Consumers Splurging on Sweet Treats
This year’s Sweets & Snacks Expo may have been canceled amid the coronavirus pandemic, but that doesn’t mean that insights on the ever-important category aren’t available.
For instance, Americans enjoy chocolate and candy two to three times per week on average, and research from the Washington, D.C.-based National Confectioners Association (NCA) shows that they give themselves a pass on eating chocolate and candy to help them maintain their emotional well-being: 86% of consumers agree that it’s completely fine to occasionally treat yourself with some chocolate or candy.
Key Takeaways
- Although COVID-19 has had a somewhat negative effect on the candy category, retailers that adjust their merchandising strategies to the new normal should see an uptick in sales.
- While seasonal sales are a category highlight, limited-edition versions of classic confectionery brands drive sales all year long in both the chocolate and nonchocolate segments.
- Retailers can still find opportunities in the candy aisle to engage with shoppers in fun and experiential ways, both online and in the store.
During these anxious times especially, consumers are more likely than ever to indulge in a candy break. According to Erica Norton, director of global consumer insights, innovation at The Hershey Co., in Hershey, Pa., demand has been high for both mainstream and premium chocolate in recent weeks as consumers look to the category to serve a variety of needs.
“Candy is a go-to for comfort and ‘me time’ moments, when people want to escape from the madness of their current situation,” affirms Norton. “Consumers are also reaching for candy to enhance their favorite stay-at-home activities like streaming movies.”
She adds that although mainstream take-home chocolate is the fastest-growing individual segment, Hershey has seen extremely high growth in multipacks as consumers leverage these products for fun at-home experiences like s’mores. “Other large ‘sharing’ bags and bars are also selling very well, due to the combination of comfort, portion-control snacking and excitement that they can provide,” notes Norton.
Navigating the New Normal
While COVID-19 has had something of a negative effect on the category, retailers that adjust their merchandising strategies to the new normal should see an uptick in sales.
Jim Klein, chief customer officer at Ferrero USA, acknowledges that the Parsippany, N.J.-based company has seen a dip in front-of-store sales because of shoppers’ shift to self-checkouts, and an increase in curbside pickup.
Sally Lyons Wyatt, EVP and practice leader at Chicago-based data analytics and market research company Information Resources Inc. (IRI), believes that social and digital media should be a key ingredient for success in 2020, especially if consumers continue to stay home and/or limit their in-store shopping.
“Retailers need to deepen their connections with their consumers to entice them into the store to shop, but also to offer a different engagement online,” advises Wyatt. “This multiprong approach should ensure retailers capture the attention of shoppers wherever they may be, before, during and after their trip.”
Celebrating the Seasons
That strategy is particularly important during holiday selling seasons (Valentine’s Day, Easter, Halloween and the winter holidays), when, according to the NCA, more than 60% of category sales occur.
“Two of the main purchase drivers for confectionery are to celebrate and to gift,” says Mike Gilroy, VP of trade development and sponsorship at Hackettstown, N.J.-based Mars Wrigley U.S. “Seasonal product offerings allow shoppers to purchase delicious treats for every celebration and gift their loved ones during the biggest times of the year.”
“Seasonal confections are about moments, family, sharing and reflection on childhood,” notes Wyatt. “Consumers love to shop the seasonal aisle because of the themed products, and an engaging section and limited-time-only products drive excitement across the aisle.”
Seasonal products also fuel category sales: NCA research finds that 16% of category sales are generated by seasonally coded items.
Like other candy manufacturers, Mars Wrigley offers seasonal products for all core holidays to encourage connections and celebrations. Its Zombie Skittles, a mix of the five traditional fruit flavors plus a hidden “rotten” flavor, saw great success last Halloween, with consumers challenging one another to test their bravery over a bag of their favorite treat.
Ferrero’s Kinder Joy, a modified version of the company’s hugely successful Kinder Surprise egg, which launched in the United States two years ago, has “been highly incremental to the category by attracting new users such as Millennial moms and Millennial Hispanic moms,” asserts Klein.
Retailers should expect more display options from the brand during upcoming holiday seasons. Ferrero is also ramping up promotion of its new Golden Gallery Signature premium boxed chocolate line, as well as its Kinder Bueno bars. Both products target Millennial consumers.
While Supplies Last
He adds that strong growth in the chocolate category has come from extensions of evergreen brands such as M&M’s, which recently added Hazelnut Spread and Fudge Brownie versions.
“Consumers love the excitement that limited editions and seasonal flavors bring,” concurs Hershey’s Norton. “Most recently, we have had great consumer response to limited-edition Kit Kat Birthday Cake,” which launched in April.
Not Just Chocolate
Limited editions are also a force in the nonchocolate segment. This year, gummi maker Haribo, with U.S. headquarters in Rosemont, Ill., is celebrating its 100th birthday with the release of limited-edition Passport Mix, which includes popular flavors and shapes from various countries. The product will be available from May through September.
While chocolate remains the largest candy subcategory, nonchocolate products such as Haribo’s gummis have seen significant growth in sales, driven largely by the tastes of Millennials. A recent report from London-based market research firm Euromonitor indicates that pastilles, gums, jellies and chews have been major growth drivers in the nonchocolate category, which comprises nearly half of sugar confectionery overall and has been showing some of the strongest growth in the category over the past few years.
In response to consumer demand for chewy and soft-creme textures, Mars Wrigley USA has introduced Skittles Dips and Starburst Swirlers, which offer a multitextured fruity experience.
Packaging innovation has also played a large part in category growth. Standup resealable bags have become more popular, and packages labeled for “sharing” have experienced a 30% dollar share increase, according to Wyatt. “Packaging is emerging with more shapes versus just [a] rectangle or square,” she says.
Smaller pack sizes are also becoming more prevalent. Going forward, “more companies than ever before will be offering treats in smaller pack sizes of 200 calories or less to help people as they seek to manage their sugar intake,” says NCA spokeswoman Carly Schildhaus.
“As shopping habits continue to evolve, we can expect to see a rise in better-for-you options and packaging choices that encourage portion control and provide consumers with new ways to treat themselves,” observes Gilroy.
Enhance the Experience
Even limited-edition offerings and exciting new packaging alternatives won’t be enough to fight COVID-19 malaise, however. Experts caution that retailers need to amp up their merchandising and in-store experiences to win with consumers in this changed marketplace.
Wyatt says that retailers can still find opportunities in the candy aisle to engage with their shoppers in fun and experiential ways, both online and in the store. “In the store, merchandising should be themed and become a wonderland of fun,” she counsels.
Ferrero’s Klein agrees that creating in-store theater is a winning strategy. “When retailers create big events that generate excitement for consumers in-store, they can stimulate significant category growth,” he says. Ferrero is working with its retailer partners to focus on expanding opportunities in key holiday selling seasons to deliver incremental sales and profitability.
To combat the surge in e-commerce and the migration of shoppers to online outlets, Gilroy suggests that retailers tap into their digital sites to encourage seasonal sales during key holiday selling seasons by placing confectionery in the digital transaction zone and promoting seasonal products earlier than they would in stores.
“Retailers can also drive confectionery purchases outside of the core four holidays by leaning into ‘mini moments,’” he adds. “Mars Wrigley knows that summer is a mini moment where consumers look for confectionery to treat themselves and gift others, so we introduced red, white and blue packaging for summer celebrations.”
