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Snack attack!

After consolidation, Intersnack faces off with PepsiCo

By Victor Velek
Staff Writer, The Prague Post
May 14th, 2008 issue

Photo illustration by caroline wren/The Prague Pos
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Choosing your junk food used to be easy.
During the “shortage economy” under communism, Czechoslovakia was deprived of the variety of prepackaged processed food found in the West. If you wanted a savory snack, your options were simple: salted sticks, peanut-flavored corn or rice puffs or one brand of greasy potato chip.
The 1990s ushered in a tidal wave of junk food, with various players looking to fill the untapped bellies of Czech consumers. One of the earliest arrivals was Germany’s Intersnack, which came to the market in 1992, taking over a potato chip plant in Choustník, south Bohemia.
Intersnack, which is known especially for its potato chip brand Bohemia, has seen the country’s appetite for salty snacks stabilize over the past couple of years, with annual consumption now sitting at more than 3 kilograms per person. Feeding into this, Intersnack’s flagship plant at Choustník turns 40,000 tons of potatoes into 10,000 tons of chips a year.
“The Czech market has been slightly growing in recent years,” said Stanislav Jánský, marketing director at the Czech arm of Intersnack. “The per capita consumption is relatively high compared to other Central and East European countries.”
Accompanying the growth of the snack market has been a consolidation, most recently with two acquisitions made by Intersnack last year. The company bought Canto and Perri Crisps & Snacks, two of its Czech competitors, boosting its market share from 36 percent to 47 percent, Jánský said.
Those deals have helped turn the sector into a race between the two multinationals, Intersnack and the U.S. firm PepsiCo, though the private-label products sold by supermarkets are also establishing a significant chunk of the market.
In fact, one of Intersnack’s acquisitions was made to help the company directly compete with private-label producers. Perri’s plant in Třemošná, west Bohemia, which was previously controlled by Ireland’s Largo Foods, focuses on private labels.
“Perri will give us a presence in the private label business, which is certainly a growth segment,” Jánský said.
Canto, a Czech-owned company established in 1993, was taken over to strengthen Intersnack’s non potato selections such as peanuts, cashews, almonds and baked snacks.
“We’re now the only player on the Czech market that can offer the full range of salty snacks,” Jánský said.
While Intersnack has courted its customers with a nationally tailored brand, PepsiCo is banking on its global brand Lay’s. The international label, which has its origins in the American South of the early 1930s, is a latecomer to the market, first appearing on shelves at the end of 2004.
Unlike Bohemia chips, which are locally produced, PepsiCo makes all its chips for Central and Eastern Europe in Poland.
Salty nation
For the Czech Republic, holding sway over the potato chip market means control over much of the country’s savory snacks industry. Potato chips are by far the nation’s favorite salty treat, accounting for 38 percent of all such snacks consumed, according to a survey carried out by ACNielsen in 2005 and 2006.
Besides chips, Czechs are keen eaters of nuts, which make up about 20 percent of the sector. Salted peanuts have been traditionally the top choice, but this may change.
With growing living standards, people are buying more expensive salted nuts like cashews, almonds and pistachios, while peanut consumption has stagnated, said Jana Kremlová, director of Alika, a Moravia-based producer of savory and sweet nut snacks.
“Recently, organic dry nuts have been successfully introduced to the market,” she added.
Popcorn, tortilla chips, pretzels and other similar snack foods unavailable in communist-era stores still occupy only a small niche of the market.
According to Jánský, Czech customers’ tastes are conservative, favoring not only traditional snack varieties but also traditional flavors.
While markets in Hungary, Germany and elsewhere in Continental Europe are dominated by paprika flavor, Czechs stick to the classic seasoning: salt.
“Intersnack’s best-selling product is salted chips,” Jánský said.             
Despite the invasion of fast-food outlets and junk food after 1989, today’s Czech diet is healthier than two decades ago, said Václava Kunová of Nutradit, a nutrition consultancy.  
“The consumption of meat has dropped and people now eat more vegetables, legumes and fish,” Kunová said, adding that “fast food is still less of an obesity problem here than in the United States or Western Europe.”
“Sweet snacks, like sweetened cereal biscuits that are advertised as healthy treats, contribute to our clients’ weight problems much more than savory snacks,” she said.

Victor Velek can be reached at vvelek@praguepost.com


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