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Healthy snacks powering growth in packaged F&B


April 20, 2016
By Laura Aiken

Chicago — The U.S. consumer packaged goods (CPG) industry registered its strongest growth in four years in 2015, with some of the biggest gains achieved by companies targeting the fast-growing market for protein-rich foods and healthy snacks, reports new research by The Boston Consulting Group and Information Resources.

The trend was particularly noticeable among small and mid-size companies, which the new research suggests continue to seize market share from larger CPG competitors. Quest Nutrition, Fairlife, Bai, Vita Coco, and Sargento Foods — all makers of high-protein foods and beverages and ‘mindful’ snacks — are among the companies with annual sales of less than $5 billion that ranked among the CPG-industry growth leaders in 2015.

In 2015, CPG sales in the U.S. rose by 3.1 per cent to $670 billion, a pace last achieved in 2012. Small companies (those with less than $1 billion in sales) and mid-size companies ($1 billion to $5 billion) accounted for 46.4 per cent of total CPG sales, a 0.5 percentage-point gain since 2014 and 2.7 percentage-point gain since 2011. That translates into an $18.1 billion shift in market share during the past four years. This growth by small and midsize companies was driven largely by their ability to gain wider distribution for their products, suggests Information Resources data.

Consumers are still finding opportunities to indulge. A number of large, high-performing CPG companies derived most of their 2015 growth from such product categories as confections, ice cream, and alcoholic beverages, shows Information Resources data. Most of these companies are also introducing health-focused foods and beverages.

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“Our research confirms that consumers’ desire for more healthful eating remains a powerful trend that packaged-foods companies can’t ignore,” said Jim Brennan, a Boston Consulting Group partner and co-author of the study, in a news release.

The findings are based on the fourth annual analysis by Boston Consulting Group and Information Resources of the growth performance of more than 400 CPG companies with annual U.S. retail sales of more than $100 million. The study included public and private CPG companies and focused on what consumers actually bought in measured channels as opposed to what factories shipped. Companies were ranked on a combination of three metrics: dollar sales growth, volume sales growth, and market share gains. The study also analyzed trends driving performance in the sector.

Among large companies, the top growth leaders are Reynolds American (which has acquired Lorillard), Unilever, Altria, Mars, and Dr Pepper Snapple Group. The leaders among mid-size companies are GlaxoSmithKline, Hostess Brands, Starbucks, Eggland’s Best, and Sterilite. Topping the growth-leader list of small companies are Quest Nutrition, Teva Pharmaceuticals, Fairlife, Bai, and Idahoan Foods.

Small and mid-size companies that target consumers’ quest for protein are among the best performers. Quest Nutrition, whose leading products include protein bars, powder, chips, and shakes, is the top-performing small company on the list. Fairlife, the third-highest-ranking small company, sells ultrafiltered milk, which is richer in protein than conventional milk. The brands of WhiteWave Foods, which is among the best-performing midsize companies, include Horizon organic dairy, and Silk plant-based beverages. Vega makes food and beverage products that contain plant-based protein. 

A number of makers of snacks that promote health and wellness also made best-performer lists. Bai is a maker of low-calorie, antioxidant fruit drinks infused with the outer layer of coffee berries. Vita Coco, which made the best-performing small CPG company list for the third consecutive year, markets coconut beverages and oil. Ready Pac Foods makes a wide range of on-the-go salads, and KIND makes whole-grain bars and clusters. The growth of Sargento, a top-performing mid-size company, is driven by its Balanced Breaks brand fruit, nut, and cheese snacks.

Most of the best-performing large companies also offer healthy foods and beverages, but much of their growth is still driven by consumer indulgences. Strong sales growth in M&M’s chocolate, Juicy Fruit gum, and Dove chocolate and ice cream helped make Mars a leading performer in 2015. Ice cream makers Ben & Jerry’s and Breyers were major contributors to sales growth at Unilever. Soft-drink giants Dr Pepper Snapple, CocaCola, and PepsiCo are all among the top seven large-company performers, while Constellation Brands, whose growth is driven by Corona and Modelo beer, made the mid-size list. 

“These findings underscore that the growth opportunities in consumer packaged goods remain diverse,” said Peri Edelstein, a Boston Consulting Group principal and a co-author, in a press statement. “The top performers are companies that best understand and capitalize on consumer trends and are able to stimulate fundamental demand.”