NCA Sweet Insights: Experience, Season are Great Opportunities for Grocery Retailers

The National Confectioners Association’s (NCA) annual road show made a stop in Chicago in late October, providing new research on trends and market factors impacting the confectionery industry. The event was also an opportunity for Chicago area confectionery manufacturers, retailers, suppliers and other industry players to meet with new NCA president and CEO John Downs. Downs, who was most recently with Coca-Cola Americas, also brings strong political experience to his new position. Fewer than three months into his role, Downs told attendees that his first line of business is to tour the country meeting with major NCA manufacturer members.

Sweet report card

Larry Wilson, VP of customer relations at NCA, shared candy sales trends, which are a “series of ups and downs,” he says. While overall growth looks sluggish, up 1.9 percent for the 52 weeks ended Oct. 5, 2014, there are bright spots. Chocolate is up 3.4 percent, fairly consistent with gains for 2013 of 3.9 percent; non-chocolate confections are up 1.9 percent, compared to total growth of 3.7 percent in 2013; while gum is down 3.8 percent, continuing a decline of 6 percent in 2013. Commodity costs are to blame for a great portion of the challenges the category is facing, with cocoa prices up nearly 32 percent; sugar up 20 percent in the U.S. (compared to a decline in global prices of 7.8 percent; sugar imports account for 15 percent of what the U.S. confectionery market utilizes). Dairy and tree nut prices are also on the rise, particularly hazelnuts, a wildly popular confectionery ingredient that was nearly wiped out last season.

Experience inspires candy purchases

However, what consumers are looking for in confectionery remains steady, he says, including value, convenience and experience. The dollar channel is strongly delivering against value, and convenience stores are naturally strong on convenience. The grocery channel is best at delivering on – and in fact holds the greatest potential for – experience.

Experience can innately kick-start the emotional tug that consumers have with candy. Grand displays bring theater to the grocery store, and can be the catalyst for igniting childhood memories, a sense of play, and act as idea generators for entertaining, sharing, gifting and more. Seasons, in particular, make great themes for creating an in-store experience, and by all counts, it appears that retailers and manufacturers understand this.

Sweet seasons

Seasonal candy demonstrates above average growth, up 3.2 percent in 2013, compared to overall category growth of 2.3 percent. While seasonal candy sales may be impacted by the timing, length and weather of a given season, in general, the outlook for seasonal candy is expected to remain bright.

Grocery retailers should put in the extra effort for seasonal products, because grocery retail offers the largest conversion opportunity among supercenters, warehouse clubs and supermarkets. While both warehouse clubs (conversion everyday 55.7 percent and conversion seasonal 57 percent) and supercenters (conversion everyday 78.5 percent and conversion seasonal 78.1 percent) are consistent in their ability to hold consumers, supermarkets lose seasonal candy shoppers (conversion everyday 66.1 percent and conversion seasonal 52.6 percent). Enticing displays and a full array of seasonal items complementary to candy are great ways of keeping shoppers in the primary supermarket.