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Published: Thursday, 10/8/2009

Snack study says consumers take recession with many grains of salt

BY LARRY P. VELLEQUETTE
BLADE BUSINESS WRITER

A new study says that when our economic chips are down ... we eat 'em.

A Chicago company that analyzes consumer trends worldwide for a variety of different industries, Mintel, said it has discovered a direct correlation between the health of the nation's economy and the amount of salty snacks Americans consume each year.

The company's thesis — that snack-food purchases increase as recessions deepen — is borne out by the fact that, after several years of modest growth, potato chip sales have rocketed up 22 percent since the start of the current recession.

“I hadn't heard about potato chips as economic indicators, but our business is up,” said Haley Thomas, director of sales and marketing for Ballreich Bros. Inc., a large regional manufacturer of snack foods in Tiffin.

“I think people are staying home more, not going out as much, and chips are an easy side item. They're also a comfort food for when people aren't feeling so good about their situation,” Ms.

Thomas said.

Mintel's most recent study of salty snack foods, which looks at sales trends back to 2004, found that potato chips weren't the only salty snack on the rise; tortilla chip sales were up 18 percent — primarily from increases in meals prepared at home.

Sales of snack nuts and seeds increased 5 percent, while popcorn went up 9 percent over the period, said Mintel senior market analyst Chris Haack.

“The recession isn't the sole reason for the growth; there's also been an incredible amount of innovation in the market — offering products that were lower in sodium or were multigrain items — that fueled a lot of the growth,” Mr. Haack explained.

“But the majority of the upswing has been about value; it's about consumers looking for an alternative to fruit or nuts.”

Amy McCormick, a spokesman for Cincinnati-based Kroger Co., the region's largest grocery retailer, said the company's potato chip sales “are up 18 to 20 percent year-to-date” over last year.

However, she said the figures could be swayed by frequent sales, too.

“We can't attribute that to the recession,” she said.

Of course, theories postulating direct correlations between narrow consumer trends and overall economic activity are nothing new.

Economists, sociologists, and market analysts have tried out everything from skirt hemlines to laxative sales to haircuts as accurate barometers of economic pressures facing the general public since the 1930s. And in many ways, Mintel's study of “the chip” is probably another example of that, economists say.

“That's not one of my indicators,” said George Mokrzan, chief economist with Huntington National Bank in Columbus, when told about the potato chip study. “The stuff that I look at are things like debt and employment levels, savings rates, and consumer confidence measures.”

Mr. Mokrzan said consumers eager to leave a bitter recession should be looking more for increases in big-ticket item sales than crumpled potato chip bags.

“What I primarily would be looking for in terms of economic recovery are things that have a lot of cyclical sensitivity: large durable goods, for example, that would respond to lower interest rates.

“More things like that as a measure that consumers are feeling more positive and willing to go out there and make significant purchases,” the economist said.

Contact Larry P. Vellequette at:lvellequette@theblade.comor 419-724-6091.



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