Category Insight: Store Brand Candy Cravings
Private label candy and gum sales are up, offering opportunities for store branding in the checkout aisle.
Whether Easter excites you professionally over a spike in candy sales or you personally crave bunny-shaped sweets, April should be a good month for candy.
Sales of private label chocolate candy (box/bag/bar) greater than 3.5 oz. have gone up 17 percent to $126 million with just a 1 percent share, while sales of the same products of less than 3.5 oz. have gone up 50 percent to $11 million, according to IRI data for the latest 52 weeks ending January 26, 2014.
While these increases show promise for private label chocolate, two national brand manufacturers still dominate chocolate confectionery in the United States. In 2013, The Hershey Co. and Mars were expected to account for a combined 65 percent share of overall value sales, according to Euromonitor’s “Chocolate Confectionery in the U.S.” November 2013 report.
The report predicts that from 2013 to 2018 chocolate confectionery is expected to register constant value growth of 7 percent, reaching sales of $18.6 billion. Higher prices and smaller pack sizes are expected to drive retail volume sales down by
For private label to capture more market share, retailers will need to incorporate new offerings into their private label programs, such as snack-size candy offerings.
“Snacking in-between meals has steadily become much more common amongst many consumers as a simple way to stay satiated all day,” notes the report. “Chocolate producers therefore started to introduce smaller, bite-sized portions, which help to fill this snacking desire. In addition, the smaller pieces allow for increased calorie control on the part of the consumer, who might think an entire bar of chocolate is too much.”
When it comes to Easter candy, Beth D. Podol, director of sales and marketing services for Mount Franklin Foods, LLC (MFF), said jelly beans are always the popular item. At this time of year, MFF offers a wide range of beans besides assorted and tiny, including black licorice, spiced, speckled, sour neon and cherry.
Private label jelly beans can be found at convenience store 7-Eleven under its 7-Select line, which includes Gummi Blue Sharks, Sour Gummi Bears, Watermelon Rings, Orange Slices and Peach Rings. Private label non-chocolate chewy candy sales have gone up 9 percent to $217 million over the past year, according to IRI.
C-stores tend to use smaller packaging targeting lower price points, said Podol. In some stores, they are under $1.00. But larger formats are also trending forward. She also noted that some stores are offering theater boxes in items not sold that way in the past, such as gummies.
As for flavors, sour continues to be popular for all non-chocolate chewy candy, not just private label, Podol said.
“We have seen more accounts adding private label to their line and/or adding additional candy items,” said Podol.
Candy isn’t exclusively carried by the grocery channels, although grocery stores have been early developers of private label candy lines. Discount stores, with many planning expansion and adding food offerings, might be the next frontier for private label candy.
“Candy has generally been sold across all channels, but not necessarily in private label,” said Podol. “Dollar stores, in particular, seem to be adding to their line of private label candy.”
Podol says she sees 10/$10 programs or other multi-unit offers, as well as display retail cartons (DRC) used to promote candy lines. She suggests that retailers develop a cohesive private label candy line by having packaging that is consistent across all items, meaning in some cases artwork is identical, while in others the main elements are the same but others vary item by item.
The challenge in merchandising private label candy, according to Podol, is competing with branded products. “Private label manufacturers are generally selling with lower margins and net programs, so who pays for the off-shelf display?”
As for which shoppers to market items to, Podol explains different items appeal to different segments. “Children tend to go for gummies and sour candies while adults are more into jells and hard candy,” she said. Certain jells skew even older, she noted, such as spice drops.
Mints are also more of an adult offering. Over the past year, private label plain mints have increased almost 3 percent to $65 million, according to IRI, while packages and rolls of hard sugar candy increased 8 percent to $41 million.
Chewing on Possibilities
Private label gum is yet another category with an opportunity to capture a much bigger share. Gum sales are up 21 percent to $7 million, according to IRI, yet share is still under 1 percent.
The demand for high-quality private label chewing gum is on the rise, noted Heather Collins, media representative for ZOFT Gum Company.
When deciding where to add a private label gum to an existing store brand portfolio, retailers can often look to their better-for-you lines.
“Functional chewing gum is the future,” said Collins, noting that her company specializes in using chewing gum and other confectionery products to deliver health-related ingredients, including vitamins, minerals, herbals, botanicals, amino acids, antioxidants, etc. The company has developed products for dental and periodontal care, to boost energy, to aid weight loss or stress management, to deliver probiotics or antioxidants, and even those with nutricosmetic goals, among others.
Additionally, the demand for sugar-free gum is on the rise, according to Collins. While sales of private label sugar-free gum are still under a million, according to IRI, they are up 117 percent.
“It seems sugar-containing gum is a thing of the past,” said Collins. “With all-natural sugar substitutes, which look and taste like sugar, there is really no advantage of sugar-containing gum.” One such sweetener, xylitol, generally has the same sweetness as sucrose but 33 percent fewer calories and is safe for diabetics. Products using xylitol can often qualify for an FDA-approved dental health claim.
“The product is helpful in inhibiting plaque and dental cavities up to 80 percent, regarding demineralization of tooth enamel, re-mineralization of tooth enamel, and increasing saliva production,” said Collins.
Private label gum has many packaging options, including bulk, blister packaging, flow wrap, bags, jars, tubs, overwrapping, tins and multi packs. This offers plenty of opportunity for store branding on gum and mint packages, often merchandised at checkout counters.
“Many companies start with a chewing gum product and later expand, offering line extensions, including mints and confectionery products,” said Collins.
Eye on the National Brands
Over the past few years, The Hershey Co. has released several unwrapped, miniature versions of its popular candy products, including Hershey’s Milk Chocolate and Cookies‘n’Creme Drops, Reese’s Peanut Butter Cups, and Rolo, with Kit Kat Minis hitting shelves last year. Mars Inc. followed suit last year, launching Snickers Bites and Milky Way Bites. The prevailing packaging choice for these products is resealable, flexible pouches. In non-chocolate developments, last year Jelly Belly Candy Co. introduced Camo Beans—jelly beans “inspired by the art of camouflage”—featuring Chocolate Pudding, Green Apple, Licorice, Juicy Pear, Orange Sherbet, Toasted Marshmallow and Watermelon flavors. The company then extended the line with Pink Camo beans in March. The flavors in Pink Camo Beans packs are Cotton Candy, Coconut, Licorice, Cherry Passion Fruit Smoothie, Bubble Gum and Strawberry Cheesecake. Jelly Belly Charities says it will donate $0.25 to support wounded U.S. veterans for every bag of Camo Beans sold.