Snack Sales Holding Up

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Snack Sales Holding Up

NEW YORK -- New data showed snacks sales are holding up in the tough economy, according to analysts.

"Snack trends have held up despite deteriorating macros and price increases," said Morgan Stanley analyst Bill Pecoriello. He told investors in a research note that sales volume declines in the past month were an improvement over recent period and year-to-date trends.

ACNielsen data cited by Goldman Sachs analyst Judy Hong, showed sales volume fell by a modest 2 percent as snack makers raised prices by 11 percent.

PepsiCo Inc.'s Frito-Lay unit, the biggest multinational snack seller, reported solid sales in October, Hong noted.

"We are encouraged Frito has arrested salty snack volume share declines while getting pricing, but remain concerned about competitive vulnerabilities in the face of widening price gaps and spreading macro weakness," the analyst said.

Potato chips are roughly one-third of Frito's volume base, and Hong said that made it vulnerable to losing market share to Pringles or regional and private-label brands as PepsiCo raises its prices to offset commodity costs.

Sales of potato chips were especially vulnerable in markets where housing was weakest, Hong said.