‘Healthy indulgence’ – the convergence of health consciousness and indulgence – is reshaping the snack foods category and packaged foods companies which embrace it by offering branded products that deliver on both taste and nutritional value are well-positioned to capture a loyal and growing market segment.
Snacks that fall under the healthy indulgence rubric can be both sweet and savoury and US consumers are increasingly seeking out such snacks because they want to enjoy the taste and experience of snack foods without feeling guilty. They aim to balance their desire for indulgence with their growing focus on health and wellness, allowing them to satisfy cravings while still maintaining dietary goals.
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Paradigm shift
This is a paradigm shift that’s been increasing significantly in the US post the Covid-19 pandemic. It also reflects the growing evidence-based realisation that health, wellness and diet are inexorably linked.
US consumers today are trying to balance their nutritional preferences with their desire for indulgence, according to a recent comprehensive study – Future of Snacking 2024: Balancing Intent with Indulgence – by research firm The Hartman Group.
The study, which surveyed more than 2,000 adults across the US and also included interviews and ethnographic research in which consumers kept track of their snacking behaviours, found that healthy indulgence is on the move. For example, 75% of consumers said they consume fruits and vegetables as snacks at least weekly and 67% said they eat healthy snacks that have less sugar and reduced sodium. Consumers also said they frequently buy and eat high-protein snacks.
New products on the horizon
Sean Connolly, CEO of packaged foods giant ConAgra, appears to agree that healthy indulgence is on the move in the snack foods category, noting on 18 February at the Consumer Analyst Group of New York (CAGNY) conference that consumers want snacks with better-for-you attributes that also taste good. The company said this week it is introducing a spate of new snack food products that focus on these and other healthier attributes, such as high protein.
In its most-recent State of Snacking report, Cadbury and Oreo brands owner Mondelez International reports its research shows health conscious snacking is growing rapidly in the US, with 32% of Americans saying they eat at least one healthy snack per day. Some 28% of Europeans do the same, according to the report. This US percentage is up considerably from past reports.
Snacking today is a balancing act for consumers between indulgence and mindful consumption. US consumers aren’t giving up indulgence but they’re increasingly searching out indulgent snack food products that contain healthier ingredients. This includes what the products don’t contain – artificial colours and flavours and excessive amounts of sugar and sodium, for example – and what they do contain, such as protein and various other attributes and ingredients that are said by nutritional science to benefit human health and wellness.
Opportunities across the board
The concept of healthy indulgence involves re-imagining traditionally indulgent snacks by enhancing their nutritional profiles without compromising on taste.
The opportunity in this growing segment of the snack foods category exists equally for big brand snack foods companies and smaller, early-stage and emerging brand players.
Siete Foods, which was acquired last year for $1.2bn by PepsiCo, and chocolate and snack foods company Hu, which was acquired by Mondelez International in 2021, are two good examples of emerging brand companies that reimagined traditional snack foods by enhancing their nutritional profiles without sacrificing taste.
Both of these emerging brand companies got the attention of and were acquired by two of the largest packaged goods companies in the world. PepsiCo, which owns the Frito-Lay snack mega-brand, and Mondelez International are both bullish on these respective brands. They’re extending them further into the snack foods category with new products and expanding retail distribution both domestically and globally, which further demonstrates how the healthy indulgence trend is on the move in the snack foods category.
Snack food companies should seriously consider entering the healthy indulgence (or growing any existing business) segment for these five major reasons:
- Growing consumer demand
Consumers are increasingly looking for snacks that balance health benefits with indulgent flavours. The demand for better-for-you or healthier snacks, including those with clean labels, natural ingredients and functional benefits, is rising.
- Premium pricing and profit margins
Health-conscious consumers are often willing to pay a premium for snacks that offer both taste and health benefits. This allows companies to position their products at higher price points, boosting profit margins.
- Competitive differentiation
The healthy indulgence segment allows brands to stand out in a crowded snack market by offering unique formulations, such as high-protein treats, reduced sugar options, and plant-based indulgences.
- Regulatory and public health trends
Robert F. Kennedy Jr., the new head of HHS (Department of Health and Human Services), has the food industry, particularly makers of processed and ultra-processed foods, in his sights. Many (perhaps even most) packaged snack food brands fall into these categories.
The new HHS chief, who at present appears to have the full support of President Trump, says he plans to reform industry regulator the FDA, which he has oversight of, and the packaged foods industry. Kennedy wants to eliminate the use of artificial colours and flavours in packaged foods, along with convincing food companies to reduce ingredients such as sodium, sugar and others.
He’s pushing for cleaner ingredient labels on all food products, including snacks. The healthy indulgence segment aligns with these evolving food regulations and could help brands stay ahead of policy changes. It also could be a smart strategic move as a way to grow sales in a changing consumer world.
- Brand loyalty and market longevity
Health-conscious consumers are highly loyal to brands that consistently deliver on taste, health, and quality. A strong presence in this segment can help snack brands build long-term customer trust and relevance.
Combining the growing health and wellness consciousness among US consumers with the fact US consumers still do enjoy pure indulgence when it comes to snack foods, offers snack foods companies of all sizes a unique opportunity in the category. Healthy indulgence is a nascent segment in the snack foods category and it has a huge growth runway.
The US snack food market is about $215bn, according to data from Circana, and 46% of Americans eat three or more snacks each day. That’s a whole lot of opportunity.
Flavour and taste still crucial
Flavour and taste remain the most significant consumer attributes for US consumers when it comes to snack foods. Price is also becoming increasingly important because of the high food inflation over the last few years. But health and wellness concerns increasingly matter in a meaningful way to US consumers though. This is why healthy indulgence should become an important strategic focus for packaged foods companies involved in the snack foods category.
While the opportunity is substantial, packaged food companies must navigate challenges to successfully capitalize on the healthy indulgence segment. Balancing taste and health benefits requires careful formulation, as consumers are unwilling to compromise on flavour. Additionally, transparency in ingredient sourcing and processing methods is crucial, as consumers are increasingly scrutinising product labels for artificial additives and high levels of sugar, salt, and unhealthy fats. The truth matters.
Economic landscape
Companies must also consider the economic landscape. Inflation and rising commodity costs can impact profitability, making it essential to innovate cost-effectively. Despite these challenges, the long-term growth potential in the healthy indulgence segment is promising, especially as consumers continue to prioritize health and wellness in their purchasing decisions.
In my analysis, the convergence of indulgence and health consciousness is gradually reshaping the snack foods category. Packaged food companies that embrace healthy indulgence by offering products that deliver on both taste and nutritional value are well-positioned to capture a loyal and growing customer base. By focusing on innovation, transparency and a deep understanding of consumer preferences, snack foods companies can turn the demand for healthy indulgence into a significant growth opportunity.
