Chocolate Remains Recession Proof

Pile of colorful chocolate coated candy

chocolateThe National Confectioners Association (NCA) is predicting that 2013 will be a strong year for chocolate in convenience stores. Sales were up 3.3% for the last 52 weeks ended March 24, according to SymphonyIRI.

By Marilyn Odesser-Torpey, Associate Editor.

In 2012, c-store was the only channel to gain in dollars (2.4%) and units (1.2%) in the chocolate category, said Jenn Ellek, NCA director of trade communications and marketing. Total sales for the confectionery category, which includes gum, non-chocolate and chocolate, grew to $32.7 billion last year, a rise of almost 3%, and $19.9 billion of that total was from chocolate. Per capita consumption of confectionery increased from $102.18 in 2011 to $104.36 in 2012, with chocolate making up $63.41 of those sales.
Experian Simmons research group noted that, among chocolate eaters, 56.4% have visited a convenience store in the last four weeks. On average, these consumers visited c-stores five or six times per month.

Driving Sales
At the nine Colorado Springs, Colo.-based Acorn Food Stores, chocolate had a strong first quarter, up 6.5% over last year, said General Manager Tom Mousaw. Most of the other candy categories are flat.

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Mousaw said he believes that two-for pricing on king size bars, which he began doing last year, is really helping to fuel chocolate sales.
Cross-merchandising also helps to move product. Mousaw keeps displays of Snickers and Milky Way bars attached to the inside of his cooler doors because some customers like them cold. The proximity to the packaged beverages also results in incremental sales.

For Tim Cote, vice president of marketing for the 107-unit, Beaverton, Ore.-based Plaid Pantries Inc., the picture is not quite so sweet. He is seeing “slightly better than flat” sales in this category.

Cote suggested that, aside from economic conditions, one reason for the category’s less-than-stellar performance may be the dearth of new product introductions so far this year. Product innovation is as low as it has been in 20 years, he said, pointing to the new Kit Kat Bite by Hershey as the only thing to come along so far this year. Mousaw also observed that there seems to be less innovation in the category.

While Ellek agreed new product releases were down in from 895 in 2011 to 423 in 2012, she noted manufacturers are deliberately taking this “less is more” approach to avoid saturating retailers with new products and to give them the most support possible for existing top sellers.

“It’s a matter of giving the retailers the strong sellers they want, giving the consumers the products they want and bringing real innovation to the table,” she said.
But, Cote said, what consumers want is what’s new and hot. That’s especially true for younger consumers.

Cote explained he doesn’t have a problem keeping up with new releases because he’s constantly tweaking candy sets. He described new items as the “lifeblood” of the category and noted that each introduction presents an occasion for a big promotional launch. Almost every new item that comes from a larger candy manufacturer finds its way into Cote’s sets.

“There’s no more exciting time in a product’s life than at its launch, so we make a big deal out of new products, especially when the supplier gets behind the promotion,” Cote said. “Then we let the customer tell us what should stay and what should go.”

Proper Placement
Off-shelf placement of shippers and other displays are generally part of Cote’s promotion to create excitement and encourage impulse purchases. Introductory prices are kept at or below grocery store prices.

Mousaw keeps his inline aisle sets fresh by building them up based on data from the major candy companies and Nielsen research. He also uses a lot of in-and-out displays at the doors and at the check-out to attract attention to the products. “I go through the candy category at least once a year and will do a completely new set if necessary,” Mousaw said.

To keep up to date on the hottest new items, retailers should keep an eye on other retail channels to see what is selling particularly well. A brochure from the American Wholesale Marketers Association (AWMA), NACS and NCA noted that other trade channels are handily beating c-stores to market with new products, particularly within the first 12 weeks of product introduction.

The organizations recommend that retailers establish partnerships with wholesalers and manufacturers to attain current movement and sales data. Manufacturers should give retailers a heads-up of at least 4-6 months prior to a new product launch to give retailers a chance to get in sufficient stock.

For c-stores, the biggest hurdle to chocolate sales is out of stocks, Ellek said. “It’s important to get rid of products that are selling slowly and replace them with the best sellers.”
While Cote agreed king size serving packages are currently driving the category, he is hoping for stronger promotional activity behind standard size candy bars, which, he said, have been declining in sales over the past three years. Although labeling the king size packages “sharing size” is helping consumers better understand portion control, the long-term consumer focus is going to be on the single serving, he predicted. As the larger packages near the $2 price point, he noted, consumers may shift to standard size bars.
Still strongly trending in the chocolate category this year are one-bite bits of favorite candy bars, Ellek noted. Retro candies are also becoming popular. “Consumers want to share with their families the classic brands they enjoyed when they were young,” she said.

Impulse Impact
According to Experian Simmons research group, 82.2% of Americans admit to indulging in chocolate and other candy. This represents an increase over the previous seven years when the number hovered around 75%.

When Packaged Facts research asked about chocolate alone, and specifically chocolate candy bought by consumers, 68.4% of respondents said they personally bought chocolate candy. Of those consumers, 75.3% said they purchased chocolate candy at least once a month. And 26% of respondents usually bought chocolate candy at a c-store.

The Experian Simmons researchers found, 86.7% of women eat chocolate and other candy, compared to 77.4% of men. The Packaged Facts study showed 72% of women personally buy chocolate candy, compared to 64% of men.

Examining the market baskets of 18-34-year-old c-store shoppers, MSA and Paradigm Sample, in partnership with Convenience Store Decisions, found that more than 37% impulse-bought candy; and 15% made a special trip to satisfy their sweet tooth.

Chocolate Leads Global Confectionery Sales
A new market research report called ‘Confectionery Products—Global Markets Package’ created by Global Research & Data Services, incorporates 73 confectionery market analyses from various countries of the world.

Among its findings, was that in 2011 the value of the global confectionery industry almost reached $185.5 billion, representing growth by over 5% year-on-year.
Chocolate accounted for more than 55% of the total confectionery sales. The U.S., the UK, Brazil, Germany and Russia made up the top five country markets in terms of value.
The world confectionery market is expected to override a $208 billion mark by 2017. The market is expected to be driven by the introduction of new flavors and ingredients, brand extensions, enhanced product advertising, packaging innovation and new product developments/launches.