Refrigerated snacks are hot

It’s an understatement to say that life, such as it is, has become extra challenging. Small indulgences have played an outsized role in keeping us all going. Global snack manufacturer Mondelēz noted in its 2020 Annual Review that “snacking has increased sharply in developed markets since the outbreak of the coronavirus.” Mondelēz has seen increases in all segments, but sales of cookies have led the way. Production of Oreos in North America increased by 30% in 2020. According to Martin Parent, president of Mondelēz Canada, after an initial spike in snacking consumption of over 50% during COVID lockdown, consumption is “still 30% higher today than where it was in 2019.”

A better mousetrap

Paradoxically, these near-term gains may be masking a phase shift in snacking habits. The pandemic has confirmed two truths: change really is the only constant; and disruptions happen whether we’re prepared or not. Rather than following the crowd and trying to sell more of the same, now may be exactly the right time to reconsider your snack offerings.

The zeitgeist on the cusp of upending the snacking market is a migration from ambient to refrigerated/chilled snacks. 

Mintel, a global market intelligence agency, picked up on ‘fresh’ snacking early. Fresh was defined as “clean label, free of additives/preservatives, and typically as either refrigerated products or those found in the produce section.”

According to data cited by Mintel, emergence of the fresh-snacking market can be traced back over 15 years, but “began accelerating in 2008, with the percentage of new, fresh-snacking product launches in the U.S. increasing by about four times, between 2008 and 2017.” 

Research identified six packaged product segments to most clearly define the fresh snacking category: refrigerated protein bars, protein snack packs, drinkable soups, bottled smoothies, yogurts, and other products, such as hummus and guacamole.

Getting on board

Millennial and Gen Z consumers consider fresh snacks to be cooler because they marry indulgence, first and foremost, with perceived better-for-you (BFY) product attributes. 

Powerhouse snack-maker Nestlé has just launched its own line of refrigerated chocolate-covered nut butters to compete in this space. Nestlé introduced Rallies Nut Butter Bombs to target a segment they call “Slumpers”—consumers looking for BFY indulgent treats to “rally them from a dip in blood sugar, stress, overwork, (or) boredom.” 

This is not a small group. A recent study by The Hartman Group in the U.S. found that “74% of consumers surveyed (mentioned) ‘treating oneself’ as their main source of comfort to combat hitting the proverbial wall during the day.” 

Rallies will be launched at major retail grocers in 2022. Soon after, Nestlé anticipates entering the convenience channel, partnering with progressive c-store operators motivated to clear beverage cooler space to make room for on-trend chilled items designed to match desired eating occasions.

There are already a myriad of new products on offer, both chilled and frozen (Exhibit 1). They are typically nutrient-dense, and have clean ingredient decks dominated by fruits, veggies, plant-based proteins and probiotics. Montreal-based start-up Mid-Day Squares’ functional chocolate protein bars jumped on board in 2018, with their initial product, Fudge Yah bar. All Mid-Day Squares products are vegan, gluten-free, soy-free, non-GMO, 100% organic and do not contain preservatives or artificial additives. Less than two years after launch, the company had sold more than 1 million bars and had product listings with Metro, Sobeys, IGA, and hundreds of independent retailers in Canada and the U.S.

Going to the dogs

Mintel research supports the suggestion that, increasingly, “the perimeter of the store is the place for discovery and variety—with a third of shoppers saying they are specifically looking for new foods on the perimeter, while a quarter say the perimeter is where they (are purchasing) impulse items.” Many large retailers have responded, expanding the number of refrigerated cases in-store, and even repositioning the placement of cooling cases into the centre of the store.

Ironically, one of the clearest examples of this kind of fresh expansion is evident in the “humanification” of pet food offerings. Dana Brooks, of the Pet Food Institute, points to manufacturer Freshpet, which has leaned into consumer desire for ‘real fresh food’ by developing such offerings for their pets. Freshpet became a public company in 2014, with a NASDAQ share price of around $17/shr, and a market value worth $500M. Today, the share is priced over $150/shr and has a value close to $7B.

Retail data tracker NielsenIQ, confirms growth in premium refrigerated and fresh pet foods with over 20% expansion in 2020, on $80M in sales. There is still a big market for conventional pet food, but fresh pet food offers growth and margin, which is why many retailers have installed stand-alone refrigerated cases dedicated to premium pet food.

Put on a fresh face

There’s not yet a lot of chatter about the fresh segment in the convenience channel, but with face-to-face work set to ramp up again in 2022, there could be a growing number of “slumpers” craving premium chilled snacks from c-stores. Wondering if it’s worth the trouble to expand refrigeration capacity, or to clear cooler space in order to accommodate something new and unproven? Think back to a time when bottled water, 100% pure not-from-concentrate juice, isotonic beverages, and energy drinks were the new kids on the block. As the old saying goes, from little acorns mighty oaks do grow.