UB quiet on salty snacks sale as sector rises

By Freddie Dawson and Mike Stones

- Last updated on GMT

Related tags: Marketing, Brand, United biscuits

McMoy's is the fourth largest salted snack brand in the UK
McMoy's is the fourth largest salted snack brand in the UK
Jaffa Cakes maker United Biscuits (UB) has dismissed reports that it is preparing for the sale of its salty snacks business – ascribed a £500M price tag by some commentators – as “market speculation”.

A spokeswoman for the firm refused to confirm or deny rumours that its owners were considering splitting the snacks division in preparation for a sale after it turned in a strong financial performance last year.

UB’s owners, US private equity group Blackstone and French buy-out firm PAI Partners had appointed the investment bank Credit Suisse to split the salty snacks unit from the biscuits business, according to reports in the Wall Street Journal, Financial Times​ and Reuters.

The owners made a failed attempt to sell the combined business two years ago at a price of about £2bn.

The salty snacks business includes brands such as McCoy’s and Hula Hoops, while the biscuits division includes iconic brands such as McVitie's.

Robust growth

Meanwhile, an analyst for market resesearch group Mintel told FoodManufacture.co.uk that UB’s salty snacks division had performed well last year in a rising market.“United Biscuits had a successful year in 2011 in terms of the crisps and snacks market, with robust growth of its core crisp brands,”​ she said.

Overall, the salty snack market in the UK reached an estimated £3.18bn last year, up 6% from 2010. UB’s McCoy’s was the fourth largest salted snack brand in the UK, while KP was the largest brand for nuts, according to Mintel.

Although the nuts category continues to be dominated by own-label – which has controlled 74% of the market since 2009 – KP was the only nut brand to grow last year, said the spokeswoman. It increased its market share to 13% (£43M) after new product launches such as jumbo-sized peanuts.

The prospects for salty snack sales were also encouraging, reported Mintel.“The expected continuation of consumer trends for staying in, snacking with others via sharing bags and the desire for affordable treats all mean that growth for salty snacks looks likely to continue in the coming years,”​ said the spokeswoman.

Particularly well

Firms that extend brand portfolios into different market segments are expected to do particularly well. For example, “McCoy’s enjoys a fun brand image, which may enable it to compete in other segments such as stacking chips,​she said.

“That was despite threats to both markets such as financial pressures on households, the government’s promotion of healthy eating and an ageing population.”

But brands are losing share to own-label products as consumers become more concerned about price and less about loyalty to established products, she added.

“Many consumers are becoming increasingly price-aware and adapting their habits in order to save money,”​ the analyst said. “Brands are likely to find it increasingly difficult to charge a premium for added-value attributes, only striking a chord where these add a tangible point of difference not offered by own-brand.”

But most peckish consumers would still “… find space in their diets for affordable treats such as crisps, nuts and salty snacks,”​ she said.

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