The U.S. population continues to adapt to life after COVID’s arrival. More people are leaving remote work behind to return to the office; families are back to taking road trips and vacations; school kids are toting their lunchboxes back to the classroom. As their lifestyles take a turn back to normal, their snack purchases and snacking occasions have evolved—and that includes how they buy and munch on chips.

Market data
While potato chips were slightly down in terms of unit sales (a dip of 0.7%) sales were still healthy—the category reached $10.3 billion, up a healthy 15.7% over the previous 12-month period, according to data from Circana OmniMarket. The top two ranked producers in the category were both Frito-Lay brands: Lays took a $4.1 billion bite out of total U.S. potato chip sales (up 13.7% from the previous year), and Ruffles sold $1.8 billion worth of product (an increase of 14.8% over the previous 12-month period). Pringles ranked third in the field, with $1.4 billion in sales (an increase of 15.4%).

Among the top potato chip producers, some had notable increases that make their performance worth keeping an eye on in coming months. Barcel’s sales enjoyed a 35.1% from the previous 12-month period (to a sales total of $86.4 million), Utz increased 26% (reaching $425.6 million), and private label potato chips took home 21% more than the previous year, a total of $648.6 million.

Source: Circana, Total U.S. Multi Outlet w/ C-Store (Grocery, Drug, Mass Market, Convenience, Military and Select Club & Dollar Retailers), 52 Weeks ending April 23, 2023

Apple and fruit chips held relatively steady over the 12-month period. Both chip subcategories had the same unit sales compared to the previous 12-month period. However, sales of apple chips were down a tick (to $10.4 million), and other dried fruit chips were up 15.2% to $247.5 million. Bare performed well in both categories, compared to its competitors—the company sold $6.1 million in apple chips (down 0.6%) and $31.8 million in other dried fruit chips (an uptick of 0.7%).

Looking back
Linda Zink, chief marketing officer for Simply Good Foods (which manages brands like Quest Nutrition), says chip consumers have been looking for snack experiences that are less likely to take them on a guilt trip.

“We see that consumers are looking for salty and savory options that they can enjoy without the guilt of saturated fats or net carbs that accounts for most of options you see in the chip aisle,” she says. “It’s one of the many reasons why we continue to expand our protein chip flavors, recently with the Quest Hot & Spicy Tortilla Style Protein Chips that brings the heat our customers are craving with the added bonus of being packed with 19-20g of protein.”

Potato chip consumers continue to show interest in products that bring a touch of heat, as well as chips that offer unique or unexpected flavor combinations. Last year, for example, Utz Brands launched a chip flavored with Mike’s Hot Honey, which put the product at the intersection of both of those trends.

"We are always looking for craveable new tastes, and the uniquely sweet and heat combination of our newest potato chip is irresistible for those who want bold new flavors when they reach for a snack,” says Howard Friedman, Utz Brands CEO. “Our new Utz Mike’s Hot Honey Potato Chip perfectly combines our classic, Utz original potato chip with the fierce flavor of Mike’s Hot Honey.”

Marilyn Yang, co-founder of Popadelics, says that while snacking is up overall (according to the Wall Street Journal, more than half of U.S. consumers eat more than three snacks a day), more consumers than ever seem interested in diving into new and less familiar territory, such as her company’s mushroom chips.

“While these macro trends have driven more eyes to Popadelics' category upon our launch, other new brands have also capitalized on similar trends if not in mushroom snacks specifically, other types of snacks,” she notes. “As such, there does seem to be increased competition from indirect snacking competitors as more snacks are hitting the market. Nevertheless, between the rise in mushrooms in snacking, it was a decent time to launch an innovative snack product. Within just a year of launch, our snacks are currently carried in 300+ stores nationwide, notably Urban Outfitters, Foxtrot, Lassens, and Fairway Market/Gourmet Garage.”

Yang adds that Popadelics has attracted the attention of several snack distributors, snagged 2023 Expo West NEXTY finalist honors, and has been featured in Forbes, Eater, Food Business News, and other publications.

However, despite good news, producers had to wrangle with a number of challenges.

“Inflation has been a broad challenge across the market for businesses and individuals alike, but in particular, we too saw an increase in our ingredient pricing,” shares Yang. “We have also had some challenges with shipping and logistics this year, namely with delayed or lost parcel shipments but also lost ingredients as a result of shipping errors.”

Zink says with U.S. workers increasingly returning to the office from working at home, chip producers have had to adjust to the new reality.

“We noticed a change in where consumers are buying products, especially as many consumers continue to shop online, a habit many shoppers adopted during COVID,” she says. “We have a strong e-commerce program in addition to brick-and-mortar presence with our retail partners.”

Looking forward
While producers have shown adaptability and flexibility in the face of challenges in the past several years, most professionals in the field don’t expect the obstacles to disappear anytime soon.

“Inflation will continue to remain a challenge, as well as the increased cost of funding as interest rates are likely to remain elevated, as well,” Yang predicts. “Shipping and logistics may also remain a challenge, particularly should some of the recent labor shortages and labor quality issues persist.”

Zink concurs, saying, “While things are better than they were during the pandemic, we are still feeling the residual effects of increased costs from raw materials, packaging, and general supply chain inflation. We continue to consider all options available to ensure we continue delivering the same quality products to our Quest customers, or ‘Questies,’ expect from us.”

Scott Reamer, co-founder and innovation lead for Jackson’s, a producer that specializes in sweet potato chips, says that the company will continue to seek consumer connection by combining quality with new, creative tastes.

“It’s important for us to offer a variety of flavors so we have something for everyone, while continuing to ensure we use only the best ingredients,” comments Reamer. “We have been on innovation overdrive in the kitchen, working to develop the perfect flavor combinations that marry the subtle earthiness of the sweet potato with various spices.”

And while problems are likely to continue, so will opportunities, according to Yang.

“We believe there will continue to be new and innovative better-for-you snacks that will enter the market,” she predicts. “We also expect there to be continued growth in vegan snacks and other vegan products, too.”

Traditional potato chips may continue to do billions in business annually, but producers may want to examine other opportunities to entice consumers. For example, Zink advises, snackers increasingly want products that offer better-for-you benefits, as well as good flavor.

“When it comes to their nutrition and eating, consumers increasingly look for science-based approaches, as well as food that tastes great and provides optimal nutrition,” she says. “There continues to be interest in consumers watching how much sugar and carbs they consume, whether they’re managing an illness, looking to lose weight, or simply feeling better in their body.” SF&WB

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