CHICAGO — From a macro level, convenience retailers battled supply issues, wholesale price increases, fewer in-store promotional campaigns and lack of innovation in the confection category in 2020.
On a micro level, retailers watched segments such as mints/breath fresheners (down 28% in dollar sales) and gum (minus 24%) falter due to consumers de-emphasizing fresh breath throughout COVID-19. A reliance on home consumption, also owed to the pandemic, saw family-size confection packages hold down sales of single-serve candy formats.
Despite the many challenges, chocolate and nonchocolate confections both landed in positive dollar territory by the end of 2020, with 1.6% and 4.4% growth, respectively, according to data from Chicago-based IRI, reflecting c-store channel performance for the 52 weeks ending Dec. 27, 2020.
The saving grace for confections in 2020: formats such as nonchocolate peg bags and stand-up pouches. At Bardstown, Ky.-based FiveStar Food Mart, part of Newcomb Oil Co., the category grew in lower double digits. Nonchocolate peg bag formats, however, registered a 20% increase in same-store sales at FiveStar.
“The peg segment was a bright spot for us, particularly nonchocolates,” says Tim Young, category manager center store for FiveStar and a 2021 finalist for CSP’s Category Manager of the Year Award for center store.
“Seasonal candy was a huge win in 2020.”
At the chain of 80 stores, nonchocolate brands such as Haribo, Hi-Chew and Jolly Rancher came up big, while FiveStar also saw success merchandising 2-pound bags of Swedish Fish and Sour Patch Kids brands.
Similarly, nonchocolate standup resealable and peg bags represented the lion’s share of sales at Long Beach, Calif.-based United Pacific, which owns and operates 451 c-stores across four retail brands in five West Coast states.
In a broad sweep of the category, Robyn Gettleson, senior category manager of snacks and candy for United Pacific, says nonchocolates have been growing steadily, with new and existing gummies driving sales. Holding the candy category back, however, was gum, which lost 35% of sales in 2020. “Mint sales suffered too, but we’re talking about a much smaller share,” says Gettleson, another of three finalists for CSP’s CMOY Award for center store.
The MAPCO Express chain found in-store promotions a vital part of its go-to-market strategy in 2020.
Kelley Gutierrez, category manager of candy and snacks for Franklin, Tenn.-based MAPCO, says the emphasis on in-store promotions started with an overarching goal to simply win general sales from local customers at a time when many were scouting for safe stores and even channel shifting to new non-core channels, when necessary.
Mapco unveiled a “buy 2, get 1 free” Reese’s King-size deal that resulted in a “great buy rate,” says Gutierrez, the winner of this year’s CMOY Award for center store. This was part of a plan to stimulate “growth multiples” of chocolate, larger sizes down to singles. It was a big contributor to sales, and all part of a “stock-up mentality” that consumers espoused. “With the emphasis on multiples, it was often a case, too, where customers would buy two Snickers or two Reese’s at the same time. Our loyalty program helped facilitate this.”
Meanwhile, as retailers wait for social distancing orders to ease, Young says FiveStar has yet to reinstate floor merchandisers removed to allow more floor space. Instead, he says, the hope is that a new FiveStar loyalty program, launched in March 2020, might trigger more endcap and power wing shippers to return by Memorial Day. In fact, he cites holidays as a key period for candy sales in 2020.
“Seasonal candy was a huge win for us in 2020,” he says. “We pre-ordered Halloween candy in July and by September had to order additional supply. We strive for 85% to 90% sell-through and easily exceeded that. It was indicative of how much people wanted to celebrate Halloween during the pandemic—and were able to.”
4 Trends Driving Confection Sales
- Package preferences. Family-size confection packages performed well for many retailers, as customers bought in bulk, often on a weekly basis.
- The COVID-19 effect. “We captured traffic from folks who would regularly frequent quick-service restaurants (QSR),” says Tim Young of FiveStar. “Some local QSRs shut down at one time, so we placed a heavy focus on the depth of our food offer, which to some people might not have been known. [They] might have come for the food, but would also reach for center-store varieties, including candy.”
- Healthy vs. indulgent. FiveStar typically offers six to seven SKUs of organic or sugar-free candy. But in 2021 that mix will be reduced based on consumer buying priorities. “I think you hear people say they plan to buy healthy candy, but then you see what they actually buy, which is indulgent brands,” Young says. “This led us to perform an SKU rationalization.”
- Confection innovation. Young says he looks forward to a return to product innovation in 2021 and would have welcomed more this past year. One new product Young cites as a category booster: Reese’s Snack Cakes, two cakes intended for a snack or breakfast packing a whopping 380 total calories.