Confection Direction

Reilly Musser knows her customers love the new “hand-to-mouth” confection products—resealable, shareable pouches of unwrapped, bite-sized sweets.  

 

Musser, category manager for Santa Clara, Calif.-based Robinson Oil, which has 18 Rotten Robbie c-stores and a few kiosk-type locations, sees the upside of the trend toward bite-sized. And the retailer is hungry for even more innovation as a way of stemming category volume declines in her stores this past year—losses in part due to a still-recovering economy. Oh, and the freefall that the gum category experienced didn’t help matters either.

 

“Our candy sales were down this year after a decade of annualized growth,” says Musser. “We’ve done the customer research and look forward to new offers in the nonchocolate segment in early 2014. Because our stores run smaller, peg-bag varieties in the nonchocolate segment are our sweet spot and offer customers good value. When we get it balanced, we can restore category growth.” 

 

The silver lining for retailers such as Musser is that while a failing economy necessitated a cutback on indulgences, more people are consuming mini-meals throughout the day, and confection has landed squarely on their hunger radars. The third meal of the day is no longer dinner but the first snack after “lunch,” and hand-to-mouth offerings are on the menu—with the latest chocolate and nonchocolate items providing convenient, immediate consumption for our clockless consumers.

 

Chicago-based IRI recently provided some insight into this snacking paradigm through its research on the daily eating habits of consumers. The research firm identified a group it calls “opportunists”: Representing 21% of Americans, these folks eat on the run and grab a snack or beverage whenever they have the chance, paying little attention to traditional meal occasions. They also emphasize price, value, portability and convenience over nutrition in their snack choices. 

 

Sales of chocolate candy among “opportunists” grew nearly 16% the past year, according to IRI, led by The Hershey Co.’s Reese’s Minis and Brookside line of chocolate-covered superfruits, which landed on IRI’s Pacesetters list of top-selling new products for confections. Both of these items are offered in the standard packaging of the hand-to-mouth trend: resealable stand-up pouches (SUP) for easy snacking. 

 

“We are inveterate snackers, and confectioners have upped the ante on quicker consumption values. The facility to snack has been made far easier,” says Marcia Mogelonsky, director of insights, food and drink for Chicago-based Mintel. 

 

“As consumers navigate through their busy on-the-go lifestyles, snacking is playing a bigger role in the daily routine,” says Brian Kavanagh, senior director, category strategy and insights, c-store, for The Hershey Co., Hershey, Pa., via e-mail. “Consumers use these bite-sized items as an easy-to-eat snack while doing other things, and the smaller pieces allow consumers to enjoy the snack at different points during the day.”

 

Since 2008, 20% of confection launches have been portable/sharable. “It’s a trend that’s not going away,” says Jenn Ellek, director of trade marketing and communications for Washington, D.C.-based National Confectioners Association (NCA). “These products eliminate the chore of unwrapping, but also bite-size increments allow consumers to eat less per occasion.”

 

SUPs have proven to be a surprise success in the c-store channel, where many category experts originally assumed the price point would prove too high. And it’s a form that manufacturers are pursuing with zeal, if product introductions at the 2013 NACS Show are any indication. 

Building on the successful introduction last spring of Snickers Bites and Milky Way Bites, Mars Chocolate North America is launching three new flavors of unwrapped, bite-sized treats in SUPs: 3 Musketeers Bites and Milky Way Simply Caramel Bites, both launching in January 2014; and Twix Bites, coming in April 2014.

 

The Wm. Wrigley Jr. Co. has been pleased with the success of its Starburst Minis, introduced this past summer and available in both a 3.5-ounce “share size” pack and 8-ounce SUP.

 

In North America, Hershey’s growth strategy is grounded in strategic, incremental and what the confectioner calls “sticky” innovation to guide new product development. This is epitomized by the Minis chocolate line, which includes this past summer’s successful Kit Kat Minis, Rolo Minis and the new York Minis. 

 

On the nonchocolate side, Hershey extended its hand-to-mouth innovation with Twizzler Bites and Jolly Rancher Bites, now offered in a soft and chewy formulation. The product creates a synergy with Jolly Rancher hard candy to expand frequency usage. 

 

“C-store requires specific thought as to how that hand-to-mouth need manifests itself, such as who is the consumer and where/when do they need to fulfill that need,” says Kavanagh of Hershey. “These considerations often impact the size of the pack and the appropriate products for that occasion.”

 

And American Licorice Co., recognizing that its Red Vines and Sour Punch candy “may not have been as convenient to drop in your mouth,” has developed more bite sizes to fill that need, says Madalyn Friedman, director of marketing for the Union City, Calif.-based confectioner. 

 

American Licorice’s Fruit Vines Bites, bite-sized chewy candies available in cherry and strawberry varieties in a 10-ounce resealable bag (as well as 2- and 5-ounce packages), are set to launch in January. Also launching next year: a 9-ounce SUP for Sour Punch Bites.

 

More than 1,400 candy launches penetrated retail channels in 2010, but in 2012 that number dwindled to 765, according to Datamonitor. Chocolate led with 423 rollouts, while nonchocolate had 302. Candy and snack items accounted for 26% of all new CPG introductions in 2012. This restraint, some say, is a good thing.

 

“As economic challenges continue, confectioners have become more thoughtful and conservative in their approach. Even with numbers down, we’ve seen a resurgence in sharable, resealable packages, and this trend is excelling due in part to the shift of consumer snacking habits,” says Ellek of NCA.

Tonnage declined due to the economy, and “people focused on the staples,” says Friedman of American Licorice. “This is a relatively mature industry, and we must achieve true innovation,” she says, “not just roll out new flavors to grow the business.”

 

Musser of Rotten Robbie is looking to breathe some new life into the category. She’s eager for those new nonchocolate varieties. Mobile apps could play a role, “where we can alert [customers] to candy couponing programs we offer,” she says. 

 

At the store level, she says, there will be more emphasis on mints and less on gum brands, which have suffered. Because of the drop in confection sales, the chain was forced to make some merchandising updates. “We moved snack chips under the register in place of some gum and candy, and cut back on candy shippers,” says Musser. “We found that with candy at the counter, the turns were not as frequent, and it showed in dated product. With snack chips, the gross margin is lower than candy, but we see better turns.”

 

However, many stress that confectioners must be careful not to overindulge in innovation, lest they alienate customers who still want the tried-and-true products. “What candy brands people ate as kids still rule; it’s very evocative, so creating new brands is a challenge,” says Friedman. “The flip side is that there’s a lot of loyalty with evocative brands. We want to take our brands and continue building on them.”