Candy Land

A sweet stash of new products and promotions illustrates the category's continuing importance to manufacturers and grocers.

Candy is big business. This month, more than 14,000 industry professionals are poised to descend on McCormick Place in Chicago for this year's sold-out Sweets & Snacks Expo, where they'll encounter thousands of new products from a record 541 exhibiting companies.

Amid a languishing economy, Americans' penchant for their favorite treats flourished: Dollar sales were up 4.3 percent and unit volume 3.7 for the 52 weeks ending March 19, in food stores with $2 million or more in sales, excluding Walmart, according to Schaumburg, Ill.-based Nielsen. So manufacturers and retailers have every reason to keep on indulging Americans' collective sweet tooth.

One of the vendors that did well this past year was the iconic Hershey Co. “We delivered strong results in 2010,” notes Jeff Beckman, spokesman for the Pennsylvania-based manufacturer. “Our 2010 consolidated net sales increased 7 percent compared to 2009. Improved market share in almost all of our channels drove our overall success. We also benefited from our strong leadership in holiday products.”

Among Hershey's recently released products are Hershey's Drops in Milk Chocolate and Cookies ‘N’ Cream varieties, Reese's Minis, Jolly Ranchers Awesome Twosome and Tropical Fruit Chews lines, and Ice Breakers Frost mints in Wintergreen and Peppermint flavors, with Hershey's Air Delight Milk Chocolate Bar and Hershey's Kisses Brand Air Delight Milk Chocolate set to launch in June, and Jolly Rancher Crunch ‘n’ Chew Candy scheduled for a December debut.

“We believe that one of the next big trends for confectionery in the United States is aerated chocolate,” says Beckman, referencing the company's version of the confection — Air Delight — that consists of “layers of rich chocolate bubbles covered in delicious Hershey's milk chocolate, giving it a lighter texture and smooth mouth feel that chocolate fans love. Aeration enhances the flavor of chocolate by creating more surfaces, which allows the chocolate to melt faster and release its flavors for a more intense chocolate experience.” Although well-known in Europe and other parts of the world, aerated chocolate is still something of a novelty to U.S. consumers, he adds.

To supports its products at retail, Hershey engaged in a number of exciting promotions, including a partnership with star athlete Emmitt Smith to present a sweepstakes in which consumers could win a trip for four to the Pro Football Hall of Fame, as well as having their likenesses rendered as chocolate busts; Reese's “Perfect Play,” which enabled college basketball fans to vote for the top NCAA men's basketball play each week while registering for the chance to make a half-court shot for $1 million during the 2012 NCAA Final Four Men's Basketball Championship; and a Hershey's Kisses/Hasbro “Family Game Night” instant-win game with a $10,000 grand prize to be used toward a family-room makeover.

Other major candy brands have been busy innovating as well. Mars Chocolate North America LLC, the Hackettstown, N.J.-based confectionery division of Mars Inc., combined sweet and salty in M&M's Pretzel Chocolate Candies, which originally bowed in May 2010 and are now available in a 2.38-ounce box size. Besides earning a 2011 Product of the Year award in the candy and snacks category, the item was also ranked the third most memorable new product launch of the year by Forbes magazine — right behind the Apple iPad and Microsoft Windows 7.

In another on-trend blend of sweet and savory ingredients, the company gave a new shape to peanut butter enjoyment with Snickers Brand Peanut Butter Squared, whose December 2010 debut offered peanuts, caramel, nougat and milk chocolate, along with creamy peanut butter.

Mars' innovation continued into the new year with the January 2011 launch of Dove Brand Chocolate Swirl in such mouthwatering varieties as White & Milk Chocolate Swirl, available in large-bar format, and Raspberry & Dark Chocolate Swirl, which comes as a large bar and in bite-sized Promises in lay-down bags. Due in stores this month is the 2011 lineup of Kudos Granola Bars — a cross between a candy treat and a granola bar — in the following varieties: Kudos with Snickers Peanuts, featuring 20 percent more peanuts; Kudos with M&M's Milk Chocolate Candies, now with a better chocolate taste; new Kudos with Dove Chocolate Drizzle; and new variety 10-packs and 30-count packs.

Noting the popularity of confections during seasonal celebrations — with Halloween alone representing 23 percent of annual candy sales, according to the Washington-based National Confectioniers Association — Timothy LeBel, VP of sales-in-store solutions & grocery/value at Mars Chocolate North America, predicts that a new member of the fall and holiday lineup, M&M's Brand Peanut Butter Chocolate Candies, will hit the sweet spot with consumers. “Peanut butter candy is growing at over one-and-one-half times the chocolate category rate, so shoppers will be looking for it.”

For Christmas 2011, some new items featuring the iconic M&M's characters will retail for only $1.99, while Dove will introduce several bow-adorned gift items at a $5.99 retail price, adds LeBel.

Grocers that want to boost their candy sales need to place product carefully, he notes. “In the grocery channel, confections are highly impulse-driven, with 66 percent of brand decisions made in the store,” explains LeBel. “Leading the aisle with impulse-oriented products — such as confections — encourages impulse sales. Retailers that lead the aisle with confectionery sell 6 percent more than average. Strategically placing confections at the end of an aisle — as well as securing displays in the deli, wine and floral sections — will drive aisle traffic and leverage the expandable, impulse nature of the category.”

Additionally, grocery retailers should anchor the ends of the candy section with premium chocolate and gum/mints, recommends LeBel. “Chocolate shoppers are redefining how they view premium chocolate in this new value economy; therefore, retailers should adjust shelf space to reflect shopper trends toward value to help total in-aisle confectionery profitability,” he says. “Research shows that most retailers should reduce space on premium chocolate and increase space for everyday premium chocolate, everyday chocolate and candy confections.”

A recent promotion involved working with Kroger to promote seasonal confections and decorative snacking this past Easter. “Shoppers who spent $15 on Mars Easter products received $5 towards any gift card in the store,” notes LeBel, adding that the campaign encompassed Catalina coupons, signage at the gift card kiosk, in-store radio, shelf signs, visibility on Kroger's website and a Kroger e-mail blast.

Just Born, the Bethlehem, Pa.-based originator of Peeps, will be showing off its Chocolate Dipped Peeps coated in either milk or dark chocolate at the upcoming expo, with seasonal varieties for Halloween (orange in color, not flavor, as the company points out), Christmas/Winter Holiday (Caramel flavor) and Valentine's Day (Strawberry Crème flavor). The new product aims to add chocolate lovers among Peeps' many fans, according to Just Born senior brand manager for seasonal brands and new products Brian Bachrach.

Other new chocolate treats from the company are milk or dark Chocolate Covered Marshmallow Chicks available in individually wrapped packages, and Chocolate Mousse Flavored Marshmallow Bunnies in Take-Home packages.

On the promotional side, Just Born's Hot Tamales and Mike and Ike brands will bow “Sweets & Beats,” a sweepstakes giving consumers a shot at winning an iPod Touch, $10 iTunes gift cards and a grand-prize package including a home theater with a 42-inch LCD TV.

Licensed to Thrill

For CandyRific LLC, a Louisville, Ky.-based novelty candy manufacturer that holds licenses with such familiar brands as M&M's, Snickers, Skittles, “Star Wars,” Disney and DreamWorks, the recession was something that happened to other people, mainly as a result of the company's “relatively low price points” of under $5, according to president Rob Auerbach.

CandyRific's sales follow the major seasons — Halloween, Christmas, Valentine's Day and Easter — with the type of sales depending on the occasion, says Auerbach. “So Halloween will be low-cost giveaway items because they are mostly used for trick or treat,” he notes. “Christmas will be the highest price points because it is candy gifting, and stocking-stuffer items will, of course, be huge. Valentine's Day tends to be more adult at the price points, and low ones for the cards and gifts children give their peers and parents. Easter is about the Easter basket and [egg] hunt.”

Among the company's recently introduced offerings, the “M&M's Brand Star Wars range has been huge, light sabers and fans in particular, and Scooby-Doo fans and Scooby-Doo Giggle Heads” have been popular sellers, asserts Auerbach.

Promotional strategies are just as important as product innovation to CandyRific, he's ck to point out. “For us, power whether floor or hanging, are strong,” he says. “It gives you your own platform to stand out and introduce new ranges for items. We also like to have strong ‘try me’ features on our products, so the customer can instantly get what the wow factor is without having to read the directions.”

One promotion proved such a hit that it's become a regular part of the company's repertoire. “We did a joint promotion with Mars where we put our dispensers next to their bags of M&M's,” recounts Auerbach. “It is simple but highly effective — the consumer buys a dispenser and needs product to fill it up. It is similar to razor blade/razor sales. It was highly successful, and has been repeated multiple times.”

Up-and-comers Address Niches

But it's not just the famous names that are breaking new ground in the category, although the smaller companies have a predictably narrower scope. Over at The TeaRoom, the accent is on organic, upscale goodies, like its curiously numbered new Fun Drops #3.141, consisting of milk chocolate infused with honeybush caramel tea and topped with a jelly bean — all USDA organic certified. Additionally, The TeaRoom's organic Chocolate Fusion chocolate bars, each infused with teas, coffees and/or spices, have proved a year-round draw for discerning consumers.

“Despite the turbulent economy, sales of our organic chocolates have increased swiftly and steadily over the past year,” affirms Ethan M. Ash, who handles marketing for the San Leandro, Calif.-based company, citing such factors as a dedicated staff, a solid and expansive broker network, and distribution via such major natural/organic wholesalers as Tree of Life and United Natural Foods Inc.

When asked how The TeaRoom markets its products, Ash is emphatic: “Demos, demos, demos! We want to get our chocolates into the mouths of as many potential customers as possible!”

The specific niche for Indie Candy, which rolled out in 2010, is the community of people whose food allergies prevent them from eating many mainstream brands. “We have been thrilled by the response from the allergy community, both in sales and in personal satisfaction,” reports the Mountain Brook, Ala.-based company's CEO, Hanson Watkins. Other buyers of the brand, she adds, are those without allergies “who want a ‘cleaner’ candy and are just attracted to the pretty displays and fun candy.”

For 2011, Indie Candy is introducing such display options as single and multi-product popup seasonal lollipop boxes and strip clips.

What's Coming in Candy

Not surprisingly, Indie Candy's Watkins believes the near future of the candy category holds “more natural options and requests for better allergy labeling from the public,” while Ash of The TeaRoom champions organic, all-natural and Fair Trade products, as well as “new, exotic and unique flavors” as consumers tune into “the infinite possibilities” such items offer.

Perhaps CandyRific's Auerbach sums it up best: “Consumers and retailers will continue to experiment — the consumer wants more choices. … Smart retailers will offer topical licensed goods around movies or TV series, and seasonal goods appropriate for the time of year. They should also keep their offerings fresh and relevant, keeping in mind [who] their competitors are.”

Sweet Sales Strategies in the Candy Aisle

Mars Chocolate North America Offers Tips to Drive Sales

MARS

chocolate

north america

Confections are highly impulse-driven in the grocery channel, with 66 percent of brand decisions made in the store.* So how can you capture shoppers' attention? An industry leader with three of the top five chocolate brands in the U.S., Mars Chocolate North America offers three keys to success: innovation, promotions and merchandising.

Innovation

“Consumers are looking for new items that bring excitement into the category,” says Timothy LeBel, Vice President of Sales- In Store Solutions & Grocery/Value, Mars Chocolate North America. “We look at numerous factors in developing new flavors and brand extensions, from industry trends and research to consumer preferences. For example, peanut butter candy is growing at nearly twice the rate of the overall candy industry. Since consumers love the flavor fusion of sweet and savory, we're creating more delicious options.”

In response to this trend, in the last year, Mars added three new treats: M&M'S® Pretzel Chocolate Candies, DOVE® Sugar Free Chocolates with Peanut Butter Crème and SNICKERS® Brand Peanut Butter Squared. Introduced in December 2010, the new SNICKERS® Brand flavor offers everything there is to love about SNICKERS®- peanuts, caramel, nougat and milk chocolate- with the addition of peanut butter. Each 1.78-ounce singles pack includes two delicious square-shaped bars.

In January 2011, Mars also introduced DOVE® Brand Chocolate Swirl, which perfectly fuses flavors with silky smooth DOVE® Chocolate. DOVE® Brand White & Milk Chocolate Swirl is available in Large Bar format, and DOVE® Brand Raspberry & Dark Chocolate Swirl is available in Large Bar format and as bite-sized PROMISES® in lay-down bags.

Promotions

“In addition to product innovation, shopper marketing programs that leverage national promotions are key enablers that help drive incremental confectionery sales,” explains LeBel. “Mars Chocolate has created many consumer programs that allow retailers to leverage our national promotional events.”

For example, in the new M&M'S® Brand Reunite 'M Promotion, launching in April, consumers try to find bags featuring all five M&M'S® Characters under the wrapper. Those who find the bags with the winning message and code will win prizes, ranging from a $100,000 grand prize to M&M'S® Brand merchandise and tickets to Six Flags amusement parks. Consumer programs like this help drive volume on retailers' category sales, and it creates an exciting and engaging shopping experience.

Merchandising

Since confection sales are highly impulse-driven. Mars Chocolate works with retail partners to ensure its iconic brands are on display in prominent areas. Creating many points of interruption throughout a shopping trip will allow consumers to see and buy their favorite chocolate snacks.

In addition, strategically placing confections at the end of an aisle will drive aisle traffic and leverage the expandable, impulse nature of the category. In fact, when comparing the indexed total confectionery velocity, there's an average eight point difference between leading the aisle with confectionery and leading with another category.**

In addition to leading the aisle with confectionery, Mars recommends that grocery retailers anchor the ends of the section with premium chocolate and gum/mints.

“Grocery retailers who want to maximize profits in the candy aisle should meet with their Mars representative,” says LeBel. “We can help retailers leverage our proprietary in-aisle best practices to improve traffic down the aisle, sales, flow, segment space allocation, in-stock conditions and assortment.”

*Source: Smart Revenue 2008

**Source: Cannondale Associates POG Analysis 2009