The snack industry is closely tied to the fizzy, sugary drink industry. Because the same few mega-manufacturers own most of the popular snack brands. And they’re facing what may be the toughest battle of their corporate lives…
Just the nine biggest-selling brands: Pepsi owns dozens…
The Cocoa Cola Company and PepsiCo both own dozens of snack and beverage brands. And they’ve been making a monumental push since the start of this year to convince consumers their UPF pro-ducts are actually healthy. International snack-first mega-brands such as Nestlé, which owns a whole slew of confectionery brands, are also on that bandwagon.
Notably, Campbell’s – The Soup People – also a major player in the snacks and pop sector. And Mick Beekhuizen, Campbell’s CEO, said recently, in prepared remarks to shareholders, his team is facing a major challenge that will require ‘tough decisions’ in its snack division.
” I want to highlight what gives me confidence in the future,” Beekhuizen started off. “Consumers are not only seeking affordability, but also the comfort, flexibility, and personalization that comes with preparing meals at home. Digital ordering and the social media-enabled recipe hack culture add convenience and creativity in a way that was never [before] possible. That makes this trend partic-ularly powerful for The Campbell’s Company, because helping people easily create meaningful, satisfying food moments at home is exactly where our Meals & Beverages brands are strongest.”
However…
“[Snacks] growth was under pressure, down 4 percent, driven largely by consumption softness as a result of purposeful, short-term decisions intended to stabilize our fresh bakery operations and weakness in our salty snacks business.” Beekhuizen admitted. Adding, “I’m pleased with the early changes being implemented by our new leadership team. Most importantly, we are putting the con-sumer front and center in everything we do.”
And there you have what might be taken as a snapshot of the whole snacks sector.
The ‘modus operandi‘
Crooks are often said to practice a defined pattern in their crimes. That’s referred to in police proced-ural TV shows and movies as the ‘MO’. Right now, snack and soda makers are all adopting the same ‘MO’ – all doing the same things to convince you their products are healthier than they really are.
A looming Crisis
The corporate behemoths that push snacks and sugary drinks have historically operated unhindered by consumer doubt about healthiness of their products. They sold their wares based mainly on the ‘fun’ factor, and the social advantages they claimed for their brans. “Things go better with Coke!”
But now, snack and soda sales are declining at a worrying rate, and the makes are struggling to grab onto the coattails of the emerging, fast-rising functional foods and beverages category.
Why?
Snack and soda sales are, in fact, plummeting, according to some industry watchers. But ‘funct-ional’ foods and beverages are taking off.
That’s because the up-and-coming generations – Millennials and later – are increasingly choosing healthy hydrators (e.g.- Gatorade) which deliver vitamins, minerals and other essential nutrients.
The younger folks are also demanding healthier foods, which has shown up as an increased interest fresh foods, and ‘functional’ ingredients such as protein and fibre.
What’s happening?
As it happens… The conventional snack and recreational beverage industries are also fairly closely allied with the functional foods sector, under the same corporate umbrellas.
Giants such as Pepsi and Coke have, in the past year or so, started buying up smaller functional products companies in hopes of getting on the bandwagon. And in so doing, acquiring the upstarts’ expertise in formulating functional options.
New products already emerging
The recreational foods monster-corps are almost exclusively promoting their new functional brand acquisitions right now. And ‘functional’ versions of their flagship products – largely soda and chips – are starting to appear on store shelves in all the old familiar places…
By the end of the year, the ‘functional’ factor will be totally blended into the snack and soda makers’ corporate identities.
My take
We’re seeing a major shakeout and course change in the snacks and soda sectors. And what the industry – and corporate behemoths like Coke and Pepsi – may look like when the smoke clears remains a tantalizing mystery…
~ Maggie J.