Snack food is on a roll but under attack

Snacks are on a roll.

After years of lackluster sales, potato chip sales jumped 22 percent and tortilla chips 18 percent since 2007, according to the market research firm Mintel International, which said the salty noshes defied the economic downturn.

"People bought more chips during the recession because they're a good value," Mintel analyst Chris Haack said in a study of the 2009 industry. "As the economy gets stronger, we expect annual sales increases to slow, but we don't expect markets to contract."

That's welcome news for the machinery and packaging manufacturers, corn millers, potato growers, and crafters of flavorings and colorings who this week pressed into SNAXPO, the industry's annual gathering, which concluded Friday at the Fort Worth Convention Center.

But the $17.7 billion snacking industry is under attack.

Critics, citing rising child obesity and health risks from too much salt, have proposed a "fat tax" on snacks and soft drinks, while urging the banning of sweet and salty treats in the schools.

"You should be concerned," Carlos Gutierrez, the chief executive of Kellogg's, who served as commerce secretary under President George W. Bush, warned the 1,460 people attending SNAXPO on Wednesday.

"One of Washington's favorite sports is to find a scapegoat," he said. "Don't stay away from Washington. It's coming very, very fast."

Gutierrez predicted new regulations will address childhood obesity, which will pose challenges to the industry. He also warned that efforts to put a special tax on snacks would continue.

The crackdown is under way in Ontario, Canada's most populous province. Beginning in fall 2011, candy and snacks will be banned from school campuses.

In the U.S. Congress, a bill, the Child Nutrition Promotion and School Lunch Protection Act, would prohibit all food items not meeting stiff new nutritional standards to be sold anywhere in schools, including vending machines. An exception is made for fundraiser bake sales.

"Yes, we are concerned about obesity," says Jim Speake, president of Evans Food Group, which produces Mac's brand fried pork rinds in Arlington. "It has to be education, education, education -- but starting at the home."

Smaller packet sizes may be one solution, Speake added.

A few days before SNAXPO, Health Affairs published a study finding that American children were heading toward snacking three times a day. Treats accounted for more than 27 percent of daily calories, with the biggest increases in salty snacks and candy while desserts and soft drinks remained major sources of between-meal calories, wrote the authors.

"Our children are moving toward constant eating," the study concluded.

Anticipating Gutierrez's warnings, the industry has tested the political waters.

Jim McCarthy, president of the Snack Food Association, sponsor of SNAXPO, said his group supports legislation allowing the Agriculture Department to set new standards for snacks in schools "based on the best nutrition science." And it generally supports first lady Michelle Obama's "Let's Move On" campaign against child obesity through a business-backed group, the Healthy Weight Foundation.

If anything, the snack industry is nimble. It created 350 new items last year -- beef-flavored chips or bloody mary mix chips, anyone? And it can quickly introduce products aimed at fads like the Atkins diet and low-sodium choices.

Creating a whole new line of goods to meet regulations or a trend can be profitable.

Snack packs limited to 100 calories not only are timely for an increasingly weight-conscious nation, but also a boon to manufacturers of snack making equipment, said Alf Taylor, whose Sydney-based TNA produces such machinery and has an Arlington branch.

Meanwhile, suppliers of raw materials are working to meet new nutritional challenges.

Mexico-based Gruma, the world's biggest supplier of corn flour and corporate parent of Mission Foods, is developing a flour with added fiber and a "resistant starch" for tortilla chips. That will prevent absorption of starch while making people feel full faster, said research director Miquel Angel Arce Monroy.

"The United States is No. 1 one in adult obesity, and Mexico is No. 2," Monroy said. "But Mexico is No. 1 in child obesity and the U.S. is second. So we have a very big problem also."

The aim is to have children absorb fewer calories without changing eating habits.

"We are fine-tuning," Monroy said of the new corn flour. Clinical tests in collaboration with Loyola University Chicago are planned with results expected by year's end.

"The market for snacks will stay the same but we're trying to come up with better, healthier products," the food scientist added.

BARRY SHLACHTER, 817-390-7718