Another year, another round of price increases for candy helped boost category dollar sales in 2011. Data from SymphonyIRI for the 52 weeks ending Dec. 25, 2011, shows c-store dollar sales up more than 9% for chocolate and up more than 7% for nonchocolate. Unit sales, meanwhile, rose less than 2%.
“Certainly, 2011 was a year of infl ation for candy and snacks,” says Lance Smith, category manager for candy for McLane Co., Temple, Texas. “If you revisit the second quarter of the year, almost all confectionary
suppliers took pricing increases on chocolate and nonchocolate.” Infl ation averaged about 7% in 2011, he estimates.
With this in mind, Smith predicts high single-digit if not double-digit growth in confections in 2012. Because much of this will again be driven by infl ation, “it’s paramount to look at unit movement” when assessing the state of the category, he says. Manufacturers may also have greater promotional monies to offer in 2012 to help drive products into the stores and out the door.
Gum Goes Back to the Start
Continuing its long-term funk, gum has proven a sticky challenge. Smith of McLane suspects a disconnect between price and value is partly to blame. In response, Mars’ Wm. Wrigley Jr. Co. and Kraft Foods’ Cadbury have
been focusing on prepriced items to capture entry-level purchases and spur sales in c-stores. “What Cadbury and Wrigley are doing is putting top brands and top SKUs into opening prepriced points,” he says. “You don’t just have Doublemint; you now have Wrigley 5, Stride and Trident. These manufacturers are actually putting power brands at an opening price point, and I really think retailers should adopt that.” While an opening-price-point item may trigger a trade-down at the register, the “pros outweigh the cons.”
It’s a long-term trend but one that is proving to have long legs. According to fi gures from Nielsen for the 52 weeks ending Dec. 31, 2011, king-sized chocolate unit sales rose more than 11%, compared to a nearly 3% drop for standard-sized bars. The appeal continues to be based in king-sized’s value and standard-sized’s encroachment on the $1 price point. “Consumers see a lot of value in the king offering. From a size-to-cost ratio, it’s not signifi cantly greater [priced] than a standard bar; however, the consumer seems to perceive that the product size is significantly greater,” says Smith, who also cites strong new product launches in the segment: Hershey’s Reese’s Minis and king-sized Mars’ Snickers PB Squared.
The average unit price for a standard-sized chocolate candy for the big three chocolate manufacturers in 2011, according to Nielsen c-store fi gures. King-sized chocolate averaged $1.58 per unit.
Continuing the “bigger is better” theme, nonchocolate bagged candy also has enjoyed a sales renaissance. “I think we can attribute much of that to the perceived value of bagged candy in a recessed economy,” says Smith. “Consumers feel like they can get more for a better spend.” Average shipments per store per week of bagged peg candy rose 7.3%, according to McLane fi gures for 2011. Here, Smith credits as drivers the Trolli brand, Wrigley’s Life Savers, and Cadbury’s Swedish Fish and Sour Patch. Bagged value products are also performing well, with McLane shipments up 8.5%. The distributor’s own CVP label, Sathers and private label all enjoyed growth, Smith says.
David Bishop, managing partner with Balvor LLC, Barrington, Ill., says retailers such as Quick Chek and Tedeschi Food Shops favor bagged candy as a way to introduce their private-label offerings. “This concept offers increased value for the consumer and retailer, and this speaks to the challenges we all face in the economy today,” he says.
New and Improved
With the heyday of limited-timeonly offers behind it, candy is seeing an emphasis on quality over quantity. “On the chocolate side, we had fewer but better new-item launches in the last two years,” Smith says, citing Reese’s Minis,
Snickers PB Squared and M&M’s Pretzel. “For the most part, manufacturers are making room for it from a rationalization standpoint with items that have probably outrun their life cycle.” Bishop of Balvor says identifying the potential of a new item is still “more art than science.” “History shows that sometimes a larger manufacturer can introduce a product where they overextend themselves and cause retailers to lose focus on the core,” he says. “It diffused the value of the SKUs that the brand represented. Retailers need to make sure to stock the core and some new products.”
25% According to shopper behavior research conducted by Video- Mining for Mars in 2010, c-store consumers buy their favorite chocolate products 75% of the time, choosing a different chocolate for variety the other 25% of
C-store retailers have been enjoying a minty-fresh feeling lately, thanks to revived sales growth for the mint category. “As recently as two years ago, we had folks wanting to shrink the merchandisable space allocated to mints, with the thought of moving them down to the base of the plan-o-gram, making more room for gum,” says Smith. “Now it’s almost the inverse.” Smith credits a few factors: Ferrero’s increase in the package size of Tic Tacs, which granted it a higher retail; Hershey’s launch of the Frost line of Ice Breakers; and the sustained growth and momentum of Perfetti Van Melle’s Mentos line.
Seasonal and Novel
Retailers are fi nding greater opportunity with seasonal candy. McLane average shipments per store per week of seasonal rose more than 42% in 2011. Chocolate drove most of the growth, Smith says. Also up and coming: novelty candy. Average shipments per store per week rose more than 43% in 2011, according to McLane fi gures. Novelty “comes in and out for two to three months,” says Bishop. “These cycles drive excitement. It’s a bit of a treasure hunt once the consumer knows it’s at a convenience store.”
Mars recommends retailers display seasonal candy at least 60 days before the season to drive incremental sales to the candy category.