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Smaller snack sizes represent big growth opportunity for PepsiCo

Brands are responding to consumer demand for healthier products by developing classic snacks in smaller portion sizes, meaning fewer calories, lower sodium, and lower fat.

There was a “slowdown” in snacks last year, according to PepsiCo chief executive officer Ramon Laguarta.

“Our No 1 priority this year has been stabilising the category, making sure that consumers come back to the category,” he told analysts in early February. “I think […] we can say that we see that happening. We're seeing the category starting to grow again on volume in the last three months.”

Smaller portions are a big opportunity, he said.

Probably “the No 1 solution for consumers to stay in our categories is small portions of our favourites – ideally, improved favourites with lower sodium and lower fat, and [fewer] artificial [ingredients] – so, portion control of our favourites is a big strategy”, he explained.

PepsiCo is also investing in out-of-home through its “Simply” options for foodservice. These are versions of its products without artificial flavours or colours. Laguarta promised “more effort” on baked and lightly salted options.

‘Sincere nods’ towards healthier snacks

Brands have long talked a good game on healthier snacks, but some of those listening in to Laguarta’s call sense more “sincere nods” to health.

“It may be wishful thinking,” said Nick Budden, an independent strategist with Flavor Forward Strategy who has worked for Tropicana and GoodPop, “or maybe big brands are starting to take health more seriously. Small brands, take note and build [a] moat.”

Laguarta was, naturally, quizzed on the success of GLP-1 medications such as Ozempic and Wegovy. Again, he mentioned portion control.

PepsiCo continues to study GLP-1s closely, he explained, but “because of the lower levels of adoption and people coming in and out of the treatment, we see very little impact in our business and in our category at this point”.

However, he did highlight “a higher level of awareness in general of American consumers towards health and wellness”, adding: “And this is driven by potentially all the conversation around obesity drugs, but also other conversations that are happening around the space of health and wellness.”

Mighty sales for mini-meals

Euromonitor has forecast that the “ready-to-heat” category will grow from €48.8 billion to more than €66 billion by 2028, with under-35s driving this shift.

“The way we eat is changing,” said Unilever in January, as it announced that mini-meals have delivered mid-single digit growth over the past five years.

Brands are trying to create solutions for consumers in those moments that they are looking for a 200- or 300-calorie product that will keep them going.

Unilever highlighted Euromonitor International research suggesting that the popularity of mini-meals in Europe is all about lifestyle: 20% of people asked said they did not have time to cook, 16% said that they did not know how to cook well, and 15% said they would rather spend their time doing something else.

“The younger generation views food differently,” said Marcelo Morishito Costa, mini-meals global innovation manager for Unilever. “They want fast, convenient, and often all-in-one solutions that still deliver on taste and nutrition.”

Unilever, owner of Pot Noodle, reported “strong mid-single digit growth” in markets where it has launched mini-meals, most notably Germany, Poland, Pakistan, the US, and India.

Successfully marketing products that match local tastes and trends has been vital. In India, for example, the Spicy Kimchi and Black Bean K-Pot varieties tapped into the recent growing trend for all things Korean.

Whether the price of meals has, in the current economic climate, also fuelled the growth of mini-meals is moot.

Asked about the pivot, Laguarda said: “This is not only a value-driven decision. […] It's been also a multi-year evolution of the category where more occasions or more calories are being eaten in small meals versus large meals. And I think that is something that will continue as consumers' lifestyle[s] evolve that way.”