From large format sizes to resealable packaging and informative labels, chocolate trends are evolving.
By Erin Rigik, Senior Editor
Health and wellness may be top of mind for most customers today, but that hasn’t slowed chocolate sales, which were up 5.6% in 2015 in the convenience and multi-outlet channel, compared to the previous year.
In fact, customers are eschewing small portions and reaching for king-size chocolate options, which allows for shareability, or the ability to eat some now, and save some for later.
Chocolate dollar sales totaled $2.77 billion at c-stores and multi-outlets combined for the 52 weeks ending Dec. 27, 2015, according to IRI data as reported by the National Confectioners Association. Unit sales at c-stores for the same 52 weeks totaled 1.78 billion, a decrease of 1.6% compared to the previous year.
Chocolate candy—boxes, bags and bars—less than 3.5 ounces generated dollar sales at c-stores and multi-outlets of $2.23 billion for the same period, a 3.8% increase over the previous period. Unit sales at c-stores were 1.48 billion, down 2.6% from the same period in 2014.
Moreover, chocolate candy (boxes, bags and bars) larger than 3.5 ounces were the real winner. They saw dollars sales at convenience stores and multi-outlets of $383 million, a 12% increase from the previous year. Unit sales measured 173 million at c-stores, up 4.1% compared to the previous year.
The numbers confirm that customers are demanding bigger sizes from the chocolate category, such as theatre boxes and king-size bars.
This trend has been evident at Beaverton, Ore.-based Plaid Pantry convenience stores, which has 107 locations in Oregon and Washington. Chocolate sales at Plaid Pantry have been “strong” so far in 2016, with large format—king size and larger—driving the growth. Standard-size chocolate bars also rose 10-15%.
However, bite-size candy isn’t keeping pace. “Bites are doing OK, but this sub-segment has lost its newness,” noted Tim Cote, vice president of marketing for Plaid Pantry.
‘TIS THE SEASON
Limited time only chocolate products and seasonal items present an opportunity for convenience stores to drive sales on impulse items. Unit sales of seasonal Valentine’s Day chocolate jumped 31.5% in the c-store channel according to IRI data for the 52 weeks ending Dec. 27, 2015, while unit sales of seasonal Christmas chocolate were up 8.5% for the same period.
“Limited time only (LTO) items still drive sales, and really we are seeing too few of them come to retail. Most manufacturers should have a non-seasonal offering in the LTO space every year, probably one new offering per quarter would do it,” Cote said.
Cote noted that the single UPC rotating item concept that beer manufacturers use to execute seasonal/LTO programs could really simplify this process for retail candy sales. In other words, one LTO product changes constantly while all other products stay the same.
“This basically overcomes the issue of ‘where do I put it’ for LTOs. I currently carry about 6-10 beer items that follow this formatting,” Cote said. “The key is to make the item an LTO and not too seasonal. LTOs have a natural life cycle; the seasonals, like a Snicker Easter egg have unnatural life cycles. They die the minute Easter has passed.”
Promotions continue to drive candy sales and aren’t going away any time soon. Millennials especially are always looking for deals, especially in the impulse categories. “Some number of candy SKU’s need to be on promotion at retail every day of the year,” Cote said.
Assuming there are no unexpected volume disrupters, like a price increase, Cote expects chocolate category sales to be up 12-15% this spring.
The Snickers Crisper product, which launched recently, has produced “outstanding results” at Plaid Pantry. “It’s well executed from media to in-store display support, and sales are reflecting this,” said Cote.
Jared Scheeler, managing director of The Hub Convenience Stores, based in Dickinson, N.D., has also experienced customer interest in the Snickers Crisper offering. “Our consumers enjoy new varieties of the brands they trust,” Scheeler said.
When Mars released Snickers Crisper, Scheeler added it to all four of his stores, one of which is branded The Hub Convenience Stores, and ordered large quantities of the shippers for the locations.
“The displays came with the standard Snickers bar as well,” Scheeler said. “We sold these in a two-pack promotion, and 78% of those two packs contained one Snickers and one Snickers Crisper. Utilizing this promotion method and displaying them together led to our consumers trying the new variety.”
LABELS & PACKAGING
Even as the c-store industry continues to trend toward bringing in healthier options, consumers are still demanding indulgence from the chocolate category.
A March 2016 report by the NPD Group, a global information company, found baby boomers and Millennials both listed chocolate/candy bars among their top three snack picks, which also included fruit and potato chips.
Like Cote, Scheeler sees evidence of this indulgent demand in the sales of king-size candy at his stores, which is far exceeding standard-size sales as far as unit sales.
“As the manufacturers are releasing more varieties in king size, we are replacing the standards size with the new king-size package,” Scheeler said. “We are also experiencing very nice growth in the larger stand-up bags in the chocolate category.”
But even as they crave indulgence, customers are more interested than ever before in the ingredients in those chocolate bars. Manufacturers have responded.
In Feb. 2015, Nestlé USA announced its commitment to removing artificial flavors and FDA-certified colors, including Red 40 and Yellow 5, from all of its chocolate candy products. By the end of 2015, more than 250 products and 10 brands were officially free of artificial flavors and certified colors.
In 2015, Hershey announced that Hershey’s chocolate kisses and chocolate bars would no longer be made with artificial ingredients. By the end of 2015, its chocolate bars and kisses no longer contained GMO sugar or soy lecithin (an emulsifying agent that is usually made from genetically modified soy).
Mars Inc., in February 2016, announced plans to remove all artificial colors from its human food products as part of a commitment to meet evolving consumer preferences. The change will take place incrementally over the next five years.
Meanwhile, as packaging evolves, Scheeler said he sees it making the chocolate category even more convenient than it already is. For example, even as standard candy bars are relatively easy to consume, manufacturers are introducing more bite-size chocolate candy in both small and standup bags.
These resealable bags offer customers more flexibility as well as portion control and the ability to share.
Snickers Crisper offers two squares of chocolate instead of a full bar, so that customers can save one for later, and the package allows customers to easily twist the wrapper closed between snacking occasions.
Scheeler also pointed to Mars’ M&M’s new on-the-go cup, which is similar to the type of packaging seen in the gum category.
“Though the price point may be a little high for it to take traction, I can see the rest of the bites trending to this type of packaging,” Scheeler said. “They fit into a cupholder in a vehicle, and they provide the type of convenience that consumers are looking for.”