Affordable Indulgence

October 28, 2009
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Much has been written about consumers’ collective avoidance of “non-essential” purchases during these economically challenging times. And although many kids (as well as adult chocoholics) might beg to differ, few food categories are less essential to daily survival than candy and chocolate.
Indeed, data from Chicago-based market researcher Information Resources Inc. (IRI) suggest that consumers are showing a bit of restraint when it comes to indulging the old sweet tooth. Unit sales of non-chocolate candy posted a 1.7 percent decline in the 52 weeks ending Aug. 9 (supermarkets, drugstores and mass merchandise outlets, excluding Walmart). Unit sales of chocolate candy, meanwhile, fell 7.7 percent during the same timeframe.
But private label is faring a bit better. The IRI data show a 6.7 percent unit sales increase in the private label non-chocolate candy sector, and just a slight (0.3 percent) unit sales decline in the private label chocolate category.
Barry Rosenbaum, president of Nassau Candy, Hicksville, N.Y., says private label’s value proposition could fuel growth here.
“We’re finding many of the major retailers in the country, in all classes of trade - club, discount, mass merchant, c-store, etc. - [are expressing interest] in expanding and building programs.”
Consumers won’t settle for cheap imitations of their favorite gummies or candy bars, however, no matter how large the assortment. They’re seeking out affordable indulgence: great-tasting confections that are in line with current trends.
According to Pablo Benitez, marketing director for Coral Gables, Fla.-based Arcor USA, many private label buyers still are too concerned about meeting financial ratios and goals to innovate in this area. And that reality could be a big stumbling block in the quest to keep consumers happy - and grow sales.
“Because everyone is playing the same game - focusing on ‘more of the usual’ and/or replicating the leading branded products - the biggest opportunity lies in differentiation,” Benitez says.

Give 'Em What They Want

Consumers continue to clamor for premium chocolate, including dark chocolate, says Roger McEldowney, past president and strategic senior advisor for Tzetzo Bros. Inc. /Mayfair Sales Inc. of Buffalo, N.Y.
Greg Cater, vice president of sales and marketing for Oakdale, Calif.-based Sconza Candy, adds chocolate blends, chocolate/fruit fusions and fusions of chocolate and spices (such as chili and ginger) to the chocolate trends list.
“Consumers are discovering dark chocolate, as well as chocolate blends,” he says. “Much like coffee and wine, chocolate is providing a lot of different taste experiences based on the chocolate’s growing region and processing. In general, the American consumer is more adventurous when it comes to chocolate.”
An April 5 Chicago Tribune article, however, suggests the recession is hurting sales of dark chocolate, which typically is priced much higher than milk chocolate. But chocolate as a category should continue to shine, contends Barbara Berg, marketing manager for Madelaine Chocolate Novelties Inc., Rockaway, N.Y.
“Consumers are looking for comfort foods and treats,” she says. “Chocolate is a natural.
“Nostalgic chocolates that remind people of a more secure era are particularly appealing,” she adds. “In this economic environment, consumers want the most for their money. Higher-quality chocolates at affordable prices are the current trend.”
On both the chocolate and non-chocolate sides, McEldowney points to a trend toward supersizing the purchase size to increase value to consumers, as well as that toward growth in small-treat self-gifting occasions.
On the non-chocolate side, he notes an “explosion in flavors and presentations/options in the gum and mint categories,” as well as significant growth of gummi confections in fun shapes and flavors.

Sweetening the Pot

On-trend, high-quality products are just one part of the private label candy and chocolate equation, of course. Retailers also need to zero in on packaging, merchandising and promotion strategies that help spur trial.
Bob O’Neill, vice president of sales for Sioux City, Iowa-based Palmer Candy Co., says bright and colorful packaging not only is in vogue for the category, but also helps catch the consumer’s eye.
“You have a brief second to catch their eye and even a smaller second to get them to pick up the bag,” he says. “Everybody knows candy is not on any grocery list except for maybe twice a year.”
Rosenbaum agrees on the importance of packaging.
“We find that private label programs need to be executed in every variety of package,” he adds, “whether it be a bag, a tub, a tin, glass, whatever.”
And because seasonal confections can represent as much as 25 percent of confection sales, McEldowney advises retailers to include a seasonal rotation of private brands in for all five major confectionary seasons - Valentine’s Day, Easter, spring/summer, Halloween and Christmas.
O’Neill notes that the summer promotional time is longer than any other promotional seasons, yet it doesn’t get the attention it needs.
“We’re doing a lot of gels, orange slices, circus peanuts, salt water taffy, those sorts of things that are not as heat-susceptible as chocolates to help retailers’ summer promotions,” he adds.
Chocolate can be positioned anywhere in the store, Berg notes, to spur impulse purchase.
“Everyday chocolates can be featured at the register,” she says. “Seasonal chocolates can be rotated year-round in the candy aisle, end caps or floor displayers.”
Design programs that can be marketed in the perimeter also work very well to drive impulse confectionary purchases, McEldowney says.
“Utilize more creative presentations such as gift tubs to [show] a product offers a little indulgence for today’s hectic consumer,” he says. “Explore merchandising in the front ends. … Include ethnic varieties as applicable and bilingual packaging where it will have a positive impact with the store’s consumer.” PLB

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