Pretzel Sector Growth Continues


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Washington — While inflation has prompted many consumers to begin carefully managing their grocery budgets, there has been an unexpected increase in pretzel sales during the past year compared to the previous 12 months. Despite shrinking food budgets and increasing costs, many snack makers anticipate this upward trend will persist, even in the face of ongoing challenges in the market.

Mark Chu, senior director of marketing Hershey Salty Snacks for The Hershey Co., owner of the Dot’s Homestyle Pretzel brand, notes the team has witnessed robust growth in the snacks market. Consumers are increasingly exploring the pretzel sector for a variety of occasions, marking a shift in consumption patterns, he says.

“As we look at the trends that have stuck out over the last year, we’re most excited about consumer desire for salty snacks to strike the right balance between familiarity and newness,” Chu remarks. “As we continue to innovate across our portfolio, we’re looking at ways to use our tried-and-true brands and product categories, while incorporating innovative twists on the classics.”

Chu goes on to mention that as the population strives to distance itself from the lingering effects of the pandemic, the trend of at-home consumption continues to act as a supportive factor, contributing to the positive momentum in pretzel sales for various reasons.

Karl Brown, president and founder of Pretzel Pete, Inc., says that Hershey’s acquisition of the Dot’s brand in 2021 served as a significant moment for all other companies operating in the sector.

“Without question, the growth of Dot’s and the subsequent purchase by Hershey has shed the seasoned pretzel segment in a whole new light,” he explains. “An entirely new generation of consumers is gaining an introduction to seasoned pretzels and looking to now experience new flavors and brands.”

Looking At Data

In the past year, consumers have maintained an appetite for the salty, twisted snacks, regardless of inflation driving up material costs and prices. Despite these challenges, shoppers have increased their pretzel purchases by 1.7 percent, according to Circana market data.

The combination of a modest rise in pretzel consumption and significant price hikes has resulted in a notable 17.2 percent increase in dollar sales, reaching a total of $2.2 billion.

In the traditional pretzel sector, all ranked players experienced a surge in sales during the 12-month period. Snyder’s of Hanover claimed the top spot among producers, reaching $633 million in sales, reflecting a 15.1 percent increase. Private label pretzels held the second position with $340.1 million in sales, marking a substantial 21.7 percent growth. Dot’s Homestyle Pretzels, ranking third with $328 million in sales, notably recorded the largest increase at 32.6 percent.

The Past Determines The Future

In recent months, Justin Spannuth, COO of Unique Pretzel Bakery, Inc., notes pretzel consumers have been exploring a combination of familiar classics and new, adventurous options.

“Consumers have remained dedicated to their core products, but they also like to try new things,” he remarks. “As the economy keeps slowing, it is keeping people eating in more and spending less on restaurant dinners, but it hasn’t gotten bad enough that middle market consumers aren’t spending on higher-end snacks and grocery foods. This is constantly evolving and can pivot at any point with significant economic swings.”

Brown agrees, adding the Pretzel Pete brand has experienced a particularly positive period in recent months.

“As we have been well-established in the seasoned pretzel space, we have seen a marked increase in new customers reaching out to discuss new projects as well as strong growth from almost all of our longer-term customers,” he says.

Consumers are increasingly seeking diversity and excitement in their pretzel choices, moving beyond traditional salty twists, according to Brown. Ongoing flavor trends such as spicy varieties and global flavor profiles that have been seen across other sectors are now appearing in the pretzel space.

Brown surmises that pretzel producers might also find opportunities in the better-for-you space.

“I’m starting to hear noise about pretzel derivatives that offer lower carbs and increases in either fiber or protein,” he notes. “Traditional wheat-based pretzels have ridden a roller coaster as carbs are often targeted in many diet regimens. There is room for pretzel products that could offer the usual taste and texture experience but perhaps without as many carbs.”

Spannuth also points out: “New flavors embracing global cuisine profiles are really on trend as well as trying to find ways to become more sustainable, including products promoting a reduction in food waste or reduction in resources to grow and produce.”

These trends first appeared due to the pandemic but have sustained over the past year mainly because of inflation, says Brown. “This has caused consumers to shift eating from higher-cost out-of-home to generally lower-cost at-home,” he observes.

A Glance Into the Future

Chu suggests that producers should anticipate the persistence of various challenges that snack companies have encountered in recent years, with the potential for new challenges being added to the list.

“Inflation will continue to be a mainstay this year as consumer spending habits continue to shift,” he guides. “With overall market changes such as student loan repayments beginning again, we expect to see a continued major impact on consumer spending, especially for millennials, one of the main consumer segments for snacks.”

Brown mentions that the cost and price challenges experienced in recent months are likely to persist, demanding a remarkable degree of adaptability and resourcefulness from snack makers.

“By far the biggest downer was the increase in ingredient costs, corrugated, and trucking in 2022 and into early 2023,” he notes.

While some of these costs have started to moderate, it has become a challenge trying to balance the growth in demand at the same time inputs were increasing, Brown adds. “It was impossible to increase prices at the same rate, and we have had to be very careful with our expenses during this period.”

Spannuth anticipates that, despite certain challenges easing, producers should not anticipate a straightforward path ahead.

“All challenges have certainly diminished, but the issues that were highlighted over that time have lingered and still exist in a diluted state,” he says. “Cost increases are still happening in a few areas, supply chain is still slower than pre-pandemic, as well as the labor shortage. All are better, but none are back 100 percent to 2019.”

Despite facing challenges, the pretzel sector has witnessed significant growth in the last 12 months. Observers such as Chu express optimism about the continuation of this trend.

“The pretzel category is ripe with brands and products that continue to get it right as we’re all working to respond to the shifting preferences of consumers,” he remarks.