Will this Halloween be a trick or treat for c-store candy profits?
By Anne Baye Ericksen, Contributing Editor
Confectioners, such as Hershey, Mars and Wonka, bank on holidays to boost their annual business.
After all, Halloween, Valentine’s Day, Easter, Christmas and Hanukkah combine to generate $7 billion in U.S. sales. Not surprisingly, Halloween accounts for a big chunk of those sales.
About three-fourths of American households hand out candy every year, purchasing nearly 600-million pounds of gum, lollipops and other sweets for Halloween, according to Nielson Wire.
What does that look like spread out on a kitchen table? Imagine 16 billion fun-size Snickers bars or 158 trillion individual candy corns.
For the c-stores, Halloween is an opportunity to cater to customers’ candy cravings, as well as pad candy and gum category profits.
Adding To Summer Profits
Summer typically tends to bring strong results in candy business for convenience stores. But when summer draws to a close, seasonal items provide chances to boost candy momentum with limited time only (LTO) products in holiday packaging. This summer has brought especially strong candy sales for many retailers.
“We usually see an increase in non-chocolate candy sales in the summer months, but this year it stayed steady [except for] our non-chocolate peg bags. We had more than a 20% increase over last summer,” said Kera Smith, merchandising specialist for Top Star Express, which is headquartered in Emmaus, Pa. and operates 31 stores throughout eastern Pennsylvania. “I feel consumers perceive more value for their dollar [with the bagged candy].”
Courtney Vercollone, category manager for Duxbury, Mass.-based VERC Enterprises, which has 24 stores in Massachusetts and southern New Hampshire, said non-chocolate sales for the c-store chain have steadily improved.
“This summer, we were down in gum, but probably up in candy,” Vercollone said. “Summers are our busiest months anyway, so we should be doing better in everything than what we do in fall, winter or spring. But compared to last summer, we were down in gum.”
That wasn’t the case for John Archer, owner of Shell Food Mart in Hinsdale, Ill. “I don’t have the exact numbers, but gums, mints and gummies have done well for us,” Archer said.
Although these businesses registered improved sales in specific categories, the national numbers still point to single-digit growth. “The non-chocolate market, including gum, is only up in value 2.9% for 2013. Chewing gum was down in the U.S. in 2012 and 2013, and that’s on top of a 5% drop the year before,” said Marcia Mogelonsky, director of insight for food and drink at Mintel International, a market research firm based in New York City.
Mogelonsky cited several factors affecting the market, such as an increase in self-checkout at supermarkets. “There’s no impulse process there,” she said.
Another is a lack of new product introductions. “There’s nothing imaginative happening, especially in gum,” said Mogelonsky.
“Another dessert flavor or layered flavors? Those have been around for a few years,” she noted.
But perhaps the most influential aspect impacting sales is parents’ desire to exercise more control over what children are consuming. “Parents don’t want their kids to have artificial flavors, but when it comes to candy, kids want something that turns their tongues blue,” Mogelonsky said. “Parents do not want their kids to have blue tongues; however, parents turn a blind eye at Halloween.”
Focus On Promotions
To keep tongues blue, and to keep up that summer momentum, both Vercollone and Smith ordered specialty candies for the Halloween season, instructing store managers to put them on display as early as the first week of September.
“We want to be among the first stores to sell it,” said Vercollone. “I didn’t bring in non-chocolate candy because Halloween chocolate does better. I brought in Snickers and Twix items in the shape of pumpkins and ghosts. We also have the Cadbury Screme Eggs. People like them because you can’t always buy them. You won’t see Cadbury until Easter.”
Of course, the calendar plays a significant role in purchasing.
“During the fall, we will bring in seasonal candy, such as Russell Stover Big Bite chocolate, which comes in seasonal flavors,” Smith said. “We also have the standard Reese’s pumpkins every year.”
At VERC, the goal isn’t to try to compete with the big box stores, but rather to entice impulse purchases.
“We’re not a destination for Halloween candy. We don’t have the space for the big bags, so we do more of the individual candies,” said Vercollone. “These are items that you see when checking out that you might think are cute and grab one.”
To that end, stores often set up promotional shippers provided by distributors as well as rearrange items in order to highlight the new products. “Seasonal candy will get the better placement in the store due to the fact that it is time sensitive. We always try to display items close to the registers and in high traffic areas,” said Smith.
Archer, however, waits until the calendar gets closer to Oct. 31 before promoting Halloween merchandise.
“We’ll put out shippers in the week leading up. Halloween is not a huge candy holiday for us. We’re a last resort for people who forgot to buy candy—90% of our Halloween candy sales happen the day before,” Archer said. “Still, I make sure we carry bags of Sathers Candy Corn. We sell those throughout the year, but I’ll make sure the peg is full because we sell more of those during the week of Halloween.”
This year, Archer plans to really get into the spirit in hopes of attracting customers. “We have a regular customer who is about 85 years old and who plays the piano. He’ll come in on Halloween dressed like a king to play scary music. We encourage our cashiers to dress up, too,” Archer said. “We do get trick-or-treaters and they get the candy that we don’t reorder because it had not sold well.”
Once the clock strikes midnight and the calendar turns to Nov. 1, however, it’s time to shift gears for the rest of the season. “It’s amazing that once the holiday is over, no one buys the same piece of candy that sold the day before,” Archer said.
2015 Chocolate Outlook
While chocolate remains the top seller of Halloween season, it’s also a year-round favorite. What’s more, it hasn’t experienced as much of a slowdown as other confectionery categories. The National Confectioners Association (NCA) cited a 4.1% increase in
chocolate candy sales between 2013-2014, which is significantly more than the 2.4% category growth for non-chocolate candy.
“We never did see a dive in chocolate sales,” said Marcia Mogelonsky, director of insight for food and drink at Mintel International, a New York City-based market research firm.
However, industry watchers anticipate an increase in retail prices due to greater costs for cocoa and other essential ingredients. The Wall Street Journal reported that Hershey Co., the maker of perennial favorites Hershey’s Kisses, Reese’s and Kit Kat, raised wholesale prices by 8% in July, and Mars issued an increase of approximately 7%.
Of course, Valentine’s Day is still projected to be an early revenue booster. “Chocolate is often given as a gift. Russell Stovers is famous for that,” said Mogelonsky.
Mars announced various new packaging programs specifically targeted toward the sweethearts’ holiday, including Dove heart tins and a new Twist’n Pour Dispenser for M&M’s decked out like a teddy bear. In fact, Mogelonsky said that repackaging will continue to be the predominant trend rather than introducing new recipes. “Hershey’s isn’t going to mess with Reese’s formulation. They will make it more about the packaging.”