Consumers tightened spending after their disposable incomes fell during the recession, leading them to cut back on nonessential purchases like snack food.
Health conscious consumers became wary of eating fattening snacks. Nevertheless, the industry remained resilient, mainly to the credit of its major companies, which quickly adapted to changing consumer preferences by introducing healthier snack food options.
For example, low-fat baked chips and 100-calorie snack packs successfully catered to health-conscious consumers. Economic recovery is allowing consumers to gain more disposable income to afford a larger quantity of snacks as well as more expensive, higher-quality snacks in 2012, when revenue is estimated to rise 3.2%, says IBISWorld industry analyst Olivia Tang.
Consequently, revenue is expected to grow at an average annual rate of 2.6% to $29.6bn over the five years to 2012. Producers also benefited from wide profit margins during the past five years as a result of effective marketing, which solidified companies’ brand-name reputation.
The snack food production industry is moderately concentrated. The top players are Frito-Lay North America, ConAgra Foods, Kraft Foods and General Mills. Concentration has increased because larger players have engaged in acquisitions to expand their product mix and market reach.
Source: IBISWorld
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