KANSAS CITY, MO — Delicious, convenient and buoyed by nostalgia, snack cakes appeal across generations. Category growth saw a peak in 2020 when snack cakes were sought out as a product of choice. Nearing a post-COVID era, the category is holding its own with $2.03 billion in sales, a 14.1% change vs. a year ago. Unit sales registered 854.10 million, a 0.8% change vs. a year ago.
Finger snack cakes, the most popular form, saw dollar sales of $1.25 billion, a 16.1% change vs. a year ago. This was followed by snack cupcakes at $482.63 million, an 11.4% change vs. a year ago.
Like many categories across the snacking landscape, snack cakes battle factors including unreliable availability and inflationary impacts. Likewise, manufacturers are facing record rising input costs, supply chain disruptions and continuing labor issues.
Two years after its peak, the snack cake category is one of many facing the impact of tightening economic belts, particularly among lower-income consumers and those with larger households, the largest consumers of snack cakes. This makes analysis of the category increasingly complex, said Sally Lyons Wyatt, executive and practice leader, client insights for IRI.
“It’s not that consumers aren’t purchasing snack cakes,” she said. “It’s that consumers must make a choice between purchasing snack cakes and other grocery essentials.”
Because of its convenience and price point, snack cakes index well among two-person households (53%) and middle-income consumers (40%) with stronger saturation among boomers and Generation X. Brand recognition in the category is particularly strong with the top five forming 75% of dollar sales followed by some private label options. A report published by Statista in June found that 74.2 million Americans ate Little Debbie snack cakes in 2020, according to data from a November 2020 survey.
Faced with having less spending money, consumers are having to make more strategic choices. That translates into fierce competition for those discretionary dollars in stores and online. The donut category, one of the biggest snack cake competitors, is growing. Seeking out different dayparts to serve, donut producers have turned to innovation to capture new audiences.
For example, donuts with caffeine offer applications during multiple dayparts. Another surprising competitor, rice popcorn cakes have seen growth in part because of its flavor range and healthier profile. But while some consumers intend to make healthier choices, this is not the majority of buyers in this category. This is evidenced by limited growth regarding claims such as calories per serving, low-fat and plant-based.
From a channel perspective, 2022 has been a banner year for dollar sales. Strong dollar sales with lower units and volume are representative of consumers spending money on the product but reducing the number of items they buy overall.
In the snack cake category, mass retail is thriving with dollars, units and volume all on the rise. Meanwhile, the dollar channel is doing reasonably well, albeit with some struggles. Lyons Wyatt recommended those in the mass and dollar channels look closely at assortment and pricing to make sure they’re the right growth engines in terms of dollar sales and volume sales.
The convenience channel is also seeing strong dollar growth but struggling a bit on unit and volume sales. Drugstore is also driving strong dollar growth.
With a nearly 15% uptick in dollar sales, the snack cake category seems to be faring better than some other snacking categories, according to Lyons Wyatt.
This story has been adapted from the October | Q4 2022 issue of Commercial Baking. Read the full story in the digital edition here.
