In the retail world, middle-tier product varieties can often get pinched at the flanks--the victim of sales declines coming at the expense of smaller and larger brand counterparts.
Welcome to the world of the standard-size 1.55-ounce candy variety, a longtime driver of chocolate impulse sales.
Standard-size bars have endured a performance trend line of flat to negative sales due to the rampant popularity of mini/bite-size brands across all channels. At the other end of the spectrum is the sales increase in king-size bars.
Ask Jared Scheeler, director of retail operations for Minneapolis-based Bobby & Steve’s Auto World, about the middle muddle. Dollar sales for 1.55-ounce chocolate bars plummeted 9.8% in his eight Twin Cities stores throughout 2013.
“For 2014, everything we hear is that primary innovation in confection will continue to revolve around mini/bite-size product development,” says Scheeler. “York Peppermint Minis [from Hershey] and Milky Way Caramels [from Mars] are the next two brand extensions we’re anticipating. Separately, over the past six months king-size-bar sales doubled in our stores. Where the new rollouts stop, I don’t know.”
The growth of mini and bite-size brands in resealable, shareable standup pouches is undeniably strong--and is only expected to sustain that trajectory in 2014. Bite sizes have grown four times faster than the total chocolate category over the past four years, according to Mars Chocolate North America category research. From 2009 through 2012, these offers grew dollar sales 80%, or close to $700 million, according to stats from IRI provided by Mars.
“The first thing that comes to my mind is, ‘Honey, who shrunk the chocolate bar?’ ” says Marcia Mogelensky, director of insights, food & drink for Chicago- based Mintel Research. “Consumers buy mini candy to ostensibly share, and to exercise some portion control for their own good. In the long run, people perceive bite sizes as more economical than king or regular sizes, and it’s about making it last longer.”
Health is also a factor. “It seems like there’s an unofficial ‘250-calorie cutoff ’ principle by manufacturers,” she says. “I think this has led to some attrition for larger-size varieties under the rubric of better-for-you snacking.”
From a health perspective, 1.55-ounce bars are tantamount to 64-ounce fountain drinks in the context of perpetuating the conversation about child and teen obesity, Mogelensky says. “In the eyes of young mothers, the front-end supermarket and c-store are becoming a dangerous space as the ‘child obesity police’ cracks down,” she says.
King-size candies don’t necessarily fall prey to this: The packages possess a duality of single and savable consumption on one hand, and shareable on the other hand--all depending on the occasion, Scheeler says, based on customer experience.
Mini Larceny
Even though the specter of cannibalization looms with the advent of true innovation across the bite-size segment, there’s a mixed bag of opinions on the breadth and depth of the so-called “steal.”
Steve Jones, president of Johnny Junxions, a single store in Bedford, Ind., says brand size variations “may help incrementally increase sales, but often the unknown is whether or not it really is an increase in sales or if the consumer just purchased a different form of the same product from the same company.”
Mars sees incremental sales being generated as the brand portfolio net widens. New users are coming out of the woodwork thanks to minis.
“As with most new-item launches, there will always be some steal. That said, we gleaned insights from shopper-card data from a major U.S. retailer that shows the Snickers Bites and Milky Way Bites have brought in new, light and lapsed users into the chocolate category,” says Larry Lupo, vice president of sales, convenience & drug channels for Hackettstown, N.J.-based Mars Chocolate North America.
For example, among shoppers who purchased Snickers Bites and Milky Way Bites, 37% were new to the chocolate category and 37% had not purchased chocolate in the prior six months.
“The new Snickers Bites and Milky Way Bites have been selling well in c-stores, in addition to the existing Snickers Bar and Milky Way Bar Singles and Sharing Size Bar offerings,” Lupo says.
Some believe a growing number of people are learning to gravitate back and forth across pack sizes based on occasion fulfillment. “The middle chocolate tier is getting squeezed, but that could change with the marketing approach. Because, let’s face it, the 18- to 24-year-old male--the core c-store customer for so long--is always going to want their hunk of chocolate. When someone really needs a chocolate bar, they need one,” says Mogelensky of Mintel. She believes decisions won’t come down to a case of either/or but both.
Cannibalization is more realistic, she says, when innovation comes in the form of a major formulation change within a brand. An example is Jolly Rancher Soft Chewy Bites and Jolly Rancher Sours Chewy Bites, available in 10-ounce resealable pouches. “It’s one thing to migrate back and forth from a Kit Kat bar to Kit Kat Bites, but a user of Jolly Rancher who switched to the chewy bites may not return to the hard candy version because they have that Jolly Rancher taste profile they prefer--in the chewy formulation,” says Mogelensky.
More Innovation to Come
With all the innovation that’s been squeezed from the mini/bite-size segment to this point, it is “still developing,” according to Mark McCormick, senior director of pack types for The Hershey Co., Hershey, Pa., who says the organization expects the segment’s growth to “remain strong in 2014 and beyond,” spearheaded by the York Minis launch.
“Consumers shop different channels for different reasons, and the key driver of choosing the best pack types is the shopper’s purpose for each shopping trip,” says McCormick. “Through knowledge, insights and innovative store simulations, we are strategic partners and advisers to our customers, which helps grow the category.”
In 2014, Mars plans a substantial increase in marketing and media spending, including its “Kenny G” TV spots for Snickers Bites.
Scheeler of Bobby & Steve’s Auto World believes it’s been a yearlong constant by suppliers to provide stellar marketing support behind the mini confections.
“These offerings have energized the category, and promotional efforts led the charge,” he says.
King-Size Candy: Good Theater
While the 3.5-ounce king-size chocolate bars have experienced a banner half-year across almost all retail channels, the 6- to 7.5-ounce theater box has seen mixed reviews.
They are both hefty sizes, but with different narratives to tell. Certainly, theater boxes are a slam-dunk at the movies, as well as club stores and mass and drug channels. The c-store--due to space limitations--has never been a domain for significant theater-box merchandising, even though some retailers might have thrived with it thanks to merchandising commitments.
This offer in the c-store has been pushed further to the margins with the onslaught of mini and bite-site confections. Hershey Consumer Insights show that the sales velocity of theater boxes is far different from that of both peg bags and resealable pouches.
“The theater-box trends we’re seeing are the result of changes in retail space allocation,” says Mark McCormick, senior director of pack types for The Hershey Co., Hershey, Pa. “Across most channels, theater box remains a stable pack type, but there have been some declines in the convenience channel, which likely reduced space for this pack type in favor of higher-velocity and more profitable pack types. But theater-box changes don’t appear to be related to any one specific pack type.”
At Bobby & Steve’s Auto World stores around Minneapolis, customers don’t have a pricing dilemma selecting king-size bars vs. mini bags. That’s because king and sharing-size bags have identical price points: $1.89.
“Our purchasing costs for both types are exactly the same,” says Jared Scheeler, director of retail operations for Bobby & Steve’s.
That’s not all that’s similar: As of mid-December, the chain’s eight stores had registered $6,800 in sales of Kit Kat King Size and $5,800 in sales for Kit Kat Mini Bags since the beginning of 2013. The difference is that minis have been promoted extensively with shippers and floor displays, according to Scheeler.
Interestingly, some consumers, says Scheeler, perceive bags of minis--with approximately 15 pieces or more--and king-size bars with eight break-off pieces as similar value propositions. “With a 3.5-ounce king-size bar, some people have no problem breaking off sections to share at once or repackage for later,” he says. “The one compelling value proposition to bites and minis is that it’s a very ‘clean consumption,’ with no mess with melting chocolate.”
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