What's Driving the Super-Growth of the Protein Bar Industry?

What's Driving the Super-Growth of the Protein Bar Industry?

The COVID-19 pandemic has affected food industries across the world—for better and for worse. While some industries, such as meat, have dismally failed to retain consumer interest, others, like the protein bar industry, have gained more traction than ever. A recent report shows that the protein bar market in the US is on track to grow an additional $806.08 million by 2024. And globally, the snack bar market is expected to reach $32 billion by USD by 2025. These numbers are a testament to the “super-growth” the protein bar industry is expected to experience, but what is driving this growth in the first place?

Factors Driving the Growth Behind the Protein Bar Market

One of the primary forces driving the growth of the protein bar market is the increasing demand for convenience among consumers. Health-conscious consumers are turning to specialty diets, such as plant-based and keto, to fulfill their wellness goals but often don’t want to deal with the pains of cooking. Protein bars have become the perfect delivery system for these consumers due to their “ready-to-eat,” “on-the-go” nature. With specialty protein bars (keto bars, paleo bars, and plant-based bars), those with dietary requirements can efficiently hit their macros and reap the benefits without much effort on their part.

The nutritional benefits of protein bars are another factor spurring the growth of this industry. Considered a functional food category, protein bars offer a healthy balance of protein, fiber, carbohydrates, and fats. As such, protein bars have become a popular choice for many looking for weight management, improved muscle mass, and increased energy. The advent of real-food, superfood ingredients (grass-fed, pasture-raised whey protein, kale, and freeze-dried blueberries) and adaptogens have amplified the benefits people can receive from protein bars. As the coronavirus pandemic raises awareness of the relationship between nutrition and health, many have turned to these “better-for-you” protein snacks as an easy way to ingest essential nutrients, vitamins, and antioxidants to reduce inflammation, boost immunity, and prevent various health diseases.

Notable Investments in the Protein Bar Industry

The protein bar industry is among the hottest food and beverage industries for venture capitalists at the moment. Understandably, there was little to no news of funding during the coronavirus. But before the pandemic, several brands were able to secure notable investments from popular venture capitalists and big brands:

  1. The Simply Good Foods Company acquired Quest Nutrition for $1 billion.
  2. Hershey’s bought ONE Brands for $397 million.
  3. Mondelēz International purchased Perfect Snacks for an undisclosed amount estimated to be in the hundreds of millions.
  4. District Ventures Capital closed an equity investment with OHi Food Co. for an undisclosed amount.

These investments indicate the growth potential of these protein bar companies, and thus, the overall profitability of the protein bar market. For example, RXBar, a clean-label protein bar company, was acquired by Kellogg in 2017 for $600 million. Since then, RXBar’s net sales during the first 12 months after Kellogg’s acquisition hit $213 million, a 180% boost from the previous year. The brand has become one of Kellogg’s main sources of revenue as well as a key player in the protein bar industry.

Similarly, Bobo’s, known for its all-natural bar products, received a total of $12.5 million in funding from 2017 to 2018, with funding led by local venture-capital groups Ridgeline Ventures LLC, Boulder Investment Group Reprise and Boulder Food Group. Propelled by its venture-capital funding, the company has recently experienced substantial growth, reaching $30 million in sales during March and even releasing a new line of nut butter protein bars. As such, Bobo’s has joined the team of smaller and nimble “up-and-coming protein bar brands” that are slowly dominating the industry.

Benefits of Investing in the Protein Bar Industry

An increasing focus on health maintenance has accelerated the popularity of the protein bars industry. More and more consumers are in search of easy and natural ways to improve their health amid the coronavirus. And protein bars have become the primary healthy snack for these people. Combined with the rising demand for “ready-to-eat” food, now is the perfect time for “better-for-you” packaged snacks, such as protein bars, to enter into the market.

Food entrepreneurs will find new opportunities and untapped market segments when entering the post-COVID-19 landscape of the protein bar industry. They will find it beneficial to shift their focus towards the nutritional gains that consumers can reap as well as the dietary trends, now that plant-based, keto, and paleo have entered the mainstream. Here are some specific growth opportunities that Protein Bar brands can benefit from in the upcoming months:

Using Functional Ingredients in Protein Bars

As virus-wary consumers increasingly prioritize health and disease prevention, functional foods with immunity-boosting and other wellness ingredients (MCT, melatonin, collagen, curcumin/turmeric, and prebiotics) have seen a huge surge in popularity. In fact, functional food sales topped $267 billion worldwide in February 2020 and this category is projected to reach USD 412.22 million by 2026. Using ingredients that provide functional benefits—such as improved gut health, good digestion, and good neurological function—will be key to finding success post-COVID.

Customizing Protein Bars for Specialty Diets

Consumers are turning towards specialty diets, especially to combat the “quarantine 15.” Specialty diets like keto and plant-based remain the most popular among health-conscious consumers. As a matter of fact, the keto market is expected to reach $15 billion by 2027 and plant-based protein is expected to reach $35.1 billion by 2026. These consumers are increasingly on the hunt for quick and tasty snacks that can help them achieve these health and wellness goals. Cutting-edge food entrepreneurs should consider protein bars and beverages designed with these diets in mind, such as Keto Bites, MCT Coffee, or Plant-based Protein Shakes, to gain a competitive advantage over major brands in these untapped markets.

Using eCommerce to Sell Protein Bars

With current retail shopping still challenged by limited product availability, homebound consumers are consistently turning to eCommerce to fulfill their grocery needs. In May, eCommerce sales reached a record of $6.6 billion, a 24% increase from the previous record of $5.3 billion in April. eCommerce presents a big opportunity for smaller protein bar brands. And it’s easier now more than ever to start an eCommerce store. Protein bar brands should focus on optimizing their online product listings with trending attributes, such as "immune-boosting" and "keto”. 

Bottom Line

The protein bar industry is poised for tremendous growth in the upcoming years. With a global valuation of $32 billion by 2025 for the snack bar market, protein bars are one of the hottest categories on the market. Spurred by changing consumer behaviors due to COVID-19, brands looking to grow and stay top of mind this year must be proactive and quick to respond to new and emerging market opportunities.