Gum Sales Grow

The retail sector is still struggling overall, but as some segments continue to sink, others rise. American consumers are still buying billions of dollars of candy each year, and this isn’t changing as they resist making major purchases. Even during a recession, American consumers still have a sweet tooth, which explains why gum and candy sales continue to grow as customers buy old favorites and new products alike.

“Our candy sales haven’t gone down, but gum sales are really going up,” said Eric Huppert, president of Team Oil in Spring Valley, Wis. “It seems like every kid who comes by on the way to school in the mornings picks up a pack of gum. They must not get into as much trouble for chewing gum as they do for eating a candy bar.”

Another reason for increased gum sales may be consumers’ anxiety about the economy. The American Dental Association recently reported that the number of emergency dental visits due to cracked or broken teeth stemming from anxiety-driven tooth grinding and jaw clenching has almost doubled in recent months.

So Many Choices, So Little Space
Gum manufacturers are coming out with new kinds of gum in packages of so many shapes and sizes, it’s been a challenge to keep up, said Darrell Looney, merchandise buyer for Portland, Ore.-based WSCO Petroleum. The SKU count is enormous in the category, Looney noted, with as many as 14 kinds of gum in the same flavor.  

The same is true of candy, Looney said, pointing to standards like Reese’s Peanut Butter Cups, which now come in multiple flavor combinations. “There are so many SKUs it’s difficult to manage the category,” he said, adding that he thinks candy manufacturers are moving too quickly. “It’s like trying to reinvent the wheel by constantly adding variations to a basic food group—sugar and chocolate.” 

Looney said he tries to find a key support person to help with schematics when he resets the stores every year. “There are some no-brainers there, like Hershey’s or Trident of course, but then you’ve got to look at space, what’s going to sell the best,” he said. “Also, we tweak our candy selections quarterly according to sales, keeping what’s selling and discarding what’s not.”

High tobacco taxes in the Northwest have adversely impacted WSCO’s cigarette volume, which in turn has lowered store foot traffic. Nonetheless, Looney said his gum and candy sales remain strong and were up last year. In part, he thinks this is because the 50-store chain reset its product mix two years ago to feature larger gum packs and king-size candy bars, putting in flat walls and display racks right as customers walk up to the register. This has increased impulse sales and boosted the ring on candy items.

Looney also maintains two facings for each of the top five bestsellers and frequently uses shippers to get the best pricing, focusing on items already in his store sets that can be used to stock shelves as the shipper sells down. “The best time to make money is when you buy, so we get shippers whenever possible because they usually offer a better price,” he pointed out. “Shippers are huge for us, and I always try and place them so that customers practically have to trip over them to get into the stores.”

Candy a “Recession Proof” Purchase
Most experts consider comparatively inexpensive, enjoyable products like gum, candy bars and mints “recession proof,” even when compared to other nonessential items like tobacco and soda. Not surprisingly, candy bars were huge sellers during the Great Depression.

“As a whole, confectionery is recession resistant,” said Jenn Ellek, director of trade communications and marketing for the National Confectioners Association (NCA). “It’s a small purchase, and even when times are tough consumers feel OK about treating themselves to a small treat.”

C-stores, as one of the fastest growing sales channels for the confectionery industry, are well positioned to profit the most from this category.

“The convenience store industry is going to have some competition because people are going to start buying more candy at warehouse stores and other discounted outlets in order to save a buck,” Ellek said. “But I think c-stores do have their own unique customer base, people who rely on the brands they know.”

Old Standards Strongest Sellers
Huppert’s sales bear out Ellek’s observations. Though his sales remain strong, Huppert reported the gum and candy SKUs he carries haven’t changed much. Trident and Wrigley gums, along with Reese’s Peanut Butter Cups, Snicker’s and Hershey bars, are still his customers’ favorites, and other old standard choices have remained strong.

“While the economy has been bad, it hasn’t been enough to change the customers’ buying patterns in gum and candy,” Huppert said.

Luckily, Huppert pointed out, 90% of the female demographic—a strong consumer group for Team Oil—seems to be hooked on gum and chocolate, making it a good, stable sales base. “Chocolate always sells,” Huppert said. “Often women buy a couple of chocolate bars, some gum and a diet Coke, which always makes me laugh.”

One trend Huppert has seen is manufacturers using movie-style candy boxes. Team Oil’s customers really like them, preferring the ease of re-sealable packages compared to cellophane bags, which can spill all over the car when opened while driving. “We’re right on the highway, so candy bought here is probably consumed in the car,” he said. “Also, a box is easier to stick into a cup holder while you’re driving.”

Across the country, candy sales at Des Moines, Wash.-based Emmanuel Inc. are still pretty flat. “I don’t know why, exactly,” said Mike Leake, general manager for the Shell-branded chain. “We’ve had some different promotions that have driven candy sales—for example, the recent two for $2.50 Hershey promotion, but sales might have been negative if we hadn’t had those promotions.”

Promotions are a terrific way to boost category sales, Leake added. Unfortunately, suppliers sometimes tend to parcel them out sparingly. “With a recent Mars promotion, we were lucky to get enough for all of our 26 stores,” Leake said.

Fortunately, Ellek believes retailers will soon start seeing more competitive price points from candy manufacturers and more cross-marketing efforts, especially from gum and chocolate manufacturers.

Location, Location, Location
Just as in real estate, the top three sales drivers are location, location and location. Leake’s prefers to give salty snacks the best positioning because he’s found doing so drives more sales. Even though gum and candy manufacturers typically provide counter displays for holiday sweet wares, Leake doesn’t invest much in special holiday candy packaging. “You’ve got to get it sold by a couple of days before the holiday, otherwise you’re never going to sell it,” he said.

Huppert concurred that placement is paramount to category sales success. When shippers get down to a certain point, he’ll move the remaining packages to the counter to move them quickly. “Whatever we put on the counter moves,” Huppert said. “If there was a way to make the whole store a counter, that would be great.”  CSD

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