Maximizing Candy and Gum Sales

What’s Coming?

Thinking about a planogram refresh in candy? The National Confectioners Association (NCA) in Washington, D.C. advised that the category is taking a turn toward the upscale.

“There is a big gourmet boom. I think we’re also going to have a ‘chocolate-covered’ category made up of things you don’t normally see covered in chocolate, such as dark dried cherries,” said Jenn Ellek, NCA’s director of trade communication and marketing.

In all, the confectionery snack industry sees about 3,000 new products every year. “Candy and snack is the fastest growing, and has the most SKUs, of any category. Of course, that’s where you’re going to see a lot of the sales made,” Ellek noted. “In fact, with confectionery products alone, products released in the past two years, make up about 25% of the entire category’s sales. So you can see that with confectionery products, specifically these new products, are the life’s blood of sales. They’re very important.”

Another emerging trend is the rise of ‘theater box’ sizes. “A lot of companies are now releasing products in these theater-box sizes, something you can grab and go that is in a bigger size for families to share,” Ellek said. Sharing is another big trend. With the economy being challenging you get the bigger size for a better price and then you share.”

Candy is a convenience store staple and, as the category grows, special concerns are presenting retailers with some tough choices. With more than 90% of candy and snack processors expected to introduce from 1-10 new products in 2010, the squeeze is on.

“It seems our attention span in society has gotten shorter,” said Wayne Wills, vice president of marketing for Certified Oil, the Columbus, Ohio marketer of more than 60 stores in three states. “They keep throwing new items because everybody wants to grab something new. You see it in flavored malts. You look at tobacco and  you’ve got flavored snuffs. It’s everywhere. (Candy makers) are just trying to get something new people are going to pick up and try. If it finds legs they’ll come back with it.”

Whether the coming wealth of new candy products is good or bad for the average c-store remains debatable.

“It depends on how you look at it,” suggested Timothy Ball, director of purchasing for Byrne Dairy Inc., a 51-unit chain based in Syracuse, N.Y. “New products are the life’s blood of the category, but out of all new products only about 10-20% actually succeed. Also, in the candy category most c-stores only have 8-10 feet, and there are only so many feet in the candy aisle. So you’ve got to make sure it’s something you think is going to have legs on it.”

Still, Ball added, “What makes things more difficult is that line extensions come out at different times. They never all come out, say, on Jan. 1. Some come out in January, some in February, some in March, etc. We made a policy to reset candy twice a year because if you tried it with every item that comes out you would drive yourself crazy.”

Super Quik, a 15-store chain in Flatwoods, Ky., resets its sections once a year during January and February, and adjusts it as needed.

“I think new products are a good thing because people like to see new items and it keeps the category fresh,” said Super Quik President Lynn Rice. “New items spark an interest, and the bottom line is we sell more product.”

As for the associated pressure to find shelf space, he added, “We love that. The more, the merrier.”

Move Quickly
While managing new candy products may be a full-time job, retailers believe it’s important to act quickly.

“We can profit by introducing many of the new items to consumers quickly after the release dates,” said Danna Huskey, candy and snack category manager for more than 300 E-Z Mart Stores in Texarkana, Texas. “Speed to shelf is essential.”

 “Almost all of the manufacturer reps that call on me know their new items have to be a ‘pull and plug’ situation,” Huskey added.  In other words, earning space on E-Z Mart shelves is a zero-sum game. “We have no more room for additions during 2010.”

A couple of successful items are the new Stride Shift flavors, Huskey noted. “Their launch is out of sequence with our planogram refresh, but it lands during a Stride promotion we’re having. So while we have no room on the shelf for them, they are taking advantage of our counter units to get product into the consumers’ hands.”

Wills lauded manufacturers’ efforts to generate excitement in the category, however, he often has to rely on account reps to pick and choose the winners. “I tell them, ‘You guys usually do projections.’ Hershey’s is pretty darn good about knowing where their candy bars are going to fall,” he said. “When it comes to gums it becomes a little harder to predict what kind of success they will have.”

Certified Oil maintains an eight-foot section of standard candy items, plus a second four-foot section with both theater-sized and peg candies. In larger stores, theater-sized and peg each receive four feet.

Still, the old standards remain Wills’  top items. “Day in and day out Reese’s Cups is what most people are picking up during the day, but they are willing to try something new if it catches their eye,” he said.

Constant Demand
Confectionery is a category that remains a constant with consumers, noted Iris Yost, a principle in Yost Family 7-Elevens, which operates five franchised stores in Las Vegas.

“It is a snack of choice in a c-store environment. It is not always a planned purchase, but when it is, customers want to find what they are looking for 100% of the time,” she said. “Discovering new items during that purchase is a bonus and possible impulse opportunity.”

Iris also described counter displays as critical for new products. “This merchandising attracts every consumer that walks through our door,” she said.

Climate is an often overlooked factor in the rollout of candy items. “Introduction dates for demographics with hotter or colder seasons need to be considered,” Yost said. “A brand new chocolate bar introduced on the counter in Vegas in July would not have the same success as the same intro in December.”

An operator can generally tell which new item has the best chance of survival by looking at what accompanies it.

“When you get it in you have to take a look at the full program. Is there going to be national advertising behind it? Is it a whole new line, or is it an extension of other lines, “ Ball said. “All of these factors contribute to a product’s success or failure.”

Byrne stores choose to rely on internal numbers rather than those supplied by vendors. “In fact, we’re in the midst of resetting our candy planogram right now,” Ball said. “We’re taking a look at our own scanning numbers at the store level to see what is doing well.”

Numbers can be deceiving for a variety of reasons, he added, such as regional taste differences. “For example, with certain IRI data, some items that are great, like Mallo Cups, which is a top 10 item for us, don’t even show up in the Northeast rankings.”

Vendors share with Ball news of what’s coming, in some cases as early as the next couple of weeks, he said. Byrne will bring some of these items in as shippers to start with, with money against them or coupons attached.

“If it does well as a shipper and we get a lot of response from the stores, it will have earned its place,” Ball said. “A potentially major arrival will be new flavors—Wildly Cherry, Coconut and others—of M&Ms, which will be brought in as everyday items. “They did fantastically as a shipper,” said Ball.

The size of the company’s candy section is not going to increase, Ball emphasized. “In our stores it’s a standard four-foot section for pegged candies and an eight-foot section for the other types.” The number of SKUs remains constant.

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