Candy: Distributor's Notebook 2014
Big sales are likely to come in small bites this year. Bagged hand-to-mouth candy offers retailers tremendous growth opportunity in the coming months, says Cassandra Matos, confections category manager for Temple, Texas-based McLane Co.
“We’ll continue to see significant growth in that peg-bag section with gummies, fruit snacks, sour-type items,” she says. “Another trend we’ll see continue in 2014 is with the larger-size items, whether pouches or stand-up gusseted bags. Those types of items fulfill several perceived needs: perceived value, perceived portion control, perceived shareability.”
Last year, c-store sales of chocolate candy grew more than 5% to $2.6 billion and unit sales increased 1.4%; nonchocolate sales rose nearly 4% to $1.9 billion, with a 1.2% drop in unit sales, according to data from Chicago-based IRI.
Overall, the candy category “still has some challenges,” Matos says, “but it’s still positive and definitely has some exciting things happening.”
Segments to Watch
▶ Hand to mouth. Snickers Bites, Kit Kat Minis and Butterfinger Bites have all been at the forefront of the bite-size revolution in chocolate. New to the miniature scene are 3 Musketeers Bites and Twix Bites, both of which come in a 2.83-ounce sharing size, as well as larger resealable bags.
“I’ve seen true incrementality to the brand with Kit Kat and its Minis launch and Butterfinger and its Bites launch,” she says. “We know those aren’t taking from their king or standard counterpart.”
On the nonchocolate side, Twizzlers Bites pouches, Starburst Minis and Jolly Rancher Bites all make familiar names ready for easy snacking. Other nonchocolate items that hold growth potential: products from Sour Patch, Trolli and Wonka, says Matos. Black Forest products now come in new packaging that makes the sweet treats more visible.
▶ Standard and king. Matos expects to see some flattening on standard chocolate and nonchocolate sales, and slight growth in king sizes of both segments.
Consumers have driven some of the growth based on king’s perceived value, but promotions offered by suppliers also helped boost king last year. “We’ve seen some retailers put in more king items than standard. But not everyone who wants a standard will trade to a king; not everyone who wants a king will trade to a standard,” she says. “We really try to work with retailers to see that when a decision has to be made on a third-tier or second-tier item, the decision for standard or king should be made based on which one is selling better for them.”
▶ Gum’s new hope. Gum sales continued their lengthy decline last year, dropping 7.1% to $1.1 billion, according to IRI.
A conservative approach to scaling back the gum set and expanding mints or confections in that space makes sense, Matos says: “Gum unfortunately doesn’t warrant the space it has warranted in prior years.”
However, better marketing by suppliers and new products could help slow gum’s decline and perhaps level it off by the third or fourth quarters of 2014, she says. Matos cited two new items in particular: Wrigley’s 5 Focus and Mondelez’s Sour Patch Kids gum.
Wrigley’s 5 Focus gum comes in a 15-piece resealable pouch and has two “eye-opening” flavors, spearmint and peppermint. The Sour Patch Kids gum is offered under the Stride label and promises an “iconic sour, then sweet” experience.
“The marketing on Focus has been good. They’re really good, intense flavors,” Matos says. “The Sour Patch Kids gum is doing great and I think it will continue to do great because those Sour Patch Kids (candy) consumers are coming over and trying the gum.”
▶ Seasonal swing. Seasonal candy is another way to bolster incremental sales with gum on decline.
Matos stresses offering simple items that have the best potential to sell. For Halloween, those might include Snickers Pumpkin bars, Reese’s Peanut Butter Pumpkins, Cadbury Halloween Eggs or ghost and pumpkin Peeps.
Retailers definitely have to think and plan ahead to take advantage of the seasonal offering. By Valentine’s Day, for example, McLane was already taking orders for Halloween items.