Snacks used to be considered special treats, but these quick bites are becoming a bigger part of Americans’ meals.
According to Technomic, a food-industry research company, 53 percent of consumers say they snack in between meals, up from 41 percent in 2014. While your mom (or dentist) may have scolded you in the past to not eat in between meals, views on eating snacks, and the type of munchies, have changed.
“With consumers’ lives getting busier, snacks are serving more needs than in the past,” says Kelly Weikel, director of consumer insights at Chicago-based Technomic.
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Stacie Sopinka, vice president of product innovation and product development for US Foods, an Illinois-based food service firm, says consumers are seeking healthy, portable options — beef jerky, hard-boiled eggs and even wraps. And younger generations, particularly millennials, are driving the move to eat away from home, she says.
Technomic’s research shows of the 40 percent of these diners’ snacks are consumed away from home versus 25 percent of snacks overall. Sopinka says younger eaters are more likely to eat out lunch more than dinner and will also eat off-peak hours since they’re eating non-traditional meals.
“In this sense they are almost like impulse eaters, finding food on the fly or finding friends in a social occasion to eat,” she says.
This is affecting processed-food companies, which are gearing their options toward those who would rather graze than eat full meals.
“To gain share, operators and suppliers must adapt their snack lineup to meet consumers’ wide range of need states — from tiding them over to the next meal to replacing meals, to providing nutritious, supplemental treats,” Weikel says.
Grazing behaviors aren’t limited to millennials, says Joseph Agnese, senior equity analyst at S&P Global Market Intelligence in New York. Baby boomers are also snacking more often.
“It shifts from healthier eating in the morning toward more treats at night. The time of day matters with the type of snack that they’re eating,” Agnese says.
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So-called healthier snacks are generally protein-based, like nuts, beef jerky, granola and yogurt, but sweet and salty snacks like chocolate and potato chips still make up a big part of the snack world, Agnese says.
The company with the biggest exposure to snacks is Mondelez International (ticker: MDLZ), with 85 percent of their revenues from snacks, Agnese says. With iconic brands such as Oreo, Nabisco, Ritz, Sour Patch Kids and Wheat Thins, Mondelez has a market capitalization of $69 billion and its stock is up 8 percent in the last 12 months.
Kellogg Co. (K), PepsiCo (PEP), General Mills (GIS) and Hershey Co. (HSY) round out this group of companies which have large snack lines, and all have been helped in some way by this trend, Agnese says.
However, there are mixed views on General Mills and Kellogg’s regarding how much they can benefit from increased snacking as they are both helped and hurt by this trend, he says. Grazing helps Kellogg brands such as PopTarts and Nutri-Grain, and will give a boost to General Mills’ Yoplait yogurt line. But both companies have large cereal divisions that are hurt by the trend away from sit-down breakfasts, Agnese says.
Mike Ciccarelli, commodity and stock trader at Chicago-based Briefing.com, says he prefers snack food company Snyder’s-Lance (LNCE) and Amplify Snack Brands (BETR) over GIS and K stock if people are thinking of munchies as an investment theme. Snyder’s-Lance owns pretzel brand Snyder’s of Hanover, and Amplify owns the Skinny Pop popcorn brand.
“Amplify benefits from the shift to healthier snacks. They’re a newer brand, which is what I want to see in this sector,” he says.
Ciccarelli says even though snackers say they are going to healthier bites, the Pringles potato chip brand owned by PepsiCo has experienced some of the largest growth in the category. Pepsi also owns Frito-Lay and Quaker, straddling the healthy and treats part of the munchies world.
John Person, president of Florida-based National Futures, says some of the top snack companies might be better buys this summer, especially if the stock market pulls back.
“I think that the summer isn’t as good a time to buy these stocks because of seasonal tendencies. These stocks generally tend to do better in the fall and the back-to-school season,” Person says.
“I personally like Mondelez. I like it long term, but I wouldn’t buy it here. I think you can buy it better on a pullback of about 8 percent. I think it’s a stock that everyone should own as a consumer staple,” he says.
But some are attractive already. He says he likes Hormel Foods Corp. (HRL), which is down nearly 20 percent in the last three months. With its price just under $35, “I think it would make a better longer-term investment,” he says.
In addition to the snack trend, Person says some of these companies may benefit from a move away from eating out at restaurants, especially if consumers are starting to feel uncertain about the economy.
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“I think these stocks may do better because the restaurant-growth trend seems to have played out. We’re starting to see a pullback in those. Same thing about Kellogg’s and General Mills, and if there are concerns about the economy, you may see people come back to these,” he says.
Best Snack Food Stocks
| Stock | Price | 1-Year Return |
| Golden Enterprises Inc. GLDC | $6.65 | 60.29% |
| Post Holdings Inc. POST | $76.93 | 47.64% |
| Bridgford Foods Corp. BRID | $12.53 | 30.08% |
| Kellogg Co. K | $77.44 | 22.13% |
| General Mills Inc. GIS | $66.46 | 17.55% |
| Tootsie Roll Industries Inc. TR | $36.81 | 14.73% |
| The Hershey Co. HSY | $97.19 | 11.82% |
| Mondelez International Inc. MDLZ | $44.52 | 8.52% |
| Snyder’s-Lance Inc. LNCE | $32.74 | 2.44% |
| J&J Snack Foods Corp. JJSF | $111.66 | 0.18% |
Stock information correct as of June 23, 2016
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Tasty Snack Foods For Any Portfolio originally appeared on usnews.com
