Candy, gum and mints: Candy Continues to be Dominant

The U.S. retail confectionery category generated approximately $29 billion in sales in 2007 and the profit margin for the category was approximately 35%, according to the National Confectioners Association’s (NCA) U.S. Confectionery Market report.

Convenience stores accounted for 15%, or $4.5 billion, of overall candy sales in 2007, surpassing drug stores and dollar stores, but slightly behind supermarkets ($4.6 billion) and hypermarkets ($4.9 billion). Led by new products and line extensions, the industry’s sales increased 6.2% over 2006. On average, every consumer in the U.S. spent $94 on confectionery products in 2006, the NCA report said.

NCA is joining forces with the American Wholesale Marketers Association (AWMA) and the National Association of Convenience Stores (NACS) to study the candy market (see News pg. 11) and help make c-stores more even profitable in this category.

"Confectionery sales continue to grow in convenience stores, so the category continues to remain a solid sales tool for c-store retailers, as well as a strong destination for all consumer groups," said Jenn Ellek, director of trade communications and marketing for NCA.

Chocolate Buzz

The category continues to be dominated by chocolate, which saw sales increase 2.9% to $16.3 billion. Non-chocolate sales rose 3.8% to $9.4 billion, while gum posted the strongest increase surging 4.1% to $3.2 billion. In terms of category share, chocolate candy accounted for 56% of category sales, followed by non-chocolate (33%) and gum (11%).

Buoyed by new products and line extensions, candy and gum sales increased 3.5% to $8.5 billion, ranking it third among food categories in 2007, behind carbonated beverages ($13.5 billion) and milk ($12.4 billion) in the major retail outlets.

"Research shows that c-stores carrying more confectionery SKUs can grow their profits into the double digits. The consumer is looking for variety as well as new items in a c-store. In fact 30% of retail sales come from products developed in the last two years," Ellek said. "Make sure both variety and new items are displayed and in multiple locations to maximize sales and profits."

Confections, unlike most other in-store categories, are heavily geared for seasonal sales spikes with demand peeking around the major "candy holidays," Valentine’s Day, Easter, Halloween and Christmas. Major sales increases were evident during each of these holidays in 2007, the report said, with the biggest jump (6.7%) coming at Valentine’s Day from $971 million in 2006 to $1.04 billion. Easter showed the second biggest spike (5.4%) from $1.88 billion to $1.99 billion, followed by Halloween (2.6%, $2.15 billion, $2.20 billion) and Christmas (2.2%, $1.39 billion, $1.42 billion).

NCA projects sales gains for all holidays in 2008 with the exception of Easter, for which it’s forecasting a nearly $80 million decline.

 

Trends for 2008

NCA predicted 2008 will be a strong year for chocolate. Dark chocolate sales jumped more than 50% in 2007. Consumers’ tastes are gravitating toward more upscale chocolate experiences such as wine pairings; exotic flavorings like citrus, spice, salt and fruits; and high cocoa content chocolates. Other trends worth watching include:

• Gourmet packaging for chocolates.

• Urban names for upscale chocolates.

• Sugar-free gum, which increased 13.5% in 2007.

• Exotic fusion flavors.

• Fortified products.

• Single-serve seasonal items.

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