applications, rural broadband initiatives, and the continued growth of digital social networks have consumers turning to their peers around the world to vet products, claims and services. Consumers will continue to make more of their purchases online – where they can instantly check-in with their social groups, use apps to ensure “triple-healthy” attributes, and find the best price.

Sustainability endures. “Resource-Neutral” will become a new business metric. Getting from point A to point B efficiently, without the use of fossil fuels, and with the least amount of environmental impact will inspire new materials that create lighter, more-efficient packaging, and that require less energy to transport.

Triple-Healthy consumers will continue to have expectations around the products they purchase and the companies who make them. Their expectations will influence everything from flavor, to packaging, to pricing, to business partners. And these forces will converge to bring about a paradigm shift in food and beverage manufacturing where triple-bottom line is replaced by triple-health.

Functional Ingredients magazine reports this evening on the Dietary Supplement Act of 2010 that was introduced today by Senator John McCain (R-AZ). The proposed bill could have far-reaching impact for manufacturers of supplements and the retailers that sell these products. Full coverage by FI can be found here.

Take a look at the sea of front-of-pack labels in your local grocery store and you’ll see a growing wave of labels rating the nutrition-value of products. And it’s not just manufacturer’s touting this info on their products. Major retailers like Hannaford have introduced nutrition labeling systems to address their customer’s desire for healthy eating and help them “get the most nutrition for the calories.”

When you start to dig-in to these front-of-pack labels take note at the lack of standardization across them — and what Parke Wilde from the Friedman School of Nutrition Science and Policy at Tufts University says has criteria that “seem arbitrary.” In a recent blog he offers three criteria for food scoring systems that include: rating food in a consistent manner, not basing the score on serving size, and rating nutrients independent of each other.

Consumers have already taken manufacturers to task for making “healthy” claims for products like Lucky Charms. And as they become more educated about what makes good nutrition, we can expect them to turn their scrutiny towards natural products and retailers, as well. The question for the natural products industry is how will we prepare for the coming scrutiny? Will we wait for government intervention? Or will we take the lead (similar to organic in the late 90’s) in setting a standard that will solve for consumer need and integrity?