Candy Remains A Solid Performer Despite Market Challenges

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In the midst of one of the longest deflationary periods, growing top line sales isn’t easy. But some categories are solid performers regardless of the market conditions, and candy is one of them. Chocolate and non-chocolate combined grew 2.0 percent—ahead of total store growth of 1.5 percent. Even so, 2016 had some mixed results as well. While dollars grew, units and volume pressure continued. Gum and mints were off, and chocolate wasn’t quite the performer it has been in recent years. But more than anything, 2016 saw quite a number of growth drivers that look to have staying power for 2017 and beyond.

1. New item rotation
New candy items drive significant growth for the category, one of the most  innovative across the store. Shoppers have their traditional favorites but also like to try new and different items, particularly in gourmet and novelty in chocolate, and chewy in non-chocolate. More than 5,000 items were launched in 2016, up from 3,500 in 2015. These items accounted for nearly 1.5 billion in new dollars, and 1,500 of these items generated at least $100,000 in sales. As such, new item sales contributed 6 percent of the total candy dollars in 2016.

2. Item count
Retailers actually added items to candy and chocolate rather than just rotating stock. Chocolate saw an additional 4 percent in average items per store and non-chocolate an additional 6.5 percent. Retailers did dial back their gum assortment. New items have been a consistent driver of growth in the past few years, with innovation likely to continue to drive dollars in the coming years.

3. Premium chocolate
Over 2016, premium chocolate grew dollars nearly 10 percent on top of 16 percent in 2015. In addition to growing dollars, premium also was the only chocolate segment that grew volume. Premium accounts for a large percentage of the total category growth and more than 90 percent of the total new chocolate dollars, with absolute dollar gains of more than $150 million. Given the trading-up behavior seen across the entire store, premium is expected to continue to be a strong driver of growth in 2017.

4. Chewy candy
What premium is doing for chocolate, chewy is doing for non-chocolate—making up nearly half of the entire non-chocolate segment. That, along with the growing consumer uptake, drove a 5.3 percent dollar gain in addition to unit and volume increases. Chewy added more than 170 million new dollars in the past year. Given the multi-year growth and consistent strength, chewy is expected to continue to be a big contributor to growth in 2017.

5. Mints/breath fresheners
A much smaller segment than chewy but one on fire, nonetheless, is that of plain mints and breath fresheners, at least in part explaining the softness seen in gum. Plain mints clocked in at a positive 7.3 percent for 2016 along with an increase in household penetration. Like chewy, mints have seen multi-year strength that will likely persist in 2017.

6. Shareables/minis
Shareables/minis have quickly become consumer favorites. Items designated by pieces, fun size, minis, etc. and are geared toward portion control accounted for more than $300 million in new sales, with $200 million for chocolate and $100 million for non-chocolate.  Euromonitor predicts a 10 percent five-year CAGR globally.

7. Mid-market innovation
While no candy aisle is complete without the many iconic brands of the industry, mid-market manufacturers have dialed up innovation. They saw 3.5 percent sales growth, vs. 1.1 percent for the category and accounted for 48 percent of new sales vs. their market share of 27 percent.

8. Online sales
One area that is driving growth for the entire category is online sales. While a small base, both non-chocolate and chocolate moved the needle quite a bit, at positive 18 percent and 13 percent, respectively. Given the expected growth of e-commerce for all of CPG, this trend likely is to continue and it’s important for retailers and manufacturers to play into this trend to make sure products/channels take advantage of the growth opportunity.

9. Convenience channel
Convenience stores had a strong 2016. With limited investment in advertising, but above average margins, c-stores are now 25 percent of the measurable markets and had 2.5 percent growth. In part, c-stores are picking up trips lost by drug as a quick stop-in. Additionally, they are moving into novelty and gourmet and even seasonal to some extent, opening up new growth opportunity as a channel of continued strength.

10. Seasonal items
Non-chocolate seasonal saw 2.2 percent sales increases with a particularly strong Easter period. Seasonal periods continue to drive enormous incremental business with ample opportunity for cross-merchandising with other meal or celebratory items.

*Editor’s note: This list was compiled by Ann-Marie Roerink of 210 Analytics. (Source: National Confectioners Association Sweet Insights using IRI performance data for the 52 weeks ending Dec. 25, 2016)
NCA’s 2017 Sweets & Snacks Expo will be held May 23-25 in Chicago.

About The Author

A former newspaper editor and publisher who has handled digital duties for The Shelby Report since 2011. She once enjoyed leisurely perusing the grocery store aisles but, since having a baby in 2016, is now an enthusiastic click-and-collect shopper.

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