Millennials and iGens (aka Generation Z) are changing the snack market as they opt for more “fresh” options, according to research from Mintel. The trend has big implications for refrigerated consumer packaged-goods brands and is influencing how retail is merchandised.
In the “Future of Fresh,” Mintel details that younger consumers have motivated companies to make this move as many of them marked “Is fresh” as their #1 purchase driver. As the report states, “fresh” is defined by consumers as clean label, free of additives and preservatives, and either refrigerated or part of the produce section.
Products such as hummus, guacamole, smoothies, drinkable soups and protein snack packs all fall into this category. As the trend now moves beyond its infancy, there will be an abundance of opportunities for producers and retailers.
It was between the years 2008 and 2016 that the market experienced a significant acceleration with the percentage of Fresh-Snacking product launches increasing by four times that of any time prior to this period. This can also be observed in the blossoming “Fresh Snacking” market which grew by 8% annually over a 3-year period, but also in the $40 billion “Conventional Snacking” market as it saw a 2% decline annually over the same period of time.
What is of great interest is the fact that this market shift is allowing brick and mortar stores to compete with e-commerce. Fresh snacking and e-commerce as a whole experienced growth during the same period of time, showing that the growth of this niche was based in brick and mortar stores.
As the report states, there are conflicts with e-commerce and the shift towards fresh snacks as there are inefficiencies in the cold supply chain that do not comply with how these fresh products would have to be delivered to consumers. This has opened up the opportunity for “traditional” brick and mortar stores to capitalize on this omnichannel macro trend. Bill Keith, founder and CEO of Perfect Bar who sponsored the research, said in a press release,
“Since being a pioneer of the Fresh set more than a decade ago, we’ve watched as consumers’ adoption of a ‘fresher-is-better’ mindset has driven more brands to the perimeter of the store and, in turn, shifted the retail layout to focus on making the fridge set a prominent shopping destination.”
The report found that “96% of perimeter shoppers don’t purchase fresh online: 49% due to uncertainty of freshness, 48% don’t think about buying Fresh online and 46% are concerned with quality.” These findings show that until e-commerce comes up with a way to give consumers a way to see, feel, and smell the products that promise freshness for themselves without the high cost of expedited shipping and additional packaging/shipping material, brick and mortar will maintain its advantage in this market.
This trend has a promising future as the report indicates that Health and Wellness snacking is projected to reach $20 billion by the year 2020 with Fresh Snacking leading with 9% CAGR. With this trend being prominent in both the millennials and iGeneration, the expected growth of this trend does seem likely.