Tom Vierhile, director, Product Launch Analytics, Datamonitor told NutraIngredientsUSA.com that the sector has become saturated with new products. “With product proliferation, this (Kraft’s sale) doesn’t surprise me. As with any market with a lot of product launches you get a retrenchment as companies re-appraise their investment,” said Vierhile.
“The peak years for bar launches in the USA were 2004 and 2005 (with the launch of 513 and 562 stock keeping units of new cereal bars in the US). Since that time, the category has slowed down which is a sign of a category that is maturing and is also probably a sign of a category that may not have as many niche opportunities that it once had.” In the first nine months of this year, 314 stock keeping units were launched.
Dieting trends
The bar market has long tracked the latest trends in new products including ingredient and dieting trends, making it susceptible to big short-term changes, said Vierhile. “The high numbers in 2004 and 2005 may have been partly due to the trend toward lo- and no-carbohydrate products. A lot of the bars launched then touted high protein contents. So when this fad collapsed, so did some of the demand for these products.”
Powerbar is still the top-selling nutrition bar with sales of $196m last year, according to the Nutrition Business Journal. Sales of Balance Bar fell seven percent in 2008 to $127m.
Launched in 1992, the Balance Bar range has grown to include Balance Gold, Balance Trail Mix, Balance Plus, Balance CarbWell, Balance Gold Crunch, Balance Outdoor, Balance Organic, Balance 100 Calories, and 40-30-30 Balance Drink Mix.
Vierhile comments: “There was a sizeable burst of new product activity from 2002 to 2004 and a drop-off since that time. Looking at these past launches, one would be hard pressed to name any viable opportunity that has not been targeted by Balance Bar. Past launches have included energy bars, high protein bars, meal replacement bars, 100 calorie bars, low carbohydrate bars, fruit and nut bars and more.
Brand extensions
“Balance’s main problem may be that it is just a bar brand and does not have a position in broader categories like breakfast cereal which limits the potential for brand extensions into new categories. The breakfast cereal market, in fact, has been a great springboard for new snack bar products as these brands have consistently moved into the market the past several years,” he said.
Vierhile predicts future growth of the health bar sector may depend on developments in dieting and obesity and the role that these products may have in helping consumers either lose weight or limit snacking. “There are other potentially promising areas for bars including bars that have probiotic benefits or bars that are high in ingredients like omega-3 fatty acids that provide support for cognitive development.
“For a while it was looking like this would be a potentially lucrative area for bars, but the science just does not seem to be there yet to support brain health-enhancing claims that companies would like to make. One last area that bars could cash in on in the future is the “beauty from within” market where consumers are gradually accepting the concept that food and drink products can provide nutritional support for enhancing your appearance,” he said.
Meanwhile, Brynwood, based in Greenwood, Connecticut, specializes in acquiring companies with values of between $25m and $125m. Hendrik Hartong, Brynwood’s senior managing partner, said: "Balance Bar is a great brand with a very loyal consumer following. We plan to increase the focus on the brand and expand the business through increased marketing and new product innovation."