Ahhhh, we’ve made it through the holidays, right?
Not so fast.
Those in the confectionery business say there’s an opportunity year-round to keep seasonal candy generating impulse buys and profits.
“I see huge opportunity in nontraditional holidays,” says Larry Levin, senior vice president of Chicago-based IRI, who focuses on the confection landscape. He encourages retailers to think beyond the “big four”: Valentine’s Day, Easter, Halloween and December holidays.
That’s easier said than done. Some convenience retailers are giving it a try with displays that don’t take up a lot of room but keep a timely emphasis on reasons to celebrate, whether it’s Mother’s Day, Cinco de Mayo, Diwali or other special days.
Other retailers, including a major retailer in the Northeast, say holiday merchandising is too difficult to execute well at the store level. “The window is too short. We get stuck with product,” says the retailer, who asked to remain unnamed.
To overcome retailer reluctance, Levin encourages stores to bundle sweets with flowers, wine and greeting cards, and tuck in candy as a secondary gift around lots of holidays.
Take what’s arguably the most American of holidays: the Super Bowl. Levin says the excitement (not to mention advertising) created around the Super Bowl has driven sales of gum, mints and nonchocolates and sparked the idea that there could be a holiday to celebrate almost every week, whether it’s graduation, Grandparents Day or ethnic and cultural celebrations. “These are already being celebrated by Hallmark and American Greetings,” Levin says, “so why not get on the train?”
Phil Sutton, category manager for Alon Brands Retail, Dallas, says he sees the logic but wants more proof. “I need more balance in my candy set rather than the heavy load of different holidays,” he says. “I don’t mind being on the leading edge, but I at least want some hypothesis of what we could expect [in results].”
Sutton admits to keeping an eye on the ethnic makeup of his customer base (largely Hispanic in West Texas) and determining the products and flavors that appeal to different shoppers. But key for him is offering something that’s not in every other retail outlet. “I’m always looking for something unique to offer my customers,” he says.
Even though he’s a bit skeptical, Sutton says nontraditional holidays and cultural influences are intriguing.
Mondelez India has targeted the season of Diwali as an occasion for sweets. As the Indian population grows in the United States, the Hindu festival of lights is finding a home in the United States, too. Diwali, or Deepavali, is celebrated in autumn in the Northern Hemisphere, falling this year on Oct. 19.
For confectioner Mondelez, with U.S. headquarters in East Hanover, N.J., the challenge is to get Indian consumers to look beyond traditional sweets (mithai) and enjoy chocolate as a contemporary yet appropriate candy for marking the celebrations.
Holidays by Hollywood
“Some companies will change flavor profiles to match demographics or seasons, but we tend to do it via licensing (novelty) offerings,” says CandyRific CEO Rob Auerbach.
Convenience stores have an advantage of consistent traffic, he says. In contrast, big-box stores typically see a spike in traffic between Halloween and through December.
“C-stores don’t have that out-of-balance rhythm,” Auerbach says, so progressive buyers are thinking how to take advantage of the everyday traffic.
Blockbuster events such as the opening of a “Star Wars” movie or new “Captain America” comic books can drive traffic and boost sales for convenience retailers, he says. “And they tend to do these things on the light areas of the calendar, not the big holidays,” he says.
Some items aren’t for the plan-o-gram, Auberbach is quick to admit. But in-and-out displays tied to movie events can capitalize on the millions of dollars the entertainment industry spends on marketing. He says Thorntons, a chain of about 180 stores based in Louisville, Ky., does a good job of moving a seasonal display in and around the stores.
“You have about a two- to three-month window” for blockbuster promotions, he says, which gives retailers time to make an emotional connection with consumers and drive impulse sales. “It’s a great way to capture sales that you weren’t going to get.”
Auerbach suggests retailers make a seasonal plan to stay ahead of the game and work with suppliers for keeping impulse-driven purchases on hand.
Retailers also want a plan for whatever doesn’t sell, says Mark Walters, vice president of marketing for Las Vegas-based Terrible Herbst. Leftovers typically are discounted heavily after a holiday, and that brings down profits.
Still, Walters says Terrible Herbst “absolutely would entertain the idea” of nontraditional holidays and bundling candy with other items in the store. The chain, which has more than 100 stores and gas stations, is adding a new back-office system that Walters says will enable it to better understand what customers are purchasing together.
“We’ll be able to see if they are buying candy with wine or flowers, for example, and help us measure success,” he says.
If thinking about a lot of holiday displays is overwhelming, consider seasons instead, says George Puro of Puro Research Group, White Plains, N.Y. “Mars has made a big push toward summer promotions tied to the military, an all-American theme. It’s been like a fifth season for them,” he says, citing 2016’s red, white and blue Skittles.
This year, Chicago-based Wrigley is debuting Juicy Fruit American Pop gum in May. With cherry, lemon and blue raspberry flavors in each stick, the gum is channeling the look and taste of the popular red, white and blue ice pops, Puro says.
The Hershey Co., Hershey, Pa., has focused on rolling out its Cookie Layer Crunch in 2017, but the confectioner also brought a new Kit Kat flavor to the United States for the Valentine’s Day selling season: Red Velvet Kit Kat minis featured red-velvet-flavored wafers coated in a white cream.
Wal-Mart and Target have been marketing American-themed promotions for a few years, Puro says. “They wouldn’t keep doing it if it wasn’t working,” he says.
Strength in Numbers
But is the success of big-box retailers and manufacturers enough motivation for convenience-store retailers to give it a try? As with most things retail, it comes down to the numbers.
Packaged Facts projects the U.S. total confectionery sales in 2016 will hit $36.2 billion, with chocolate candy representing $21.8 billion. Sales are projected to grow to a record $41.3 billion for total confectionery and $25 billion for chocolate by 2020. Those with the biggest market share are mass, grocery and convenience, in that order, with c-stores representing a 13% share of chocolate and 17% share of overall candy sales.
Considering the 2016 report was written in August, Puro says he would bring those numbers down slightly. That’s due to the ongoing consumer attention to health and diet. “Consumption is definitely down,” he says, but prices (and revenues) are higher due to a rise in cocoa costs, as well as an increase in sales of premium chocolates. Premium is still driving sales, Puro says, as consumers select higher-quality, higher-priced chocolates for an indulgence.
Puro says what’s most important is the dynamic nature of the confection industry, with an ongoing strong pace of innovation, creative new players and a steady flow of new products that engage consumers.
As with fashion, confectionery also cycles through fads and trends. After a product or flavor profile has its time in the spotlight, the consumer will move on to the next big thing. Candy suppliers and retailers must market and merchandise toward the trend but also be able to get ahead of the trend, Puro says.
Consumers have lots of options, and about 80% of candy purchases are impulse buys, Puro says. So retail brands need to be on consumers’ minds when the mood—and the holiday—strikes.
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