Innovation is a key for enticing Millennials and Gen Z customers, but staple products continue to drive the candy category.
By Erin Rigik, Senior Editor
Even as ‘healthy’ becomes a growing call, candy customers continue to want indulgent options.
Convenience store retailers are succeeding in driving candy sales with a balance of tried-and-true products and limited-time-only varieties. When it comes to the latter, candy manufacturers are tapping food industry trends and rolling out a range of exciting flavors to woo customers.
The 2015 Sweets & Snacks Expo at Chicago’s McCormick Place in May showcased the latest candy trends and flavors that are now beginning to appear on retail shelves. Many of the flavors being introduced are already known and popular flavors from the food industry that are appearing in candy for the first time.
C-store retailers know breakfast is a favorite daypart, but well-loved breakfast flavors are now finding their way into candy, from maple syrup to bacon to waffle to peaches and cream. For example, the Sweets and Snacks Expo showcased new products such as Chuao Chocolatier’s Strawberry Waffle Wild and Jelly Belly Candy Co.’s Pancakes & Maple Syrup jelly beans.
Flavors that may evoke childhood memories are also appearing in candy, such as s’mores, birthday cake and lemonade flavors. More sophisticated, complex fruit flavors are also popping up in the candy aisle: think blood orange and pineapple jalapeño.
At Beaverton, Ore.-based Plaid Pantry, which operates 107 convenience stores, Tim Cote, vice president of marketing, said breakfast flavors hadn’t yet found their way onto store shelves, but flavors like s’mores and birthday cake have been out for a while, with “mixed results.”
Complex fruit flavors, Cote said, is “where the trend lies.” He is seeing more exotic fruits “like blood orange and yumberry,” entering the candy category, but mostly in trade-up products so far. However, Cote sees an opportunity here for mainstream brands and expects the trend to continue to grow and evolve.
PERFECTING THE MIX
At Mad Max Convenience Stores, which operates 10 convenience stores and a truck stop in Wisconsin, Steve Magestro, company president, noted candy customers mostly gravitate toward classics or best sellers.
“They are looking for the old stand-bys, but at the same time looking for healthier alternatives,” Magestro said.
However, classic best sellers seem to remain a steadfast trend.
“Tried and true is called that for a reason. These items produce,” Plaid Pantry’s Cote said. But balancing classic product with limited time offers is also key in driving sales.
Finding the perfect balance between the two has been an ongoing challenge for the industry.
“Limited editions are strong, and could be stronger,” Cote said. “The industry went overboard with this concept a few years ago, but now they may have pendulumed back too far the other way. Limited edition should have a small presence in the store every day.”
FUTURE FORECAST
Magestro expects chocolate sales will be flat for the remainder of the year at Mad Max stores.
“I think they will be flat for several reasons,” Magestro said. “One, costs continue to go up, which means retails do too; product does not sell as quickly as it used to because of increases in retail and smaller portion sizes.”
Magestro explained that store promotions that bundle candy items or buy-twos can drive an uptick in sales.
Gum and mint sales have been flat or seeing only small gains due to prices and portion size at Mad Max stores.
“In the summer months, gum and mint sales always go up in sales, but overall for the year I think they will be flat,” Magestro said.
He noted that while new gum and mint items continue to debut, the category isn’t as robust as it used to be.
“The category has been reduced for us overall over the last several years as we only carry what is selling quickly,” Magestro said. “We look at this category ongoing through the year, but it gets reworked twice a year to make sure we are staying up with what is hot and removing what is not. Again, promotions see gains while everyday sales do not.”
Cote, however, sees a possible bright spot and opportunity for growth for certain brands in the gum category, noting that gum sales for the remainder of 2015 will depend largely on the individual brands.
“Gum and mint companies that want to execute true innovation and more importantly in-store promotion will grow,” Cote said. “Those that are looking for institutional advertising to drive sales alone will likely be disappointed.”
Overall, there is bound to be better growth on the chocolate and non-chocolate side compared to gum and mints, Cote predicted.
“Candy marketers seem to understand the Millennial and Gen Z customers better,” Cote said. “Bombarded with deal offers all day and night on their smart devices these generations are all about ‘the deal.’ It is all they hear about all day and night: ‘Buy now because of the deal.’ If there are no deals offered in store in a category, sometimes it can be hard to get that consumer’s attention.”
Millennials and Generation Z are also interested in the latest and greatest, something savvy retailers and manufacturers strive to provide, Cote said.
“These generations want constant upgrades and new deliverables in every category they touch,” Cote said. “This is what makes limited edition so important. Candy, and to a degree mint, seem to understand and are able to execute against this need for innovation a bit better than gum right now.”
TRANSPARENT TREATS
John Downs Jr., president and CEO of the National Confectioners Association (NCA) during a presentation at the Sweets and Snacks Expo addressed the growing vilification of the candy and snacks industry as the cause of obesity.
“Our business symbolizes all that is right with the world. We are an affordable, authentic, honest, transparent treat,” Downs told attendees, pointing out that about 123 million U.S. households purchase chocolate, non-chocolate candy, gum or mints each year, with Americans enjoying these treats 2-3 times a week.
About 78% of consumers polled in a quantitative study reported that they expect sugar to be included in candy. “Shoppers would rather cut sugar from other sources,” Downs said.
In fact, candy represents only 2% of the calories in the diet, and only 6% of added sugars. Most people enjoy candy twice a week, averaging less than 50 calories per day from confectionery items.
“This tells us our consumers are driven by common sense and making smart choices about what they want to enjoy and when they want to enjoy it,” Downs said. “Our sales total about $35 billion. Consumers are willing to pay more for choice, especially Millennials. They want variety. They want options as it relates to portion sizes and calories. Consumers want customized offerings and premium products. People are beginning to understand and appreciate premium in this country and in our category.”
Paid Pantry’s Cote agreed that customers are aware that candy is an indulgent treat and want to keep it that way. Customers are more focused on simpler as opposed to healthier, meaning fewer ingredients, natural ingredients and ingredients that are easy to pronounce. Major candy manufacturers have been responding to this demand by cutting artificial ingredients from their products.
“Candy is not about healthy,” Cote said. “The health-oriented candy consumer is more about permissible indulgence, not healthy candy.”
