Popcorn Finds Its Mojo

March 20, 2015

New flavors, organic varieties, convenience lead this pre-popped salty snack to "give potato chips a run for its money," says Rabobank.

Originally published in the Facts, Figures & the Future weekly e-newsletter. Click here for a free subscripton.

New taste, texture and nutrition appeals have the ready-to-eat popcorn category bursting with sales potential.

More than a movie-night staple these days, RTE popcorn has gone from Plain Jane to celebrity status in the supermarket because it is convenient and has the snacking traits Gen X and Millennial moms want for their weight-watching selves and their children. Consider these: filling fiber to help reduce hunger pangs, flavor, crunch, portability - and a neutral base for olive oil, cheese, dark chocolate, herbs, coconut and other healthful toppings. Also, organic varieties especially stand apart from other snack temptations, says Facts, Figures & The Future (F3), citing reasons for fresh excitement in the once-staid category.

F3 sees RTE popcorn increasingly on endcap, checklane and freestanding displays. These reflect promotional efforts behind the smaller, innovative brands, and retailers’ own desire to enhance their health image and impulse sales, and to fulfill more on-the-go and at-home eating occasions. Retail prices often exceed 50 cents per ounce in bags sized about four ounces, shown at hand and eye levels for midday, post-gym or evening snacks.

RTE popcorn’s ability to stretch category prices and build shelf performance bodes well for this salty snack - at the expense of others. According to a new Rabobank report, The Popcorn Blockbuster: What the Snack’s Comeback Means for the Future of the U.S. Food Industry, the pre-popped bagged snack “is now giving the potato chip, the dominant snack, a run for its money.” Popcorn made up just six percent of the U.S. snack market in 2014, estimated Rabobank and Euromonitor. Yet the report also notes, “Since 2013, the RTE popcorn segment has grown at double-digit rates...the market [was to] grow by about 25 percent in 2014 to $750 million.”

More context: Packaged snacks (potato chips, pretzels, popcorn, snack bars and nuts) dollar sales rose in aggregate four percent (compound annual growth rate) on two percent volume rises over the last five years; potato chips at $7.6 billion, averaged just three percent per year. These figures exceed the two percent CAGR of packaged foods overall.

The spate of new brands (among them Skinnygirl, SkinnyPop and Angie’s BOOMCHICKAPOP) may challenge category managers to cut them into planograms. Yet it is clear their product and marketing inventiveness is building consumer enthusiasm for the category. According to Rabobank, the three market leaders in popcorn overall (ConAgra, 28 percent share, Diamond Foods 15 percent, and PepsiCo 12 percent) could also capture some of this excitement in three ways: move directly into the RTE segment, perhaps by acquisition; be a contract manufacturer, either for the aspiring RTE brands or for retailer private label; or refresh their microwave offerings (for example, ConAgra has co-branded its Orville Redenbacher’s brand with Bethenny Frankel’s Skinnygirl, in new flavors such as lime and salt in mini-bags).

Rabobank further suggests that if farmers were to breed heirloom varieties of popcorn in yellow, white, midnight blue, ruby red, turquoise and black, brand marketers could leverage these new tastes and colors - as potato chip manufacturers have done.

Meanwhile, the RTE caramel corn segment approached the $1 billion sales benchmark at $963.9 million during the 52 weeks ended December 28, 2014, shows multi-outlet data (supermarkets, drug stores, mass market, convenience/gasoline stores, military commissaries and select club and dollar retail chains) which IRi, a Chicago-based market research firm, shared with F3. The dollar sales gain was unspecified for the period, but unit sales grew 13.4 percent.