Snack Foods Manufacturing

SIC CODES: 2068, 2096

Key Business Challenges

Volatile Ingredient Prices
The price of critical commodity inputs such as corn, tree nuts, soybean and cottonseed oil, and potatoes can increase significantly due to poor farm yields, unpredictable weather patterns, and market reactions to government farm subsidies
How does the company limit the risk of volatile commodity prices?

Highly Competitive Industry
The snack food industry competes with a number of other impulse purchases and snacking options, including cookies, crackers, candy, energy bars, in-store bakery items, fast food, and baking at home
How difficult is raising prices to consumers?

Vulnerability to Litigation, Regulation
Increased awareness of obesity, ingredients, and labeling has made snack food manufacturers much more vulnerable to litigation and federal regulation
How challenging are the risks of increased litigation and regulation?

Key Business Opportunities

Boosting Convenience Store Sales
Manufacturers are paying more attention to maximizing the sales potential of snack foods at convenience stores (c-stores) and drugstores
What is the company's convenience store sales strategy?

Reinventing Nuts
High in Omega-3s, tree nuts are one of the few truly healthy snacks; however, the product category had lacked innovation until recently
How can the company capitalize on the health benefits of tree nuts?

Promoting Sustainability
Even though snacks are an indulgence, companies can capitalize on the growing interest in sustainability and reduced carbon footprints
What opportunities does the company see in promoting environmentally friendly products?

Fast Facts

Companies in this industry make snack foods such as nuts, chips, and popcorn, as well as peanut butter.

Major companies include US-based PepsiCo's Frito-Lay, Kraft Foods, Diamond Foods, and Snyder's-Lance; Grupo Bimbo (Mexico), United Biscuits (UK), Calbee Foods (Japan), and Nongshim (South Korea).

Major products are potato chips (about 30 percent of industry revenue); corn chips, including tortilla chips (20 percent); and bulk nuts (10 percent).

Typical customers are grocery wholesalers, warehouse club stores, food service distributors, vending machine distributors, and convenience stores ("c-stores").

Cash flow is generally steady throughout the year.


Industry Growth Rating

Growth Rating

Risk: Vulnerable to volatile raw material costs and litigation
Need efficient operations and effective marketing
Demand: Driven by consumer tastes and health considerations


Executive Talking Points

Chief Executive Officer - CEO
Identifying Optimal Product Mix
How does the company determine its ideal product mix?

Chief Financial Officer - CFO
Managing Commodity Purchases
How does the company protect itself against highly volatile commodity prices?

Chief Information Officer - CIO
Fully Integrating Operations
How well does the company's technology platform communicate across divisions?

Human Resources - HR
Hiring Qualified Workers
How is the company finding and retaining qualified employees?

VP Sales/Marketing - Sales
Implementing Sales Strategy
How is the company's sales force organized?