Euromonitor: Health is on the menu

Health is on the menu Health is on the menu

Consumers have been increasingly opting for healthier versions of their favorite baked snacks, a Consumers have been increasingly opting for healthier versions of their favorite baked snacks, a trend that boosts sales across flavor categories, from sweet to savory. After a year that saw a trend that boosts sales across flavor categories, from sweet to savory. After a year that saw a reevaluation of entire supply chains, the use of ethical, health and dietary claims in Sweet and reevaluation of entire supply chains, the use of ethical, health and dietary claims in Sweet and Savory Biscuits* in Western Europe is more important than in any other region worldwide, Savory Biscuits* in Western Europe is more important than in any other region worldwide, Euromonitor finds. Euromonitor finds.

+In the last five years, organic and free-from gluten sweet biscuits have seen the biggest growth in Western Europe. The market also faces rising competition from fruit and nuts bars, as consumers look for more reduced sugar and on-the-go snacks. This trend is very similar in the savory biscuits category, as consumers are seeking healthier alternatives. Vegetables, pulse and bread chips, popcorn and rice sales have grown accordingly, at CAGRs of 23%, 5% and 8% respectively from 2015 to 2020, in contrast to savory biscuits, where sales have grown by a 1.5% CAGR. All these categories should maintain positive results in the next five years but as the first three gain in maturity, their sales increase should gradually slow.

Despite current external factors, permissible indulgence remains a hot topic in food and drinks, health-conscious consumers included. Consumer purchasing power is forecast to suffer as a result of the pandemic – but health through food will remain important, and demand for premium, indulgent snacks will keep growing in the future.

Consumption priorities when in lockdown

Sales of sweet biscuits showed very positive growth in 2020, especially in North-Western European countries, where year-on-year value sales increased by 6%.

Savory biscuits posted a slightly more modest performance in Western Europe, rising by 4%, with the most significant growth in Ireland (12%) and Germany (8%).

In the first month of the pandemic, national lockdowns and panic buying had led to massive stockpiling across the whole region. Today, consumers are still looking for convenience and shelf-stable food as they spend most of their time at home, and while foodservice remains closed. With the rise of e-commerce and home seclusion, consumers have also shifted their consumption from on-the-go snacks to larger pack sizes. But with less opportunity to go outside, they are increasing the time they spend in their kitchen. In some countries, such as the UK and France, flour was barely accessible in the first month of lockdown. Yeast was largely missing from supermarket shelves throughout Europe in spring. The supply chain has improved since, and home-made snacks have become an important competitor for packaged biscuit manufacturers.

* Cookies and crackers are called sweet and savory biscuits according to Euromonitor’s categorization

The supply chain ripple effect

In 2020, the entire packaged food industry has had to reimagine its supply chain strategy across Western Europe. With stockpiling and the closure of foodservice, demand increased brutally in March 2020, and shelves were drained quicker than they could be refilled. Food manufacturers have had to rethink their supply chain since. Some of the common strategies evident in Western Europe include expansion of the supplier network, outsourcing production, as well as streamlining product portfolios - keeping fewer variants and focusing on those in highest demand. According to Euromonitor’s Voice of the industry survey, in October 2020, 26% of European professional respondents declared that their company had reviewed or adapted their supply chain for business continuity.

During the first lockdown, sales from mid-sized biscuit players were negatively impacted by the shift of sales from hypermarkets and supermarkets to e-commerce and convenience stores. Mainly present in large grocery stores, mid-players struggled to access or maintain distribution in convenience stores and to acquire key SEOs on retailers’ websites. Other leading competitors have reconsidered their relationship with logistics companies and suppliers. Before the pandemic, their calls for tender to select their partner mainly focused on price and were based on short-term contracts. Now, some manufacturers have redesigned this approach and are looking for flexibility and reliability over cost.

Comfort in biscuits

Brand loyalty was damaged by the pandemic. During the first lockdown, with panic buying, low stocks pushed consumers to buy whatever they could get. Cautious consumption also negatively impacted brand loyalty. As a result, private label sales have increased in multiple countries. However, indulgence has kept a very important role in boosting consumer wellbeing. Secluded at home, consumers are looking for innovation, and are willing to purchase products that can offer them new experiences.

In 2020, filled biscuits were the most successful category in Western Europe. This is mainly due to the launch of Nutella Biscuits in Western Europe in the last two years. The pouch format lends itself to home consumption and the biscuit recipe breaks new ground with its original Nutella filling. In France, only one year after the release of the original biscuit, multiple private label alternatives such as Carrefour, Lidl and Intermarché, have launched their own comparable variants. As palm oil remains a contentious issue in food, Carrefour’s

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option is palm oil-free, a characteristic that remains important for consumers, particularly in sweet spreads and sweet biscuits.

Market dynamics

According to VIA, Euromonitor’s online SKU tracking tool, from March to June 2020, the number of SKUs available in sweet biscuits, snack bars and fruit snacks, and in savory snacks has declined by around 30% across 40 key markets globally. With the increase of e-commerce sales, there is a clear strategy of streamlining the number of SKUs available to help consumers navigate through innovation and new product development online. In the upcoming years, investments in innovation in biscuits should be more limited, as companies prioritize improvements to their online presence and supply chain efficiency. In 2020, Dirk Van de Put, CEO International, publicly confirmed the global strategy to “reduce the number of SKUs and make the business simpler”. Impulse purchases, one of the main drivers of biscuit sales, are more limited online, making it important for industry players to limit consumer confusion with too many launches, and in the short term, focus their investments on key products.

There are several possible scenarios for a new balance in this landscape, as COVID-19 has shifted the way consumers shop and the approach they have to food. These consequences will directly impact the savory and sweet biscuits categories. First, home seclusion has boosted homemade cooking and consumer curiosity for dessert mixes, with sales rising by 4.5% in value in 2020 across Western Europe impacting negatively on packaged baked goods and snack sales.

In addition, local supply is high on the consumer agenda, in terms of both availability and in the wish to support local businesses, but this tends to come at a price. Local businesses will need to think about how to be competitive, as in modern retail the number of local players is growing and price sensitivity should increase in the near future as a result of the pandemic and subsequent economic decline. Private-label brands are also promoting their search for local ingredients; their leadership should allow them to offer affordable goods and maintain their position in biscuits and crackers. For example, in Spain, private label commands a 30% share in sweet biscuits and 42% in savory biscuits. Leading grocery retailers were quick to adapt to consumer demand in March, with low prices further stimulating sales.

Finally, product claims should remain very important in guiding consumer choice and promoting the more distinctive characteristics of products. According to the Euromonitor Product Claims and Positioning tool, collecting packaged food SKUs claims online, the use of ethical, health and dietary claims in Sweet and Savory Biscuits in Western Europe is more important than in any other region worldwide. For example, in Western Europe, 16% of savory and sweet biscuits have an ethical-related claim (i.e., Organic or Fairtrade) on the front of their packaging, whereas worldwide, only 4% of the product range is showing one of these claims. In France, leaders such as Mondelēz or St Michel are launching multiple organic biscuit ranges while in Belgium, Denmark and Portugal free from gluten biscuits are forecast to grow by CAGRs of more than 10% from 2020 to 2025. Despite increasing unemployment and prospective decline in consumers’ purchasing power, healthy alternatives remain a key element to boost premiumization in the sweet and savory biscuits industry.

Resilience and adaptability are the driving forces behind the global consumer trends in 2021, all created, influenced, or accelerated by the pandemic. Among them, it’s worth noting that consumers are more concerned about sustainability going forward, particularly about brands that help make the world cleaner, healthier, more resilient, and equitable, as shown in Euromonitor’s Top 10 Global Consumer Trends 2021. Moreover, convenience is redefined to include e-commerce, a digital land of opportunity for businesses, with biscuit manufacturers included. +++

© Euromonitor

Margaux Laine

Margaux joined Euromonitor International in 2019 as an analyst associate after completing a Master of Management in Food and Beverage at SDA Bocconi in Milan. Margaux strengthened her knowledge of the French food industry by focusing on direct research within the first months and has now extended her expertise by commissioning several Western European projects. Also specializing in Snacks, Margaux has been in constant dialogue with Euromonitor’s analysts from other regions to discuss and compare the trends in Snacks across the globe. Margaux is also a content writer and she recently published Ferrero and Lindt & Sprüngli company profiles, which provide in-depth overviews of the recent activities and results of both companies.