Snack Foods Manufacturing
Description
Companies in this industry make snack foods such as nuts, chips, and popcorn, as well as peanut butter. Major companies include Clif Bar & Company, Frito-Lay, Mondelez International, Utz Brands, Wonderful Pistachios & Almonds, and the snack divisions of diversified food manufacturers such as Campbell Soup Company and Kellogg's (all based in the US); other leading firms include Calbee (Japan), Nongshim (South Korea), and United Biscuits and Walkers Crisps (both based in the UK).
The global savory snacks market is projected to reach about $340 billion by 2030, at about 6% compound annual growth rate (CAGR) during the forecast period, according to Mordor Intelligence. Asia Pacific and North America holds the highest revenue share of the market.
The US snack foods manufacturing industry includes about 670 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $40 billion.
The industry does not include makers of cookies and candy, which are covered in separate industry profiles.
COMPETITIVE LANDSCAPE
Demand is driven by consumer tastes and health considerations. The profitability of individual companies depends on efficient operations, effective marketing, and a strong sales force. Large companies have advantages in raw material purchasing, manufacturing efficiencies, distribution, and marketing budgets. Small operations can compete effectively by self-distributing products, selling online, or marketing snacks as gift items. The US industry is highly concentrated: the top 50 companies account for about 85% of industry revenue.
Snack foods compete for consumer dollars against other impulse food items, including cookies and crackers, baked goods, fruits and vegetables, and fast food.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products are nuts and seeds, potato chips, corn chips, and tortilla chips. Other products include peanut butter, popcorn, hard pretzels, and other chips. Salty snack foods are found in most American households. According to Statista, America's favorite snacks include cookies, chips, and ice cream.
To make potato chips, manufacturers receive daily truckloads of fresh potatoes. Potatoes come from various states, but Michigan is the largest producer of potatoes used for chips. Potatoes are stored in warehouses at 40 to 45°F and warmed to room temperature prior to processing.
A conveyor belt moves the potatoes through the various stages of manufacturing. Vibrating conveyors remove debris and push the potato to an automatic peeling machine. After peeling, potatoes are washed with cold water and enter a revolving impaler. Straight blades produce regular chips; rippled blades make ridged potato chips. A secondary wash rinses off excess starch from the newly sliced potatoes. "Natural" potato chips aren't washed and retain this starch.
The sliced potatoes move through air jets that remove excess water and enter a long trough filled with hot cottonseed, corn, or blended oil. Paddles push the chips along as they fry. Salt and flavorings are added as the chips cool. Cooled chips are conveyed to a packing machine, where computer-aided machines pack the chips and add air and nitrogen to the package prior to sealing. Workers hand pack the bags into cartons and place them on pallets for warehousing. Rejected potatoes and peels are sent to farms for animal feed. The starch removed during rinsing is sold to starch processors.
To reduce product shipping costs, companies typically operate multiple manufacturing plants across the US. Most plants are capable of manufacturing a range of products, though each plant usually specializes in one or two popular brands. Large companies manage a network of distribution centers for warehousing products prior to store delivery.
Common inputs for snacks include white potatoes; corn and wheat flour; cottonseed, corn, and soybean oil; shelled peanuts; flavorings like herbs, salt, and spices; and packaging materials. Key energy inputs include water, electricity, diesel, and natural gas.
The global savory snacks market is projected to reach about $340 billion by 2030, at about 6% compound annual growth rate (CAGR) during the forecast period, according to Mordor Intelligence. Asia Pacific and North America holds the highest revenue share of the market.
The US snack foods manufacturing industry includes about 670 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $40 billion.
The industry does not include makers of cookies and candy, which are covered in separate industry profiles.
COMPETITIVE LANDSCAPE
Demand is driven by consumer tastes and health considerations. The profitability of individual companies depends on efficient operations, effective marketing, and a strong sales force. Large companies have advantages in raw material purchasing, manufacturing efficiencies, distribution, and marketing budgets. Small operations can compete effectively by self-distributing products, selling online, or marketing snacks as gift items. The US industry is highly concentrated: the top 50 companies account for about 85% of industry revenue.
Snack foods compete for consumer dollars against other impulse food items, including cookies and crackers, baked goods, fruits and vegetables, and fast food.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products are nuts and seeds, potato chips, corn chips, and tortilla chips. Other products include peanut butter, popcorn, hard pretzels, and other chips. Salty snack foods are found in most American households. According to Statista, America's favorite snacks include cookies, chips, and ice cream.
To make potato chips, manufacturers receive daily truckloads of fresh potatoes. Potatoes come from various states, but Michigan is the largest producer of potatoes used for chips. Potatoes are stored in warehouses at 40 to 45°F and warmed to room temperature prior to processing.
A conveyor belt moves the potatoes through the various stages of manufacturing. Vibrating conveyors remove debris and push the potato to an automatic peeling machine. After peeling, potatoes are washed with cold water and enter a revolving impaler. Straight blades produce regular chips; rippled blades make ridged potato chips. A secondary wash rinses off excess starch from the newly sliced potatoes. "Natural" potato chips aren't washed and retain this starch.
The sliced potatoes move through air jets that remove excess water and enter a long trough filled with hot cottonseed, corn, or blended oil. Paddles push the chips along as they fry. Salt and flavorings are added as the chips cool. Cooled chips are conveyed to a packing machine, where computer-aided machines pack the chips and add air and nitrogen to the package prior to sealing. Workers hand pack the bags into cartons and place them on pallets for warehousing. Rejected potatoes and peels are sent to farms for animal feed. The starch removed during rinsing is sold to starch processors.
To reduce product shipping costs, companies typically operate multiple manufacturing plants across the US. Most plants are capable of manufacturing a range of products, though each plant usually specializes in one or two popular brands. Large companies manage a network of distribution centers for warehousing products prior to store delivery.
Common inputs for snacks include white potatoes; corn and wheat flour; cottonseed, corn, and soybean oil; shelled peanuts; flavorings like herbs, salt, and spices; and packaging materials. Key energy inputs include water, electricity, diesel, and natural gas.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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