MARKET ACCESS SECRETARIAT Global Analysis Report Consumer Trends Snack Bars in the United Kingdom February 2014 EXECUTIVE SUMMARY CONTENTS The snack bar market in the United Kingdom (U.K.) was Executive summary ........................ 1 valued at US$821.1 million in 2012, benefitting from a nation of consumers looking for convenient, on-the-go meal and snack Introduction ..................................... 2 options. The market is expected to grow to US$1.05 billion by 2017. Retail sales ..................................... 2 Close to half (47%) of British adults eat snacks on-the-go Competitive Landscape ................. 3 (while away from home, work or place of study) at least once a week. Mintel estimates there are 6.4 billion on-the-go adult Consumer Attitudes ........................ 4 snacking occasions annually, with 16-24 year olds and 35-44 year olds together accounting for around 1.5 billion of those Snack Bar Trends……………… ..... 5 occasions. Market Shares by Brand................. 7 Furthermore, close to 18% of adult consumers in the U.K. report snacking on-the-go at least once a day. This rises to Distribution Channels ..................... 9 33% among 16-24 year olds and 38% among students, according to Mintel (June 2010). Product Extensions and Innovation ............................. 10 Consumers in the U.K. are particularly big on-the-go breakfast eaters, with 22% of adults having breakfast outside of the home at least once a week. This trend is more New Product Examples ............... 12 prevalent amongst men (27%), consumers who work or go to school full-time (33%) and the 25-34 age demographic (38%), Resources ................................... 13 according to Mintel (February 2011). INTRODUCTION The snack bar market in the United Kingdom (U.K.) was valued at US$821.1 million in 2012, benefitting from a nation of consumers looking for convenient, on-the-go meal and snack options. A 2012 Mintel survey found that 67% of adults have eaten a cereal, energy or snack bar within the six months ending November 2012. According to the same survey, women under 35, living in large households, and those with children recorded the highest consumption of cereal bars. Consumers over 55 years of age showed the lowest consumption rate of cereal bars. Close to half (47%) of British adults eat snacks on-the-go (while away from home, work or place of study) at least once a week. Mintel estimates there are 6.4 billion on-the-go adult snacking occasions annually, with 16-24 year olds and 35-44 year olds together accounting for around 1.5 billion of those occasions. Furthermore, close to 18% of adult consumers in the U.K. report snacking on-the-go at least once a day. This rises to 33% among 16-24 year olds and 38% among students, according to Mintel (June 2010). Consumers in the U.K. are particularly big on-the-go breakfast eaters, with 22% of adults having breakfast outside of the home at least once a week. This trend is more prevalent amongst men (27%), consumers who work or go to school full-time (33%) and the 25-34 age demographic (38%), according to Mintel (February 2011). While cereal and snack bars cannot be sold in British schools under School Food Trust (SFT) guidelines, many schools do accept them as part of a packed lunch. This makes the lunchbox occasion a very lucrative market for snack bars. Retail sales of snack bars are expected to register a compound annual growth rate (CAGR) of 3.0% from 2012 to 2017, to reach an estimated US$1.05 billion by 2017. Retail Sales A number of consumer trends have worked in favour of the snack bar market in the U.K., such as the longer-term rise in snacking on the go, as well as an overall rise in snacking between meals. The ongoing public focus on healthy eating has also benefited the snack bar market. Snack bars are widely perceived as a healthier alternative to products like chocolate or confectionery, but due to product variation, they also enjoy a strong image as a treat. Product developments and innovation have been key drivers of growth in recent years, supporting visibility and consumer interest, and helping attract new clients to the market. The projected growth of the upper middle class in Britain will undoubtedly continue to provide growth potential, since this group is the most likely to buy expensive, higher quality snack bars. Page | 2 Snack Bars Market Size in the United Kingdom Historic/Forecast Retail Value Sales in US$ millions Categories 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Snack bars 631.8 677.9 726.8 772.4 821.1 870.3 915.0 954.7 1,005.2 1,050.8 Breakfast bars 403.4 411.7 421.9 428.1 432.8 436.4 432.6 424.3 426.6 429.1 Granola/muesli bars 98.1 109.4 129.8 149.6 168.0 187.3 206.9 224.8 241.1 255.4 Other snack bars 68.3 84.6 92.0 100.5 111.9 122.2 133.3 144.9 157.3 170.4 Energy and nutrition 37.6 48.5 59.9 71.6 86.2 102.5 120.8 139.6 159.6 175.7 bars Fruit bars 24.4 23.7 23.1 22.6 22.2 21.9 21.5 21.1 20.7 20.1 Euromonitor, 2013. : Calculated totals/sub-totals may not add up to exact figures due to rounding. Source: Note The snack bars category is comprised of breakfast bars, granola/muesli bars, other snack bars, energy and nutrition bars, and fruit bars. It reached a market size of US$821.1 million in 2012, an increase of 3.1% from 2011 and a CAGR of 4% since 2008. Overall, the snack bars market has grown 23% in value since 2007. Breakfast bars represented over 50% of all snack bar sales in 2012, but continues to decrease in demand, as other sub-categories such as granola/muesli bars and energy and nutrition bars continue to gain popularity with consumers seeking healthier and more natural snack bars. Over the forecast period, the value of the snack bars category is expected to continue to grow at a CAGR of 3%, and its volume is expected to grow at 4%. The category is expected to reach over US$1.05 billion in value sales by 2017. Breakfast bars are expected to decrease in value growth over the forecast period with a negative CAGR of 2.1%, while energy and nutritious bars are expected to continue to gain popularity, recording a CAGR of 13% over the same time. Competitive Landscape The snack bar sector is in competition with a wide variety of other snack products ranging from chocolate to sandwiches. Cereal, snack and energy bars are only recently gaining traction in the mainstream market, compared to long-established snack sub-sectors with more potential to attract both new manufacturers and users. While sales are growing, cereal, snack and energy bars still comprise a much smaller market compared to most leading snack categories such as chips, cakes and chocolate confectionery. Communicating fruit content is a major way in which British snack bar brands are working to increase their natural health credentials. Despite its competitive environment, there are opportunities for cereal, snacks and energy bars. For example, the world of sports has become a key area for the snack bar category in the U.K. Brands Page | 3 are becoming more specific regarding the type of athletic support they provide, and the type of benefits they can offer to athletes. As the British snack bar market is currently going through a period of growth, manufacturers from other categories, such as biscuits, are looking to the category to extend their brand presence. Type of Cereal, Snack and Energy Bars Consumed in the United Kingdom – November 2012 Any Kellogg's Special K bar Nature Valley Go ahead! Cadbury Brunch Bar Kellogg's Rice Krispies Squares Belvita Biscuits / Yogurt Crunch Tracker Bar Alpen / Alpen Light Other cereal/snack bar Kellogg's Nutri-Grain* Jordans Other breakfast biscuits Eat Natural Quaker Oats So Simple morning bar Energy Bar (eg PowerBar) Other 0 10 20 30 40 50 60 70 80 % Eaten Bought Source: Mintel, 2013. Consumer Attitudes In a recent survey, Mintel identified four target groups among adult British consumers according to their attitudes toward cereal, snack and energy bars. Compared to average consumers, these users are all more likely to eat cereal bars as an alternative to other snacks, or as an accompaniment to hot drinks. They are also more likely to use snack bars as a part of both adult and children’s lunches. Adventurous (22%) Health Benefit Seekers (26%) Interested in new types of bars. Strong interest in health-related Convenience and functionality play a attributes. Keen on new types of bars. major role. Characterised by 25-34 Health Characterised by women, over-45s, year olds, and households with Benefit households with incomes of US$39,000 incomes of US$39,000 Adventurous Seekers and those without children. 22% 26% Bar Lovers (24%) Disengaged (28%) Show high enthusiasm for snack bars. Characterised by apathetic and Bar Lovers Positive value perception. Interested unemotional approach to cereal bars. 24% Disengaged in natural ingredients and added 28% Price-driven shoppers. Geared towards nutritional benefits. Geared towards the 16-24 and 45-64 year olds, and under-45s, Londoners, those employed households with incomes under full-time, and households with incomes US$24,000. of US$24,000-US$39,000. Source: Mintel, 2013. Page | 4 The survey also demonstrates consumers preferences for cereal, energy and snack bars.