Crunching the numbers: could bagged snacks help socially distanced pubs bite back?

Pre-pandemic value sales of crisps, snacks and nuts in the UK’s pubs and bars totalled £24m according to Kantar World Panel, with sales of PepsiCo brands including Walkers and Pipers crisps increasing by 6% year-on-year, in each of the last three years, according to away from home channel director, Lucy Davidson. 

However, upon crunching snack sales numbers since the onset of Covid-19, Davidson reveals that the pandemic has left the category somewhat undercooked. 

“Crisps, snacks and nuts value sales within pubs and bars have, as can be imagined, seen a dramatic reduction versus the previous year, due to Covid-19 Government enforced closure,” she explains.

All-day snacking

Right range is crucial

“There are still a lot of unknowns,” Lucy Davidson, away from home channel director at PepsiCo UK & Ireland explains. “We’re working closely with our customers to understand and plan for the future landscape of the channel. 

“We recognise that there is going to be a huge impact enforced on operators due to the two-metre social distancing rule, which the British Beer and Pub Association has estimated will limit indoor capacity by around 70%. While pubs with outdoor space will most likely be the first to reopen their doors, it is recognised that more than three-quarters of pubs could reopen if social distancing rules were relaxed to one metre. 

“Prior to Covid-19, the average spend per head was 30% higher when customers purchased snacks alongside their drink orders, versus drinks alone. We see this growing rapidly in the initial reopening phases; crisps, snacks and nuts are likely to play a crucial role for operators in offsetting any weakening revenue behind the reduction of hot food in the initial period after re-opening. 

“Some 86% of UK hospitality operators have stated that they believe consumers will actually go out to eat less frequently than they did before lockdown and 82% believe consumers will drink out less. ​Therefore, it is going to be vital for operators to ensure they have the right range in place to cater for a broad set of consumer need-states, as part of an initial rationalised offer to limit wastage, as well as increased visibility to consumers.”

Yet despite this, Davidson anticipates that a surge of consumers desperate to get back into their local pub to enjoy the company of their friends and family over a drink and snack, will help PepsiCo bag strong crisp and nut sales once more. 

As part of this, she forecasts that trends such as the growth of breakfast and brunch in the away from home channel, increased emphasis on food as a revenue driver, rising consumer spend through impulsivity, visibility and perfect execution, and harnessing customer experience through events, will be more vital than ever.

“The focus will be on driving more occasions and experiences across day-parts - breakfast, brunch, lunch, afternoon snack, evening - while leveraging events to drive footfall back to the pub,” she explains. 

On top of these pre-pandemic snack trends helping pubs bite back at lost revenue by increasing consumer spend per head, Davidson adds that PepsiCo has witnessed new consumer habits emerge as pubs have diversified to continue serving their communities during lockdown.

“Opportunities such as increased delivery or broadening of the portfolio may well continue moving forward,” she says. “Another key emerging trend throughout lockdown has been the increase in healthier eating. Only time will tell if this translates to the on-trade, but it’s definitely one to monitor.”

Impact of lockdown on premium tastes 

However, the key snack trend to dine out on pre-lockdown was that products with evidence of craft and provenance really became consumers’ bag.

Davidson explains that ever-sophisticated consumer tastes saw outlets premiumise food menus, enhance flavours and improve provenance, which in turn has seasoned the away from home snacks category.

“Our premium potato-based snacks – Pipers Crisps – has almost doubled in penetration in the on-trade in less than five years, pre-Covid-19,” she explains.

“Premium snacks also represent a significant advantage over ‘standard’ and ‘value’ crisps in terms of their rate of sale, price or margin - premium crisps command around a 30% price premium over quality mainstream products.” 

She adds that as pubs and bars start to open their doors again, it will be even more important than ever to offer a diverse range of crisps, snacks and nuts - albeit within an initially more streamlined offer to avoid wastage. 

“Given the predicted tougher economic environment and squeeze on household disposable income, there will be a wider set of consumer need-states to cater,” she continues. “There will be an appetite for the core ranges of crisps and nuts, but premium lines – like Pipers – are also likely to be in demand with many consumers wanting to treat themselves, i.e. I’m spending less time at the pub, so I’ll treat myself whilst I’m there’.”

Like Davidson, Alice Bowyer, executive chef at Channel Islands-based Liberation Group - a two-time winner of the Best Food Offer at the Publican Awards - believes that the clamour for premium snacks will, among other trends, survive the Covid-19 crunch.

“If anything, this lockdown period has probably accelerated all the trends at once,” she tells MA​. “We will focus on premium and quality and those with a story just as much as the rest of our food offer.  We try and cover a range of different snacks for the tastes of our customers and specifically pairing these with drinks so our 'made for drink' snacks do really well.

“We work closely with Mr Filberts based in Glastonbury, right in our Butcombe heartland who sources all our nuts, salami sticks, and amazing pork scratchings.  With the accelerated trends we may see the request for healthier and ‘feel good’ snacks so we have been playing around with our own kale crisps, popcorn and vegan sausage rolls.  

“Again, I think 'experience' is something we’ll be looking for in all areas of hospitality and even snacks play their part in that.”  

Hygienic post-lockdown option 

“That being said, snacks are only purchased in 3.6% of pub trips, so there’s a huge opportunity for outlets to leverage crisps, nuts and snacks further as part of the recovery,” she adds.

“With the likely reduction of hot food immediately after opening – as highlighted by KAM Media’s Return of the Pub research which says spend on food will be down 26% - snacking options will be vital in offsetting some of the gap.” 

What’s more, Davidson argues that pre-packaged offerings will become increasingly important after lockdown due to heightened consumer focus on hygiene. “Only a third of consumers say they feel anxious about eating pre-packaged food and beverages from well-known brands,” she explains, “versus two thirds from self-serve buffets”.

Building a reopening range

Bowyer advises publicans to keep it simple and focus on quality, taste and packaging.  

“I don't know if there is any benefit in having five different brands of crisps for instance,” she says. “I would suggest a broad range of options that are interesting as well and put as much care and thought into them as you do your menus.  

“Be clever with what you produce in the kitchen bearing in mind reducing waste from the menu.  This will mean a more efficient use of labour and save money on food costs.”

Breaking down what she believes consumers will be looking at post-pandemic, Davidson portions the pub snack shelf into three categories post-lockdown. 

Firstly, she advises throwing pre-packaged snacks into the mix as they’re more hygienic and reduce the risk of virus spreading.

Secondly, Davidson suggests a core range of recognisable brands that customers trust. “’It’s my favourite’ is the second most popular reason for selecting snacks in pubs, only behind taste,” she explains. “With the right visibility, it will be key to stock the bestsellers that capture the attention of punters.”

Finally, she explains that a pub’s range of snacks needs to listen to customer needs. “It will be even more important than ever for pubs and bars to offer a good range of crisps, snacks and nuts. Our advice would be to initially re-open with a focussed range to minimise potential waste, while ensuring it caters for relevant consumer need-states and outlet type. Leveraging recognised brands that customers trust will be essential, so an offer that includes core or premium depending upon outlet type, together with an accompanying snack to broaden appeal with families as well as a nuts offering.”

Crunch time for sport and snacks? 

Finally, Davidson explains that preparing bar space to accommodate impulsive customers amid social distancing measures is a key ingredient in snack success post-lockdown.

“With many pubs and bars likely to be operating a one-way system within their establishments to adhere to social distancing rules, punters will be even more impulsive and focused on moving along quickly. Of course, pre-packaged offerings will take precedence over decanted ranges, due to heightened consumer focus on hygiene.”

Ultimately, however, Davidson says that a premium offer will be defined in the experience operators can create – which the return of live sport behind closed doors could play an important role in.

“The focus will be on driving more occasions and experiences across dayparts, whilst leveraging events to drive footfall back to the pub,” she says. “With talks of many of the larger sporting events recommencing over the coming months, but behind closed doors, there is an opportunity for pubs to create social moments for their customers. 

“While social distancing regulations must be strictly adhered to, pubs operating with large internal spaces or pub gardens, could consider ticketed viewings of the big sporting matches and games. 

“Alongside this, leveraging food and snacks as a way to increase consumer trip spend will be pivotal to recoup lost revenue.”