By Sarah Hamaker
It€™s a good thing candy doesn€™t mind being ignored. Candy€™s 19.4% share of impulse incidence outranks second-place packaged beverages by 5.5%, according to NACS Convenience Tracking Program (CTP) data €" all this despite being tied as the third-most-forgotten category in terms of missed sales. The category consistently ranks in the top 10 merchandise categories boasting of a sixth place finish in 2011, according to recently released NACS State of the Industry data. The category also delivered an impressive 48.5% gross margin with sales of $4,191 per store per month in 2011. Chocolate bars dominated the category with 35.6% of the category€™s sales, with gum following close behind at 23.7% of sales, according to Nielsen Syndicated -Convenience Tracking data.
Impulse buys fuel the category€™s growth, but what drives these unplanned purchases is product placement.
"We place our high-margin candies around the checkout," said Tom Myers, owner and manager of Grant€™s Food Mart, which has four locations in and around Birmingham, Alabama. "A lot of our candy sales come from its placement in the store to draw impulse sales."
"People look at candy as an indulgence for themselves, and merchandising it by the checkout drives that impulse sale," added Dan Powers, category manager for Tedeschi Food Shops, a chain of nearly 200 locations based in Rockland, Massachusetts.
"Going into the store and picking up some candy and a drink is just normal behavior," said Scott Samet, president of Taste of Nature. "I don€™t see that changing, which is why we still view the channel as a growth opportunity for candy."
Jeff Beckman, director of corporate communications for The Hershey Company, agreed: "C-stores have been one of the best performing channels for confection over the past four years€¦ Even after multiple years of continuous category growth, year-to-date confection category sales continue to show solid growth."
Not all candy grows at the same pace. Within the candy category in convenience stores, a power shift is slowly taking place. During the last 52 weeks ending February 19, non-chocolate candy sales rose 9.2%, while chocolate sales advanced 9.6%, according to Symphony IRI data. But in the last 12 weeks ending February 19, non-chocolate sales jumped 15.3%, outpacing chocolate sales, which increased 9.9%.
"Ironically, the sales driver recently has been the non-chocolate candy category," said Jenn Ellek, director of trade marketing and communications for the National Confectioners Association. "Non-chocolate has seen a 2.3% growth in units, while chocolate is only up 0.4% in unit sales. The message to retailers is the non-chocolate category is growing, so look at that category within your store and make sure you€™re using the best sellers and top brands."
Just Born, which sells mostly non-chocolate candy, has seen moderate growth lately. "Candy is an affordable treat," said Wayne Lutomski, director of customer marketing for Just Born. "Therefore, the prognosis remains solid for continued growth in confections."
But in a rather surprising turn, the gum category has shown a decline in sales recently.
"The gum category has been down and continues to be down, with units down 4% last year," agreed Ellek. "Two years ago, it was all about gum. Now with the mind-boggling array of unique flavor profiles offered in this segment, consumers can get confused at checkout €" it€™s more difficult for them to latch on to one flavor and make it a favorite."
Seasonal candy took up some of the slack created by the slowdown of gum sales. "We€™ve seen tremendous growth in the seasonal chocolate immediate consumption segment in c-stores," said Larry Lupo, vice president of sales convenience and retail for Mars Chocolate North America. "Seasonal candy is exploding in c-stores, and is experiencing double-digit growth overall."
Hershey echoes that view. "There has been a significant increase in seasonal instant consumable confection sales," said Beckman. NACS State of the Industry data for seasonal candy showed 10% sales growth in 2011 over 2010.
Candy bars continue to be king €" king size that is. "King-size items have shown significant growth, up 20% versus total candy, which is up 8% in the convenience channel," said Mehmet Yuksek, executive vice president of Perfetti Van Melle. "King-size items are enticing consumers to trade up to a better value."
"Consumers see the value in king-size bars and we have seen a significant increase in the king-size segment over the past year," concurred Beckman.
Price increases due to the rising cost of commodities might dethrone the reign of king-size bars. "The king size might be slowing down a bit because of the price hikes," said Myers. "It€™s hard to quantify that, but it appears that customers are opting for the smaller bars presumably because of the difference in the price."
Other packaging trends factor in convenience or the ability to share. "Customers are looking for convenience in their candy selections," said Ellek. Sharable sizes, bags that close, containers that seal and travel packages all make it easier for consumers to take candy products on the go. "Convenience stores are poised well in that particular area because that€™s what they€™re for: convenience," she said.
Overall, consumers continue to reward themselves with little indulgences. "Because the economy has ongoing challenges, consumers look to the confectionery category as a little pleasure, and they€™re willing to spend a little bit more on premium candies," explained Ellek. "The premium candy category is not suffering because of what we call the 'everyday gourmet.€™"
Gourmet doesn€™t always mean chocolate, reminded Powers. The top candy seller in unit sales at Tedeschi is its private-label gourmet lollipop line with 15 flavors, appealing to both children and adults. "This is our second year with the lollipops, and they have really taken off," he said.
Ellek also pointed out how her local convenience store has "really gotten into the gourmet candy. You would not have seen that five years ago, but they are getting the hint that high-end candy is an affordable luxury."
Beyond indulgence, the ongoing evolution of consumers€™ taste leads to unique pairings in confections. "The consumers€™ palate is maturing, and they are looking for flavor combinations that 10 years ago would have been unthinkable," said Ellek. Mojito mint and melon mint in gum for example.
"The candy consumer is also looking for variety through assortment and a mix of flavors," agreed Yuksek. Some of these combinations include salty and spicy, and salty and hot. "A lot of influence from Latin America has been apparent, and will become even more apparent," added Ellek.
With strong subcategories fueling growth, and consumers viewing candy as an affordable treat, candy€™s future in convenience stores seems assured. "I think the candy category will continue to do well," said Myers. His belief in the category is shown by the expansion of the section in Grant€™s Food Mart.
Ellek remains optimistic about candy in convenience stores, especially if retailers remember to focus on merchandising and product mix. "There€™s always going to be a role for candy in convenience stores, especially with retailers changing the way they do business with more emphasis on foodservice and becoming a destination," she said.
Retailers who capitalize on the category€™s high incidence of impulse purchases will find a sweet future in the confection section. "The future of confection in c-stores is very bright," agreed Hershey€™s Beckman. "Candy continues to lead other segments in impulse sales, increasing basket size and, most importantly, increasing profitability for retailers."
Sarah Hamaker is a NACS Magazine and NACS Daily contributing writer. Visit her online at sarahhamaker.com.