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CSP Magazine

Exploring Functional Candy

Retailers ponder whether—and where—to place benefit-boosted confections

A customer strides to the health and beauty aisle of a convenience store to grab their favorite … gummy?

Something’s amiss, but the customer’s not off-base. They’re tuned into the emerging trend toward functional confections and seek a supplemental fix other than multivitamins, powders or shots.

And much like the trajectory of other functional subsegments, these products are finding secondary placements in HBC, at the coffee bar and alongside the category that started them all: energy shots.

Touted for offering the best of both worlds—quelling sweet-tooth cravings while providing a beneficial boost—functional candy is expected to grow at a projected compounded annual growth rate of 3.9% from now to 2022, according to a report by Portland, Ore.-based Allied Market Research.

It follows on the heels of other product categories, such as beverages and snacks, with established footholds in the functional arena. As with any new-product innovation, retailers are tasked with not only determining where healthy candy should be placed, but also whether it fits into a store’s product mix in the first place.

With c-stores ranking third—behind mass and grocery—as confection merchandisers (13% and 17% for chocolate and nonchocolate, respectively, according to Rockville, Md.-based Packaged Facts), there’s opportunity to garner trial of functional candy and gum. But will consumers connect the dots and perceive it not only as fun and indulgent but also good for them—or vice versa?

“If you can infuse a little of what I would call ‘lower guilt’ into a product, that’s great. But the healthy overlay of some functional ingredients, like vitamin B with a chocolate, for instance, might not resonate with the masses,” says Beth Bloom, analyst for food and drink for Chicago-based Mintel.

Seeking the Sweet Spot

Across candy, mints, gum and gummy products, each face both hurdles and opportunity. Take gum: It’s tough convincing people that it’s more than a breath freshener.

“Gum that emphasizes vitamins first, for whatever reason, hasn’t come close to cracking the (acceptance) barrier. You’d think people might want to chew their vitamins, but it has not resonated,” says Tyler Merrick, CEO of San Clemente, Calif.-based Project 7, which manufactures organic gummies and Midnite gum infused with vitamin B, the latter specifically tailored to c-stores. Midnite has gained traction with consumers by focusing on packaging and flavors first, and vitamins second.

“Gum is light-years from being perceived as functional first, while gummies are seen as vitamins as much as indulgence,” says Merrick. “At trade shows, we’re asked by buyers all the time if our gummies are vitamins.”

Mintel’s October 2016 Vitamins, Minerals and Supplements report found that when consumers were polled about their interest in various candy formats to deliver functional ingredients, 65% cited mints as the preferred format in confection, 64% hard candy and 55% gum. (See chart on this page.) Bloom points out that 26% of buyers of chocolate do so to improve their mood—so they’re already playing the health card on their path to purchase.

Paving the way for companies to dare think about a functional-confection play is the way consumers have gravitated toward the naturally occurring antioxidants found in dark chocolate.

In 2010, Andrew Goldman, a physician by trade, started Boulder, Colo.-based Good Day Chocolate with Simeon Margolis, a retail merchandising practitioner—melding clinical R&D with  distribution/merchandising experience. Similar to dark chocolate’s payoff, Good Day’s calling card is “chocolate with benefits.” Its lineup includes chocolates with vitamin D-3 and turmeric (in the spotlight for numerous purported health benefits) and candy promoting energy, focus and sleep. The company also offers lollipops with functional doses of common medications that have been given to patients following surgery.

Another chocolate-driven company, Minneapolis-based K’ul, takes the functionality of the bar category and merges it with a high-end candy bar experience. Its “bean to bar” products contain superfoods such as pumpkin seeds as well as guarana and other functional ingredients. Packaging is decidedly more Whole Foods than GNC.

Where to place an indulgent yet health-oriented offer is the burning question, and there’s no one-size-fits-all answer, says Cassandra Matos, product director for confection, McLane Co., Temple, Texas.

“It’s tough to say where functional candy items should be positioned, but we think it’s best answered by understanding the marketing strategy of the manufacturer,” she says.

Matos recommends retailers follow their individual go-to-market strategy. “[If it] is one of providing a great calcium item in chocolate form, then that item likely would not go in a confection set. If the strategy is providing a really good permissible indulgent chocolate item that also has calcium and other benefits, then the item should go in the confection set,” she says.

Suppliers will have their own recommendations—and hopes. “If there’s space next to the 5-hour Energy display, that’s where we want our products to go—or even with [HBC lines],” says Goldman.

“We want to be in-line with the other gum brands, as we think that our unique package—that includes a little irreverence—is how we can maximize trial,” says Merrick of Project 7.

Projecting Channel Growth

Various c-store retailers contacted about the opportunity for functional indicated that velocity was modest, with gummies representing the segment with the most upside.

Gum, in the meantime, is trying to lead with energy benefits along the healthy/functional spectrum. And Merrick knows from experience: Midnite gum was first manufacturered with guarana to provide an energy boost.

“You can alter the flavor of the gum with too many supplements and fall into the trap of masking [other essential flavors],” he says.

The company was inspired by consumers’ growing preference for bold flavors, be it Sriracha, hoppy craft beers or dark-roast coffees. “We wanted to offer a very strong peppermint and spearmint that mimics these other palate changes,” Merrick says. “People are ready for these experiences—a palate cleanse with a vitamin component.”

McLane is also seeing legacy gum manufacturers in the better-for-you area with new innovations such as Trident Simply Pure. Mondelez recently used B-6 and B-12 vitamins to boost its Stride Spark Gum.

That said, McLane has “seen in the past examples where gum was marketed as a vehicle for energy or some other type of function with minimal success, and we are not sure the current environment would provide a different outcome,” Matos says.

Retailers should look to other categories that have found success in functional formulations. Ieva Grimm, founder of Synerge Consulting, Duncansville, Pa., points to the success of dispensed smoothies that boast healthy attributes addressing fatigue, cold and flu season, or weight loss. Better-for-you smoothies are now a fixture in many c-stores.

As for c-stores’ affinity for calculated gambles on innovative products, Grimm says, “I question if we (the industry) are aggressively looking for new stuff.” Tactical merchandising around functional confections, she says, can be a healthy start.


How Consumers Want Their Boost

Mintel recently asked consumers if they’d be willing to try vitamins, minerals or supplements in the following formats, including some confection categories.

FormatYesNo
Pills that can be taken once a week 83%17%
Dissolvable tablets72%28%
Mint65%35%
Hard candy64%36%
Drink that can be consumed throughout the day61%39%
Gum55%45%
Seasoning that can be added to food53%47%
Powdered drink mix52%48%
Glucose gel (taken orally)45%55%
Cream or powder that can be added to coffee44%56%
Flavored mouth spray43%57%

Source: Lightspeed/Mintel

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