While there is a lot of buzz about bite-size and shareable packages that pace chocolate and nonchocolate growth, compelling developments also include products that morph into completely new forms.
With single, traditional candy brands needing some excitement to revive flat performances, some new entries could provide that lift. The migration into new brand formulations is something that is “important for reasons beyond sales,” says Susan Viamari, editor of Chicago-based research firm IRI’s Times & Trends. “It’s motivated by the need to create excitement and buzz factor, which seems to be equally important [to sales].”
Think M&M’s and M&M’s Chocolate Bar, Jolly Rancher Hard Candy and Jolly Rancher Soft Chews, and the classic Butterfinger Candy Bar and breakthrough Butterfinger Peanut Butter Cups.
While there are certainly bona fide examples of brands that branch out into all new product categories—Special K comes to mind—the process naturally has its share of short-term upside coupled with some uncertainty about longevity.
When Randy Adams caught wind of the launch of Butterfinger Peanut Butter Cups earlier this year, he sensed opportunity—but with a caveat. He shuddered thinking about the category-management challenge of properly calibrating his confection department all over again.
“You have mixed feeling,” says Adams, center-store category manager for the 113-unit Huck’s Convenience Stores, Carmi, Ill. “I’ve been doing this a long time, and these line extensions are often temporary blips on the radar that don’t sustain momentum. I’m a bit jaded by the hype that accompanies a new offer that fails to live up to its promise. I remember ‘sure things’ where we gave it a lot of play in the stores, and it ultimately failed.”
Adams believes brand cannibalization is always possible for brands that make a radical turn in package and formulation characteristics, but he cites one example where past is prologue. “Years ago, Werther’s Original USA launched a soft-chew line extension, and the two versions were able to coexist nicely. I think it’s a case of two different consumers—someone with a dry mouth opts for the hard Werther’s, while the soft candy is for a different occasion. That same idea would apply to Jolly Rancher’s [new Bites soft chews].”
On the Butterfinger Peanut Butter Cups two-cup single pack and four-cup shareable king pack, Adams says thus far it has not cannibalized the flagship Butterfinger. Moreover, he says that it has not eaten into his sales of Reese’s Peanut Butter Cup, which has a loyal following of its own. It’s all incremental.
Single-Bar Boosters
Impulse combined with product-positioning strategies are crucial for getting strong returns on line extensions such as these, because 31% of all confection purchases are made in secondary locations of a category that soon will be a $33-billion dollar business, according to McLane, Temple, Texas. Convenience stores account for $5.3 billion in sales and possess a 23% share of total U.S. confectionery sales.
In peering at the state of traditional bars, Viamari says, “It makes sense over the years to try and prop up this segment. The price point of traditional bars doesn’t seem to hold the same level of value as the reshareable bags or the king sizes.”
One prevailing value of the 1.5-ounce bar is that it’s the most powerful for immediate-consumption purposes, and 53% of candy sales are bought on impulse, according to McLane. Minis and kings can be immediate, but they also run on a parallel track as a take-home candy.
Value is key. Adams says that while standard-size-bar sales are flat, king sizes and peg bags are “just phenomenal. The economy being down is a reason the king and peg bag grew. It’s not that people don’t have money for a candy bar, but they look more for value, and those two sizes are perceived as value.
“I think the innovation in standard-size packages has helped to keep sales flat for that size: Innovation is not going to turn it into a powerhouse,” says Adams, who adds that Huck’s offers an everyday candy discount, typically in the form of two-fors.
How do marketers know which brands to ride into new territory? Viamari believes “it’s both an art and science. The marketing and R&D people might look at trends that are working elsewhere, but it might also be a shot in the dark on the decision-making.”
The transition to multiple categories such as what Special K has done—and even Jolly Rancher with its Freeze Pops—opens brand users up to a trove of opportunities across day-parts. Just look at Greek yogurt, which began as a simple trend in the dairy aisle and has morphed into cereals, snack bars, frozen treats, sauces, dips and packaged beverages.
The Hershey Co. entered a new category this year with the introduction of Hershey’s Spreads. The spreads are available in three varieties: Chocolate, Chocolate with Almond and Chocolate with Hazelnut. Pairing suggestions from the company include graham crackers, strawberries and bananas, or more adventurous pairings such as celery, pineapple and pickles.
LTO Lowdown
Larry Lupo, vice president of sales for the convenience and drug channels, Mars Chocolate North America, Hackettstown, N.J., says that limited-edition offerings provide an automatic buzz, and cited Snickers Rockin’ Nut Road Bar as a variety that was “such a popular limited edition a few years ago that we just brought it back in January.”
Limited editions provide a sense of urgency, but what about when LTOs become permanent? A hit during the holidays, M&M’s Brand Milk Chocolate Mint Candies have been permanently added to the lineup. “Research shows that consumers are willing to try new flavors from brands they already know. We’ve had tremendous success with brand extensions,” says Lupo.
In September, The Hershey Co. will launch Ice Breakers Cool Blast Chews, an extension of the popular Ice Breakers Mints line. “Grounded in consumer insight, it is a product that chews like a gum but dissolves like a mint and provides a cool blast of instant freshness,” says Brandy Woolford, associate manager, brand public relations, for Hershey. “It will deliver on the consumer need for convenient, discreet breath freshening without continuous chewing and the need for disposal.”
Confection category managers know that the top 10 candy brands rarely change positions, demonstrating a great deal of solid entrenchment for longtime favorites. Thus, morphing into a new formulation such as M&M’s Chocolate Bar and Butterfinger Peanut Butter Cups requires empirical findings from a brand team, as well as outreach with consumers through focus groups and more.
A crucial element for Hershey’s product development process is not stopping the analysis once the product rolls out. “R&D plays a significant role from start to finish in all phases of our product developments, including creation, refinement and perfecting,” says Woolford.
Will candy brands that morph into new forms continue to see additional opportunities going forward? Mars’ Lupo says that seasonal confectionery is an area where Mars looks to extend its brands “with great success.” Singles in seasonal shapes are growing, so Mars is expanding its line this year with Twix in shapes such as hearts, eggs and ghosts.
Retailers like Adams at Huck’s like limited-edition confection for just that value—consumers have an urgency to buy and look forward to them when they return. As for permanent extensions, success is found Werther’s style: when the new iteration meets a different consumer need.
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