Healthier Snack Foods A Good Business Strategy

Snack food marketers such as PepsiCo, Kraft, Kellogg, General Mills, and McDonald’s see offering healthier foods as good business strategy.

In their effort to capitalize on and direct the growing trend towards healthier foods, food makers are increasing their offering of natural and healthier products, and a lot of these new offerings are targeting kids.

Avoiding increased government regulations and law suits is also smart business strategy, and food makers are demonstrating that they can drive change in the industry without costly government interference.

According to Mintel’s Global New Products Database, 2006 product launches in the ‘food minus’ category which includes low or no trans-fat and gluten-free products showed “major increases” with low or no trans-fat product growing by nearly 120 percent.

While the better-for-you food category grew by double-digits, Nielsen LabelTrends reported that sales of snack foods rose only 3.4 percent, with sales of reduced fat, low fat and fat-free snacks falling 2.6 percent in the past year. This decrease could be due to snack makers’ failure to balance healthier ingredients and consumer taste. Alternatively, it could be attributed to the fact that, in general, adult consumers are snacking less, and when they do snack, they tend to choose their favorite snacks, but reduce their portions.

Most snack foods are consumed by children aged three to eleven, a 35.8 million demographic that makes up the market for kids’ foods and beverages in the United States. This share, which exceeded $15.1 billion in 2006, experienced a growth of 8.5 percent over 2005. Unfortunately, conventional snack foods are some of the least nutritious products on the market. Many parents, having given up control over what their children consume to television commercials; blame food marketers, and are apparently waiting for the government to punish food makers. As a result, government and non-profit groups are targeting makers and producers of children’s foods and marketing.

Food makers and marketers are demonstrating that they hear what consumers are saying and companies such as General Mills, Coca Cola, PepsiCo, Kraft, Kellogg and McDonald’s are among 11 companies that are working together to make it easier for consumers to choose healthier snacks and on-the-go foods and assist parents in regulating their children’s diet by offering healthier kids foods and beverages and carefully editing their advertising.

Disney and Nickelodeon instituted licensing initiatives that promoted a healthier diet for kids and challenged makers of kids’ foods to meet their nutritional guidelines, another great illustration of the private sector driving change without increased government regulations. The guidelines emphasized limits on calories, fat, saturated fat, and sugar, and inclusion of fruits and vegetables in child-size packaging.

Companies like Kellogg, Kraft and PepsiCo, who are offering healthier product lines, and designing programs and guidelines for marketing to children, are not driven by fear of law suits and increased regulations, but by business interests. As the Center for Science in the Public Interest, liberal nutritionists, the American media, and parents find that corporations are not doing enough to make it easy for consumers and parents to abdicate their responsibility they will demand that the government increase regulation. What they ignore is that greater government interference often results in higher production costs and price points.

The popular idea that snack food makers are trying to seduce parents with promises that they are doing better is ludicrous. Soft drink makers operate profit-making businesses and spend time and money to obtain market intelligence that drives what they develop and bring to market. Offering low-, no-calorie beverages, teas, energy drinks, flavored and fortified water, vegetable and fruit juices are all business decisions.

The key to capitalizing on the $10.39 billion-a-year snack foods industry is to continuously develop new products with the right mix of healthier ingredients that meet parental (and governmental) approval – foods that are high in nutrition, convenient and easy to consume, while appealing to children.

Consumers, including children who control their parents, will decide if the food maker achieved the right balance or not, because consumers will choose to buy what they like, regardless of what the health industry and watchdog groups say or do.