SIC 2096 Potato Chips, Corn Chips, and Similar Snacks
SIC 2096
This classification consists of establishments primarily engaged in manufacturing potato chips, corn chips, and similar snacks. Establishments primarily engaged in manufacturing pretzels and crackers are classified in SIC 2052: Cookies and Crackers; those manufacturing candy covered popcorn are classified in SIC 2064: Candy and Other Confectionery Products; those manufacturing salted, roasted, cooked, or canned nuts and seeds are classified in SIC 2068: Salted and Roasted Nuts and Seeds; and those manufacturing packaged unpopped popcorn are classified in SIC 2099: Food Preparations, Not Elsewhere Classified.
311919
Other Snack Food Manufacturing
The "salty snack" industry includes potato chips, corn chips, tortilla chips, ready-to-eat popcorn (except candy-coated), pork rinds, potato sticks, and extruded snacks such as cheese puffs. Overall, retail dollar sales for snacks during 2003 totaled $47.1 billion. Frito-Lay was the undisputed champion of this industry category, with Tostitos, Ruffles, Rold Gold, Fritos, Lay's, Cheetos, Sun Chips, and many more top sellers under its umbrella. Potato chips and tortilla chips controlled the snack foods market. Some 84 percent of American households eat potato chips, which had one-third of the salty snacks market in the mid-2000s.
The dietary trend in the 2000s toward healthier eating did not affect the snack category of foods as much as anticipated, as approximately one-third of the population regularly ate snacks in place of a meal. Single-serve and other "on the go" packaging was lifting sales by catering to the demands of a faster-paced lifestyle. Three-fourths of those who snack do so in the evenings. In addition, snacks were becoming more healthful, with reductions in sugar and fat. New labeling requirements for fats stipulated that by 2006, nutritional labels must specify trans fat content, otherwise known as hydrogenated fats and oils, in grams. Industry leader Frito-Lay beat the rush by including the line on its labels in 2003, well in advance of the deadline for compliance.
The salty snack foods industry has a unique structure, since Frito-Lay controlled more than 67 percent of the total market share with total retail sales of about $14.2 billion in 2002. Kraft Foods Inc., with the Nabisco brand business, holds second place with total 2002 retail sales of $29.7 billion. Although the industry has some elements of a monopoly (aggressive pricing and distribution policies among chip makers), the regional presence of many large and small manufacturers keeps it highly competitive.
Numerous companies of varying size make up the snack industry. Many compete only on a regional level, although some find it difficult to price their products competitively with the larger manufacturers. Others, however, create a market niche, sometimes with a specialty product such as kettle-style potato chips or baked chips sold through health food stores. If their products meet with success among customers, the smaller makers can often charge higher prices than the biggest manufacturers. Larger manufacturers are generally full-service snack companies—those offering a full range of products, including potato chips, tortilla chips, and other salty snacks. The smaller producers are more likely to specialize.
The potato chip was born accidentally in 1853, when railroad magnate and naval commodore Cornelius Vanderbilt was vacationing in a popular East Coast inn. He ordered fried potatoes but disliked them and returned the fries to the kitchen, complaining that they were "too thick." The cook, a Native American named George Crumm, reacted with indignation. He sliced a potato into slivers as thin as he could, fried them, and served them to Vanderbilt.
The newly invented snack gained popularity among other customers, but remained primarily a restaurant item for several decades. This style of potatoes became known as Saratoga chips, named after the town in which they were first consumed. In 1895, William Tappenden of Cleveland began manufacturing potato chips for home consumption. Snack food innovations included the introduction of ridged potato chips in 1966 and fabricated potato chips in the 1970s.
Popcorn is perhaps the oldest salty snack food still widely consumed. Indigenous peoples in what became Peru were known to toast corn kernels over flames until they burst. This tradition was recorded as early as the fifteenth century. North American Indians also prepared popcorn, and it was believed to have been shared at the first Thanksgiving dinner in Plymouth, Massachusetts. The term popcorn became accepted around 1820. Early American settlers may have eaten it—sprinkled with sugar and doused in cream—as the first breakfast cereal. It was also used decoratively from the beginning of its history, having been strung and draped on Christmas trees during the 1800s.
In 1885 the snack food industry received a boost from the invention of the first popping machine by a Chicago inventor named Charles Cretors. His machine used oil to pop the corn and was used for about a century until the development of the hot air popper. In the mid-1960s, the snack began to be manufactured on a mass scale by Orville Redenbacher, who then promoted his brand as a gourmet hybrid popcorn. The next major innovation came in 1986, when Pillsbury introduced microwavable popcorn.
Industry analysts reported that the snack food industry fared well in the early 1990s, given the economic downturn. In fact, over time the industry developed a reputation for being recession proof. However, stiff competition required increasingly aggressive promotions to grab the consumer dollar, so some viewed salty snacks as a no-growth industry.
Dollar sales of savory snacks—in a broad category including pretzels and snack nuts—grew from $10.6 billion in 1987 to $13.8 billion in 1992, an increase of 30 percent. Per capita consumption jumped from 17.49 pounds in 1987 to 20.55 pounds in 1992. The field was dominated by Frito-Lay, a subsidiary of Pepsi Co., which claimed nearly half of the overall salty snack food market in 1992. But Americans' appetite for specialty and relatively "healthy" snacks kept the industry competitive. More than 400 new products were introduced in both 1991 and 1992, including several varieties of multigrain chips, flavored ready-to-eat popcorn, and diet cheese puffs.
Profits for salty snack manufacturers were 7.5 percent in 1992, representing a slight drop from the previous year. These figures included additional snacks, such as pretzels and packaged nuts, which were made by "full-service" salty snack companies such as Frito-Lay and Borden. Pre-tax profit margins for this broad category of snacks slipped from 6.8 percent in 1991 to 4.2 percent in 1992. Domestic dollar sales in 1992 were $9.6 billion—up overall from 1991 sales. Consumers bought approximately 3.6 billion pounds of salty snacks, or nearly 18 pounds per capita consumption.
Potato chips led the way in salty snack consumption in 1992, with a retail sales volume of $4.41 billion. This dollar amount represented the sale of more than 1.66 billion pounds of potato chips, which claimed 32 percent of the market for all savory snacks—including popcorn, meat snacks, pretzels, and snack nuts. Steadily increasing throughout the 1990s, by 1998 potato chips had increased 15.1 percent in sales from the previous year, with pound volume increasing 6.5 percent. The low fat and no fat lines of potato chips were behind the surge in sales, and by 1999 the category was shrinking at a considerable rate.
Tortilla chips were the second most consumed salty snack. More than $2.57 billion worth were sold in 1992—a volume of 1.06 billion pounds. This represented a 20.5 percent market share by pound volume, or 18.6 percent by dollar sales. Also popular throughout the mid-1990s, by 1998 tortilla chips were bought overwhelmingly in supermarkets—44.8 percent of all tortilla sales. Corn chips saw sales of almost $750 million in 1998, with 49...
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