Cleveland — Snacks made from alternative ingredients are gaining awareness and experiencing sales growth. Appealing to a broad demographic spanning gen X, millennials and boomers, as well as vegans and flexitarians, introductions of chips, crisps and puffs made from ancient grains, plant products, legumes and produce are on the rise.
“Consumers are showing a willingness to try a variety of previously unheard of ingredients,” confirms Sally Lyons Wyatt, executive vice-president and practice leader at Information Resources, Inc. (IRI). She points out snacks containing sorghum protein grew 55 percent in dollar sales and adds that even new-to-market products such as popped water lily seeds are gaining traction, though sales are still relatively small compared to other snacks in the sector.
“According to our 2019 survey, 49 percent of American consumers of all ages report increasing consumption of food items made from plant-based ingredients,” Tom Vierhile, vice-president of strategic insights, North America at Innova Market Insights, tells Candy & Snack TODAY. He adds that the percentage is highest for 18 to 35 year olds (61 percent) and lowest for consumers older than 55 (37 percent), while the middle group, 35 to 55, accounts for 52 percent.
“Snack makers are using iconic ingredients to connect with consumers seeking healthier snack options,” explains Vierhile. Among them are products featuring cauliflower and avocado as ingredients, which are showing high compound annual growth rates of 96.4 and 48.8 percent, respectively, for the period from 2017 to 2019, albeit from a small base.
Snack aisles are featuring more of these products than ever before, a nod to shifts in consumer preferences. “The tide has definitely shifted,” says Mark Andrus, founder and president of Mark’s Mindful Munchies, Inc., a startup making air-popped sorghum snacks. A founder and past owner of Stacy’s Pita Chips, Andrus notes: “When Stacy’s launched in 1997, the natural aisle of grocery stores had little traffic and low sales. Now these sections get such good traffic that many stores place natural snacks alongside the regular snack sets or the products are integrated with conventional snacks.”
Dustin Finkel, founder and CEO at Ancient inGRAINed Snack Co., maker of Ka-Pops! popped sorghum snacks, agrees. “These snacks used to get two feet, now many stores have six-foot sections,” he says. “This helps increase awareness and drive sales.”
A Sector Not Without Its Challenges
As manufacturers seek to continue growing their audience and sales, they face challenges. For starters, price points. “We work with retailers to promote our product regularly to reach price-conscious consumers,” says Hass Alireza, founder and CEO, Natural Intentions, Inc., maker of Daily Crave Beyond brand churros, puffs and chips made with lentils and quinoa. He points out consumers don’t mind paying promotional prices in the $2.50 to $3 range to try alternative comfort foods.
Typically, however, these snacks can cost 30 to 50 percent more than their conventional counterparts because of a higher ingredient costs, notes Ian Walker, founder and president of Ike Enterprises Inc., maker of Hippie Snacks. He does add that products must fall within a competitive “pricing window.”
Finkel, who recently appeared on ABC’s Shark Tank — no deal, but uber exposure — stresses the importance of strategic pricing. “Breaking into the mainstream is a huge challenge for premium products at premium price points,” he tells Candy & Snack TODAY, explaining: “Companies in this space must figure out ways to source ingredients efficiently and grow in ways that enable accessibility for a broad audience.”
There’s also something to be said about premium products that deserve a premium price, sources report. “When the product tastes great and meets the dietary needs and wants of consumers, they are going to seek it out,” says Jason Galante, vice-president of sales for Mary’s Gone Crackers, Inc. He says this is something buyers need to understand. “Bottom line: the right premium products increase basket ring.”
Another challenge is converting skeptics wary of the taste of snacks made with alternative ingredients. The good news is that there now exists myriad flavors, ranging from cayenne, chipotle, jalapeno, rosemary-garlic, siracha and vegan cheddar, the latter being especially difficult for the uninitiated to swallow, making in-store and event demos critical.
“We’ve done thousands of hours of demos and product sampling,” says Finkel. He says this helps eliminate any pre-conceived ideas consumers have about how the products taste.
Nadine Habayeb, cofounder and CEO of LES Foods Inc., makers of Bohana brand snacks and also a Shark Tank alum — deal with Kevin O’Leary — also relies on demoing, which she refers to as the startup’s biggest revenue engine. “Once people try our popped water lily seeds they want them,” she says, crediting co-founder and COO, Priyal Bhartia, with introducing her to the ingredient.
Another tool used by the young entrepreneurs at LES Foods is social media influencers. “We are shipping product to dieticians and popular foodies to help get the word out,” says Habayeb. The company also sponsors yoga retreats and Girlboss Rally events, which attract thousands of female entrepreneurs.
Christina Finkel, chief marketing officer at Ancient inGRAINed (and Dustin’s wife) is working with two NFL players to promote product on Instagram and Twitter, pro bono. “One has a daughter with food allergies and wants safe snacks,” she explains, “and the other is moving toward a plant-based diet.”
At Ike Enterprises, Walker says creative promotions help educate consumers. Preparing to launch its Snack Au Naturel campaign, the company will challenge 80 social-media influencers to make cauliflower crisps at home to show what goes into making the product. In addition, the company is rolling out an unusual three-for-one promotion in Canada and the Pacific Northwest where consumers who purchase three bags of its Avocado Crisps get a free avocado.”
Also among the challenges facing companies in the alternative ingredient snack sector is effective on-pack messaging. Products in the segment feature graphic styles ranging from comic-book inspired illustrations on Ka-Pop! packs and newspaper-style Daily Crave bags, to Bohana brand’s colorful water lilies and Mama Chia’s soulful silhouetted woman. Habayeb says it’s important not to overwhelm consumers with too much on-pack information.
“Packaging can be tricky,” adds Andrus. “The target consumer looks for packages that convey health benefits and taste. The words and aesthetics have to convey both.”
Galante agrees, stressing that callouts must be concise — plant-based, gluten-free, first ingredients, etc. — and strategically positioned for easy viewing. “When the consumer walks down the aisle, she should be able to see your messaging — what we call walking attributes.”
Bright Future Ahead, But When?
What the post-pandemic economic landscape will look like is anyone’s guess as this is being written. For now sources in the alternative ingredient snack sector remain optimistic about product innovation and industry growth, with one stating: “We will achieve our projections, though it may take 14 months instead of 12.” Others indicate they might be relying on core flavors and products at least for the short term, sticking with options that are most familiar to consumers.
“Even with a recession, the impact won’t be huge,” predicts Andrus. “When this bleak period is over, people will treat themselves and food is one of the first items they will turn to.”
Some foresee acquisitions of startups by large CPG companies. Analysts such as Lyons Wyatt express caution: “It depends on how fast we recover from the current pandemic and impending recession,” she says. “The majority of large CPGs will focus on rebalancing their portfolios. We might see a wave of innovation and R&D, but likely not until later this year or in early 2021.”