Indulging Profits Via Chocolate

Pile of colorful chocolate coated candy

Chocolate candy has remained a relative uncomplicated c-store offering, with the same appeal that keeps customers coming back for more.

By David Bennett, Senior Editor

Most convenience retailers would agree that one of the most popular impulse buys is chocolate candy.

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Chocolate accounts for about 60% of the $35 billion U.S. confectionery industry—about $22 billion, according to the National Confectioners Association.

Candy’s health halo has expanded because of demand for more organic and wholesome ingredients, clean labeling, fewer preservatives and less artificial sweeteners.

Also, snacking chocolate, a concept popularized by barkTHINS—now a business unit of Hershey—continues to gain traction as new players enter the segment.

Of course, bigger candy makers are innovating more than ever. Last year, Hershey introduced Reese’s Crunchy Cookie Cups and a new Crunchers range.

Darren Seifer, food and beverage industry analyst for the NPD Group, a Port Washington, N.Y.-based market research firm, said even the stability and mainstream of the confections industry must bend some to the increasing diversity reflected in today’s consumer.

“We are a demographic that is vastly changing in this country,” said Seifer. “We have a very big Hispanic population that is known for its spicy flavors. We have a big Asian population known for spicy and bold flavors. And, it’s not a surprise to see products reflect that.”

That’s why, Seifer said, you can see that the rollout of spicy chocolate candy has become more predominant in U.S. markets.

TriStar Energy LLC, which does business as Twice Daily in more than half of its stores, realized four years ago that declining sales of gum and mints warranted a rearrangement of space in its stores, said Rick Staley, merchandise manager who oversees various categories at Twice Daily.

“We decided to change our space allocation and reduced our space dedicated to gum and mints by 25% and reallocated that area to increasing our chocolate and non-chocolate count goods candy offering,” said Staley. “We also noticed a strong increase in bag candy sales and significantly increased our space allocation on this package type in many cases doubling the merchandising space. Both of these changes have paid dividends to our overall candy/confection category sales.”

Based in Nashville, Tenn., TriStar Energy operates more than 80 stores in Tennessee, Kentucky and Georgia.

After strong chocolate sales last year, 2018 is shaping up to be promising for the Tennessee retailer.

Staley explained that the c-store continues to see success with stand up bags (SUB) at many Twice Daily locations, partially because the SUB offers customers a portion-control option.

“Some of the SUB and other bagged packages have individually-wrapped ‘mini’ or small bag versions of the standard and king-size chocolate offers that allow a consumer to more easily enjoy a smaller portion at any one time,” Staley said.

Gary Randell, vice president of marketing at Marion, Ind.-based McClure Oil Corp., said the chain of nearly 40 locations has also experienced a steady decline in gum and mints. However, candy sales have taken up the slack.

“We have given more space to king-size bars as they are growing faster than standard bars,” said Randell. “Seven of our top 10 items currently are king size.”

He projects 2018 will be a good year for candy sales.

“In 2017 sales were up about 3% for us driven by many top sellers,” Randell said. “We look to promote many of the same bars again in 2018 and utilize manufacturer promotions to drive it. It will be interesting to see if the recent mergers and acquisitions change how the top companies promote, going forward.”

One of the biggest deals is when Nestlé recently announced selling nearly $3 billion worth of its U.S. candy brands, including Butterfinger, Baby Ruth and Crunch to Ferrero, the maker of Nutella.