Small brands are posting the fastest growth in the ready-to-eat popcorn market.

SAN FRANCISCO — ConAgra Foods, Diamond Foods and PepsiCo control 55% of the U.S. popcorn market, according to Rabobank, New York, but startup brands are posting the fastest growth.

“These smaller companies have proven adept at spotting the emergence of new trends and gaps in the market, while taking advantage of them,” Rabobank said in a new popcorn report. “In contrast, many of the larger microwave popcorn companies have sleepwalked through the growth in the (ready-to-eat) market, as their microwave popcorn sales ebbed away.”

Other players represent 26% of the market; private label accounts for 10%.

ConAgra’s sales of microwave popcorn brands, which include Act II, Jiffy Pop and Orville Redenbacher’s, have declined by a compound annual growth rate of 4% between 2010 and 2013. Diamond Foods’ Pop Secret brand, conversely, has grown at a 12% compound annual growth rate in the same period, achieving sales of $225 million in 2013.

While microwave popcorn may be fizzling, the ready-to-eat segment has grown at double-digit rates since 2013 to achieve sales of $750 million last year.

Emerging brands are buttering up to millennial consumers with gourmet flavors, vibrant packaging and healthful positioning. More than a handful of small players exhibited at the Winter Fancy Food Show, held Jan. 11-13 in San Francisco. Products on display ranged from nutritious snacks to indulgent treats.

Angie's debuted two varieties at the Winter Fancy Food Show.

Sugar and spice

Heating up the popcorn market are such spicy varieties as sriracha and jalapeño. Both varieties are available from Pop! Gourmet Popcorn, Tukwila, Wash., which makes more than 30 innovative flavors that also include African peri peri, Chinese 12-spice, smoky barbecue and Northwest cheddar, ginger and garlic, and white truffle. The sriracha popcorn, which debuted last year in a partnership with Huy Fong Foods, the maker of the original namesake sauce, combines flavors of sun-ripened chili peppers and garlic.

Pineapple habanero popcorn debuted at Winter Fancy Food Show from Sexy Pop L.L.C., Sea Cliff, N.Y., founded by Pirate’s Booty creator Robert Ehrlich. Other flavors include such classics as French butter and cheddar, plus some unusual varieties like banana and Brazilian coconut.

Angie’s Popcorn, North Mankato, Minn., debuted a pair of new flavors at the show under the Boomchickapop brand: white cheddar and caramel and cheddar mix. Made with local ingredients and no preservatives or trans fats, the products join a lineup that includes sea salt, lightly sweet, sweet and spice, salted caramel and sweet and salty kettle corn.

Such brands as Pop Art experiment with global flavors and spices.

Global inspiration

Worldly flavors are trending in ready-to-eat popcorn. Masala Pop, Portland, Ore., peppers its popcorn with exotic Indian spices, including turmeric, mustard seeds, cardamom and Garam Masala. The snacks are sweetened with organic agave and organic coconut sugar and coated with non-bioengineered sunflower oil or pure organic coconut oil.

Saigon Sunrise, Brazilian Samba and Honolulu Aloha are varieties offered by Popsalot, Beverly Hills, Calif., a maker of air-popped popcorn featuring premium ingredients such as Vietnamese cinnamon and house-blended Macadamia nut butter.

479° makes sweet and savory organic popcorn.

Sophisticated palates

For Mike and Venessa Dobson of Pop Art Snacks, Salt Lake City, kernels are a culinary canvas for such exotic flavor combinations as Thai coconut curry, tandoori yogurt, nori sesame and rosemary truffle.

Oogie’s Snacks, Denver, uses proprietary corn and gourmet ingredients to create popcorn varieties that include sundried tomato and parmesan, hatch chili con queso, and cracked pepper and asiago.

Bing cherries and dark chocolate is the latest limited-edition variety from 479°, a San Francisco-based maker of sweet and savory organic popcorn. At the show, the company sampled several signature flavors, including asiago, parmesan and cheddar; sea salt caramel, and creamery butter.

Co-branding and updated packaging may help spark microwave popcorn sales.

Don’t count out the big guys

While small brands are shaking up the category, large players may still pop back.

“It is not too late for the major players to wake up and get more actively involved,” Rabobank said. “It is hard for big companies to react quickly to changing tastes and capitalize on emerging new markets. Like large shipping tankers, they are not built to make sharp turns, and they take a while to change course and direction.

“However, despite being structurally challenged, they can ultimately mobilize larger resources to play the longer game.”

Large popcorn companies have three options to spark new growth, said Rabobank. First, microwave popcorn companies may need to move more aggressively into the ready-to-eat market, either through innovation or acquisition of smaller players.

As another option, popcorn companies may consider manufacturing products for a private label store brand or contract manufacturing for a small brand with capacity constraints. Private label ready-to-eat popcorn brands represent just 5% of the market but grew 21% in the past year to achieve $40 million in 2014.

Finally, existing brands may consider a makeover of microwave products with new flavors, packaging and branding. ConAga’s Orville Redenbacher’s recent partnership with Bethenny Frankel’s Skinnygirl line is an example of such a refresh.

“Some of the branding may also need updating,” Rabobank said. “Just as the Quaker Oats image has not really resonated with the snack bar crowd, maybe it is time to retire the white-haired old men.