06:05 PM EDT, 06/22/2024 (MT Newswires) -- Merchandising and promotions across salty snacks have failed to move the needle for sales and volume, contrary to expectations of the packaged food industry, which has viewed the category as a reliable avenue of growth, BofA Securities said in a note emailed Friday.

Salty Snack category sales have risen 0.2% year to date while volume has trended 1.2% lower, below the average growth rates of the past three and five years of 9% and 5.8%, respectively, the firm said, citing Nielsen figures.

Merchandising and promotions have been ineffective due to their failure to drive demand from non-regular customers and may have enticed heavy consumers instead who "theoretically" would have paid a higher price anyway, according to the firm.

"The choices are not great. Deeper promotions pressure margins while providing only temporary volume lift. Rolling prices back would run against historic precedent," BofA Securities wrote.

PepsiCo's ( PEP ) salty snack retail sales are up 0.2% year over year, BofA said, while volume is off 1.7%. Meanwhile, Mondelez International ( MDLZ ) is not seeing the intended lift from promotional spending, according to the note. "Management alluded that prices may be too high at a recent conference," BofA said. "Promotions and adjusting pack sizes are in the toolbox to address this."

Still, private label and companies like Utz Brands ( UTZ ) are outperforming the broader industry by generating sales above the category. Private label salty snack retail sales have risen 4.8% year over year while Utz's has grown an "impressive" 2.1% thanks to performance in cheese snacks and tortilla chips, BofA Securities said.

Private label offerings are gaining share in five of seven key sub-categories of potato chips, crackers, tortilla chips, popcorn and pretzels, according to the note.

Elsewhere, management teams have adopted a wait-and-see approach before reacting to the weakness and their patience will be tested during the summer, the firm said.

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