NCA State of the Industry: A Sweet Business
Although some might consider it a cliché, the first day of the National Confectioners Association (NCA) 2014 State of the Industry Conference made one thing clear: It's a sweet time to be in the candy industry, and business is only expected to get sweeter for both suppliers and retailers this year.
"I think candy makers have a reason to be happy," NCA President Larry Graham said while introducing the opening session of the event, which kicked off Monday and concludes tomorrow at the Fontainebleau Resort in Miami Beach. Graham went on to note that the confectionery industry has seen 10 straight years of growth despite troubled economic times.
Still, though, he urged those in attendance to continue to advocate for the industry. "We really want to encourage you to be politically involved," he said.
While business was strong for the candy industry last year, NCA Vice President of Customer Relations Larry Wilson said this year, "business is stronger. This is a big, growing and profitable category."
In regards to the trends driving the category, chocolate indulgence is a winner, according to Wilson, who discussed the current state of the industry alongside co-presenter Leslie Liss, VP of commercial solutions at dunnhumby USA. Sales of milk, dark and white chocolate all grew in the last year, but hazelnut chocolate saw the biggest jump at 16 percent, driven by chocolate spread products as well as its popularity with Hispanic customers. Seasonal candy also saw promising growth.
Discussing the results of NCA consumer research, Wilson noted that the number of consumers who purchase candy online increased 3 percent over the last year to 24 percent, and they shop primarily at online specialty stores. "Online has to be part of your strategy going forward," he said.
Interestingly, these consumers say their main reason for purchasing candy online is to buy items they can't find in person; not to take advantage of the best value for their money. This is something retailers may be able to leverage if they can provide these consumers what they want, he stated.
Consumers also understand the balance between candy vs. health and wellness. Ninety-two percent believe they as individuals are responsible for a balanced diet; 75 percent believe candy is a little indulgence for when they want to treat themselves; and 74 percent believe candy can be part of one's diet in moderation. "They get it — shoppers get it," Wilson said.
The candy consumer is out there. To capitalize, retailers should apply the NCA's E5 characteristics of candy: experience, emotion, effectiveness, efficiency and environment, the speakers urged.
Liss, of customer science company dunnhumby, also advised retailers to "think outside the aisle," noting that 42 percent of consumers see the candy section as no more exciting than the bread aisle.
Additionally, retailers can retain their best candy customers by getting to know them, rewarding their loyalty and personalizing their experience. "Candy Champions" in particular are extremely valuable because they make an average of 42 visits per year and generate 24 percent of sales.
Day one of the NCA State of the Industry Conference also included:
• David Horsager of Horsager Leadership Inc. discussed "the trust edge" and led attendees through eight pillars he said will help them gain it for themselves. "Fundamentally, I believe a lack of trust is your biggest expense," he said. If business leaders are trusted by those they work with, productivity, effectiveness and other positive attributes will increase. Leaders can become more trusted by being trustworthy, and it's important to remember that "individuals build trust," not companies, Horsager said.
• Dina Howell, worldwide CEO of shopper marketing network Saatchi & Saatchi X, discussed the critical "three seconds" during which 76 percent of today's shoppers make their decisions while at the shelf. For brands to make the most of those three seconds, they must understand the dynamics of the market; know what is important to the retailer and retail channel; and know how to engage shoppers on a personal level.
• Jim Stengel, president and CEO of The Jim Stengel Co., discussed how the best brands are built on ideals, their inspirational reason for being. He asked attendees to consider which brands have grown their bond with consumers the most over the past decade and what they can learn from them.
• Jeremy Gutsche, founder and CEO of TrendHunter.com, explored "farmer instincts" vs. "hunter instincts" when it comes to business. He guided attendees through a look at companies that found success in overlooked opportunities and those that failed to adapt to changing times in a way that gave customers the innovation they wanted.
In addition, the day featured the presentation of this year's Confectionery Leadership Awards, designed to honor the "best and most innovative category champions." Tim Erceg, purchasing specialist for Hy-Vee Inc., and Jamal Parker, senior buyer of candy and snacks for Sam's Club, were the recipients.
The conference included a special tribute as well to Graham, who will retire this year following 22 years of service with NCA. He was lauded for his diplomatic skills and such achievements as forming the World Cocoa Foundation, dramatically increasing the NCA's political presence and developing the annual NCA Sweets & Snacks Expo.
Graham praised his colleagues, attributing much of his success to their support, and said throughout his career, he never looked forward to retiring. "I looked forward to the job," he said.