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    What is happening in the savory snacks market?

    Marketshare of the major players in the Global Savory Snacks Market

    Since both Frito-Lay and Procter and Gamble just reported recent financial data I thought this was a good time to see how the savory snack market is holding up in the current economic downturn.

    If one company is a good indicator of what is happening in the global snack market it is Frito-Lay.

    Just have a look at the global market share of Frito-lay; It is more than 10 times the market share of Number two, Procter and Gamble, the manufacturer of Pringles.

    Marketshare of the major players in the Global Savory Snacks Market

    Frito-Lay reported for the 3rd quarter a 9% revenue growth in North America, resulting from double-digit growth at Tostitos, Ruffles and Cheetos and high-single-digit growth in trademark Lay's and Doritos. Profit was up 6% and volume 1.5%. Frito-lay managed to pass on (most of the) higher oil and fuel costs (by increasing prices and reducing packaging sizes) without suffering a loss of overall volume!

    In the Middle East/Africa/Asia (MEAA) segment Frito-Lay reported a snack volume growth of 9 percent, led by double-digit growth in the Middle East, China, and India. The snacks business in Turkey grew high- single-digits, while Australia experienced a low-single-digit decline, primarily due to increased pricing.

    For Europe Frito-Lay refers to unfavorable circumstances and volumes growth in the low single digits. In the UK, low-single-digit growth at Walkers reflected the success of the value-added "Walkers' Brit Trips" promotion and solid pricing execution and cost control to offset significant commodity input costs. Strong top-line growth in the rest of Europe was led by high- teens snack growth in Russia and by mid-single-digit snack growth in the Netherlands.

    Pepsico has initiated a "productivity program" and part of this program is a reduction of the workforce with 3300 (keep in mind Pepsico has 185.000 employees!),of which 300 in Frito-Lay.

    Most jobs will be lost at Frito-Lays headquarters in Plano, but Frito-Lay also announced two plant closures:Closure of the Frito-Lay plant in Mission (Texas) andClosure of the Frito-Lay plant in Pointe Claire, Canada (Qc).

    Historic growth savory snacks market

    Historic long term growth of the Savory Snack market by region (Source: Datamonitor)

    The second largest savoury snack manufacturer globally is Procter and Gamble.Procter and Gamble reports for its fiscal first quarter (July-September) that snacks volume increased mid-single digits due to double- digit growth in North America behind strong base business growth of Pringles and continued growth from Pringles Extreme Flavors and Stix initiatives.

    Although some of Frito-Lay's and Procter and Gambles gains could have been at the expense of smaller local snack manufacturers, I interpret these results as a rather positive sign about how the snack market could hold up in a challenging economic situation. Especially if you keep in mind that price increases of ingredients and fuel are easing if not reversing.

    And if you believe that stress result in more excessive consumption of snacks, the market may start to look even better.