Sector Insight: Savoury biscuits - Health infusion

Added seeds and grains are helping drive savoury biscuits' growth as a snack option. Jane Bainbridge reports.

THE BACKGROUND

The savoury biscuit market has seen considerable growth in recent years, benefiting from the growing consumer trend toward healthier alternatives to sweet snacks. Manufacturers have also given the market greater appeal by introducing exciting products and flavours, and moving away from the 'diet' sector while emphasising the health benefits of the biscuits. There is plenty of opportunity for further growth, especially among parents who are keen to encourage their kids to eat more healthily.

Crackers and crispbreads make up more than three-quarters of the £285m savoury biscuit market and are estimated to be worth £219m this year - an increase of 38% since 2000.

Cream crackers are the most popular choice, and rice crackers are one of the fastest-growing products in the sector, up 75% between 2000 and 2004 to £68m in sales.

The desire to provide healthy alternatives to sweet and fatty foods for children has boosted this category. The fact that the sector is considered healthier than other food categories also means it does not face the same pressure from the government over ingredients or advertising to children.

Many manufacturers have recognised the value of their brands' healthier status and are promoting products as 'naturally low fat' or 'high in fibre'. Some have added seeds and grains to reinforce the health message or are exploiting the GI diet phenomenon to promote their crackers or crispbreads as 'low GI'.

The biggest consumers in this category tend to be older adults, people living alone and affluent consumers. The good news for biscuit manufacturers is that these demographic groups are growing. These heavy users account for 4.1% of the population, according to TGI.

Youth appeal

The launch of mini versions of existing snacks have attracted new, younger consumers to the sector and are especially popular among 35- to 44-year-olds. Meanwhile, the even younger 16- to 34-year-old age group has been drawn to the category by the introduction of more varied rice cakes.These are now available in a range of flavours and have moved out of traditional diet and food-intolerance territory.

The dominant manufacturer in this category is United Biscuits (UB). Since its purchase of the Jacob's business from Danone for £240m last year, its share of the market has increased to 40%. Its brand portfolio now comprises Jacob's, McVitie's, Carr's and Krackawheat.

The purchase of the the Jacob's business means UB now owns the iconic Cream Crackers brand. First introduced in 1885 it has become synonymous with cheese eating. In January, under UB's ownership, it introduced Essentials Crackers, with herbs and seeds.

Another integral part of the Jacob's portfolio is Thai Bites, described by UB as a 'safe adventure' in the rice cracker market, with less than 5% fat. However, in December the company announced it was cutting back the Thai Bites range to its three bestselling flavours. This meant axing the Seaweed and Mild Chilli variants. The range, which was first launched in 2001 with a £1.2m campaign, has suffered from the success of competitor Quaker's Snack-a-Jacks.

In November, UB extended its Go Ahead! range to include savoury snacks as part of a relaunch, which included new packaging and design.

In contrast, UB's print campaign last month for its Carr's biscuits highlighted the absence of changes to the recipe, pack design or size, with the tagline 'Carr's. Perfect as we are'.

Quaker, part of PepsiCo, is number two in the market with an 18% share, up 6% since 2003. Its big success has been the Snack-a-Jacks brand, now worth £50m, to which it added two new sweet flavours - chocolate chip and chocolate orange - to its Jumbo range in April 2005. The sweet versions of these rice cakes have proved especially popular.

Product extensions

Quaker also introduced Quaker Seasons, an oven-baked crackerbread snack, in December 2004. It was supported with a £10m marketing budget and is available in three flavours: cheese, onion and chives, salt and cracked black pepper and Caribbean chicken.

The savoury biscuit category provides retailers with an opportunity to reach consumers who generally try to avoid less healthy snacks. However, some retailers are recognising the opportunities more than others. 'Research shows that healthier shoppers avoid the temptation of shopping in the snacks or confectionery aisles' says PepsiCo trade manager Nicky Seal.

'However, many impulse outlets have been slow to pick up on the healthier snacking opportunity, and are losing out on a valuable and growing market that the multiples have already picked up on.'

Another important player in this market is Ryvita, which has been revitalised through intensive product development and advertising in recent years.

The brand has repositioned itself as a healthy-eating brand rather than a diet one and has grown 33% since 2003, according to Mintel. The Ryvita Minis extension has taken the brand successfully into the bagged-snack market.

US innovations

US trends in the savoury biscuit market such as reduced trans-fat content and packaging crackers in 100-calorie packs to help with portion control, are likely to arrive in the UK. Adult lunchtime snack packs similar to those aimed at the kids' market in the UK, such as Dairylea Lunchables, have also been introduced in the US, but with ingredients more suited to adult tastes.

There is also potential for the development of products specifically for the children's market, such as shaped crackers, which would appeal to parents who want to encourage their children to eat healthier snacks.

The nation's obsession with healthy eating and the variety of new products on the market mean the future of the category looks healthy. Growth is predicted to be 33% at current prices, taking the market to £380m by 2010, according to Mintel. This is equivalent to real-term growth of 23%. Crackers and crispbreads are predicted to experience the biggest growth, with savoury biscuits close behind.

SAVOURY BISCUIT BRANDS BY MARKET SHARE, 2005 pounds m % 1 Quaker Snack-a-Jack rice snacks 46 16 2 Jacob's Cracker Collection (including Cheddars, 24 8 Mediterranean, Herb & Spice Selection) 3 Ryvita Crispbread 20 7 4 Jacob's Tuc (including Mini Tuc) 17 6 5 Jacob's Cream Crackers 14 5 6 Jacob's Ritz 10 4 7 Jacob's Thai Bites 6 2 Own-label 123 43 All other brands 25 9 Total 285 100 Source: Mintel SAVOURY BISCUIT COMPANIES BY ADSPEND (£000) 2000 2001 2002 2003 2004 2005 1 Quaker Oats 0 0 0 4093 0 4199 2 Ryvita Company 1283 250 1018 1793 2987 2727 3 Jacob's Bakery 2135 3368 2824 3523 1195 1856 4 McVitie's Group 2390 3422 0 0 0 0 Others 615 541 45 115 114 55 Total 6423 7580 3886 9524 4296 8836 Source: Nielsen Media Research/Mintel SAVOURY BISCUIT COMPANIES BY SALES VALUE, 2005 pounds m % 1 McVitie's (United Biscuits) 114 40 2 Quaker (PepsiCo) 50 18 3 Ryvita 30 11 4 Kallo Foods (Garma Foods International) 8 3 Other brands 12 4 Own-label 71 25 Total 285 100 Source: Mintel *Jacobs acquired by United Biscuits in 2004

ANALYST COMMENT - ALICE DIEPENBROCK, UK MARKET ANALYST, EUROMONITOR INTERNATIONAL

Sales of savoury biscuits have been increasing in the UK in line with rapid growth recorded for the wider snack arena. But, unlike snacks such as crisps and nuts, savoury biscuits have a narrow consumer base, dominated by older, wealthier men. This core consumer group tends to be brand-loyal and unlikely to try new offerings.

Consequently, manufacturers are keen to update their products to cater for younger consumers who are driving growth in snacking, as they are more adventurous and willing to pay higher prices.

Jacob's Thai Bites was one of the first cracker brands to enter this new territory with some initial success. The industry has come a long way by tempting consumers with more exciting flavours, far from the blandness of original crackers. The Mediterraneo line, for example, includes ingredients such as sundried tomato, pesto, and garlic.

Flavour is one trend affecting the market, but growing health concerns are equally important. Consumers are looking for snacks containing little salt or calories and savoury biscuit manufacturers are working hard to make crackers fit the bill.

Jacob's new Essentials range claims to contain less fat and more fibre.

Kettle Chips is also reported to be planning to bring lentil-based Crispy Bakes with both Oriental and Italian flavours to the market early next year, positioned as a healthier snack.

The difficulty arises when initial consumer interest wanes, since the newly converted cracker fans quickly move on to the next offer. Thai Bites are already in decline, with two variants recently discontinued - a fact that suggests product life cycles are becoming ever-shorter.

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