Inflation has many consumers pinching pennies during their grocery shopping trips. However, there’s a twist: despite their dwindling food budgets and rising costs, U.S. snackers bought more pretzels over the last year than the 12-month period before, and many producers playing in the category expect the surge to continue, despite ongoing challenges in the market.

Market data

Pretzel consumers continued crunching down on the salty, twisted snacks in the previous 12 months—despite inflation pushing material costs and price tags up, shoppers purchased 1.7% more units this year than last. Overall, the combination of modest increase in pretzel purchases and significant price increases led to a 17.2% increase in pretzel sales, for a total of $2.2 billion.

All the ranked players in the traditional pretzel category saw an increase in sales for the 1-month period. Snyders of Hanover topped the list of producers, with $633 million in sales (a 15.1% increase); private label pretzels were in second place, with $340.1 million (up 21.7%). Dot’s Homestyle Pretzels, which came in at third place with $328 million, also saw the biggest increase (32.6%).

Looking back

Justin Spannuth, chief operating officer of Unique Snacks, says in recent months, shoppers on the hunt for pretzels have sought out a mix of old favorites and new adventures.

“Consumers remain dedicated to their core products but they also like to try new things,” he observes. “As the economy keeps slowing it is keeping people eating in more and spending less on restaurant dinners, but it hasn’t gotten bad enough that the middle market consumers aren’t spending on higher-end snacks and grocery foods. This is constantly evolving and can pivot at any point with significant economic swings.”

Mark Chu, senior director of marketing with Hershey Salty Snacks (which owns the Dot’s Homestyle Pretzel brand), says the team observed strong growth in the snacks market, including consumers turning to the pretzel categories for more occasions than ever before. 

“As we look at the trends that stuck out in 2022, at Hershey, we’re most excited about consumer desire for salty snacks to strike the right balance between familiarity and newness,” Chu shares. “As we continue to innovate across our portfolio, we’re looking at ways to use our tried-and-true brands and product categories, while incorporating innovative twists on the classics.”

Karl Brown, president and founder of Pretzel Pete, says the brand has had had a particular bright time in recent months.

“We have experienced unprecedented levels of growth during the past 18 months,” Brown relates. “As we have been well-established in the seasoned pretzel space, we have had seen a marked increase in new customers reaching out to discuss new projects as well as strong growth from almost all of our longer-term customers.”

Chu adds that while the populace continues to try and put distance between itself and the impact of the pandemic, at-home consumption continues to “provide a tailwind” for pretzel sales, for a number of reasons.

“The trend first appeared due to the COVID-19 pandemic but has sustained over the past year due to high inflation, which has caused consumers to shift eating from higher-cost out-of-home to generally lower cost at-home,” he observes.

Consumers also are looking for more diversity and adventure in their pretzels, beyond just salty twists. In fact, Brown says, Hershey’s purchase of Dot’s Homestyle Pretzels in 2021 has proven a notable moment for all the other companies (including his) in the subcategory. 

“Without question, the growth of Dot’s and the subsequent purchase by Hershey’s has shed the seasoned pretzel segment in a whole new light,” Brown comments. “A whole new generation of consumers is gaining an introduction to seasoned pretzels and looking to now experience new flavors and brands.”

Looking forward

Chu says producers should expect some of the myriad challenges snack companies have faced in recent years to continue impacting the field, perhaps with some new ones adding to the list.

“Inflation will continue to be a mainstay this year as consumer spending habits continue to shift,” he advises. “Similarly, with the Debt Ceiling deal, student loan repayments will start again this fall, which will also have an impact on consumer spending, especially for millennials, one of the main consumer segments for snacks.”

Brown says the cost and price woes of recent months likely will continue to require a remarkable level of adaptability and resourcefulness of producers.

“By the far the biggest downer was the big increase in ingredient costs, corrugated, and trucking in 2022 and into early 2023,” he notes. “While some of these costs have started to moderate, it was a huge challenge last year trying to balance the large growth in demand at the same time inputs were increasing. It was impossible to increase prices at the same rate and we had to be very careful with our expenses during this period.”

Spannuth predicts that while some challenges are easing, producers should not expect a clear road ahead.

“All challenges have certainly diminished since the peak of COVID and Inflation but the issues that were highlighted over that time have lingered and still exist in a diluted state,” he advises. “Cost increases are still happening in a few areas, supply chain is still slower the pre-COVID, as well as the labor shortage.  All are better but none are back 100% to 2019.  It has certainly become the expectation with seemingly no end in sight—I’m trying to resist saying ‘the new normal.’”

Despite challenges, the pretzel category has seen notable growth in the past 12 months, and observers like Chu are optimistic about the upward trend continuing.

“The pretzel category is ripe with brands and products that continue to get it right as we’re all working to respond to the shifting preferences of consumers,” he remarks. “In a category with a household penetration of 59%, there is immense opportunity for Hershey to continue to increase our market share with the right products, in the right place.”

Brown surmises that pretzel producers may find opportunities in the better-for-you space.

“I’m starting to hear noise about pretzel derivatives that offer lower carbs and increases in either fiber and/or protein,” Brown says. “The traditional wheat-based pretzel has ridden a roller coaster over the past years as carbs are often targeted in many diet regimens. When one of these diets gains popularity, demand for pretzels always sees a dip. There is room for pretzel products that could offer the usual excellent taste/texture experience but perhaps without as many carbs.” Spannuth also suggests, “New flavors embracing global cuisine profiles is really on-trend as well as companies trying to find ways to become sustainable in many ways, including products promoting a reduction in food waste or reduction in resources to grow and produce.”

NEW PRETZEL PRODUCTS on snackandbakery.com

Quinn Pizzeria Filled Pretzel Nuggets

Zapp’s Sinfully Seasoned Pretzel Stix

Flipz State Fair covered pretzels

Discover More New Products at snackandbakery.com/newproducts