How to capitalize on unique product extensions without cannibalizing sales and cluttering sets
While there is a lot of buzz about bite-size and shareable packages that pace chocolate and nonchocolate growth, compelling developments also include products that morph into completely new forms.
With single, traditional candy brands needing some excitement to revive flat performances, some new entries could provide that lift. The migration into new brand formulations is something that is “important for reasons beyond sales,” says Susan Viamari, editor of Chicago-based research firm IRI’s Times & Trends. “It’s motivated by the need to create excitement and buzz factor, which seems to be equally important [to sales].”
Think M&M’s and M&M’s Chocolate Bar, Jolly Rancher Hard Candy and Jolly Rancher Soft Chews, and the classic Butterfinger Candy Bar and breakthrough Butterfinger Peanut Butter Cups.
While there are certainly bona fide examples of brands that branch out into all new product categories—Special K comes to mind—the process naturally has its share of short-term upside coupled with some uncertainty about longevity.
When Randy Adams caught wind of the launch of Butterfinger Peanut Butter Cups earlier this year, he sensed opportunity—but with a caveat. He shuddered thinking about the category-management challenge of properly calibrating his confection department all over again.
“You have mixed feeling,” says Adams, center-store category manager for the 113-unit Huck’s Convenience Stores, Carmi, Ill. “I’ve been doing this a long time, and these line extensions are often temporary blips on the radar that don’t sustain momentum. I’m a bit jaded by the hype that accompanies a new offer that fails to live up to its promise. I remember ‘sure things’ where we gave it a lot of play in the stores, and it ultimately failed.”
Adams believes brand cannibalization is always possible for brands that make a radical turn in package and formulation characteristics, but he cites one example where past is prologue. “Years ago, Werther’s Original USA launched a soft-chew line extension, and the two versions were able to coexist nicely. I think it’s a case of two different consumers—someone with a dry mouth opts for the hard Werther’s, while the soft candy is for a different occasion. That same idea would apply to Jolly Rancher’s [new Bites soft chews].”
On the Butterfinger Peanut Butter Cups two-cup single pack and four-cup shareable king pack, Adams says thus far it has not cannibalized the flagship Butterfinger. Moreover, he says that it has not eaten into his sales of Reese’s Peanut Butter Cup, which has a loyal following of its own. It’s all incremental.
Impulse combined with product-positioning strategies are crucial for getting strong returns on line extensions such as these, because 31% of all confection purchases are made in secondary locations of a category that soon will be a $33-billion dollar business, according to McLane, Temple, Texas. Convenience stores account for $5.3 billion in sales and possess a 23% share of total U.S. confectionery sales.
In peering at the state of traditional bars, Viamari says, “It makes sense over the years to try and prop up this segment. The price point of traditional bars doesn’t seem to hold the same level of value as the reshareable bags or the king sizes.”
One prevailing value of the 1.5-ounce bar is that it’s the most powerful for immediate-consumption purposes, and 53% of candy sales are bought on impulse, according to McLane. Minis and kings can be immediate, but they also run on a parallel track as a take-home candy.