Sweets Sales Get Sweeter

While many industries are facing a sluggish market, the candy segment continues to experience sweet sales. That resilience is helping retailers in all channels see the benefits that candy sales can offer, while candy companies continue to expand the options with new lines and flavors. P-O-P companies are also taking a more creative approach to display materials by emphasizing that dressing up these impulse-oriented products can lead to sizeable profit opportunities."Candy sales depend on the product's impulse nature and on impulse-type merchandising to increase sales," says Jim Corcoran, vice president of trade relations for the National Confectioners Association (NCA) in Vienna, Va. "You can't just merchandise it in an in-line gondola, because shoppers don't always walk down that aisle. You need to put it in a high-impulse area to maximize sales and profitability of the category." He also notes that candy sales are known to increase more based on display and visibility, rather than on price reduction.Mass merchants seem to be making efforts to put candy in the spotlight. Wal-Mart is testing its Kid Connection bulk candy department, normally used in its grocery-only Wal-Mart Neighborhood Market stores, in several of its super-center stores. The departments, ranging in size from 500 to 900 square feet, feature higher-priced products than the regular candy aisle, according to industry reports. Meanwhile, Target has expanded its candy department to take advantage of current trends. It is offering a wide range of gift packs, tins and licensed products."These expansions represent a tremendous increase in opportunity for the confection category," says Corcoran. "When those kinds of retailers put that kind of space, investment and devotion into it, it leads to an increase in sales -- and it leads to other retailers following that lead." Space for candy products is increasing in several channels, adds Lory J. Zimbalatti, marketing manager for New England Confectionery Co., Cambridge, Mass., maker of Necco wafers and several other brands. "In general, it has increased because of profitable gross margins."Sales Rise Despite EconomyCandy sales grew in 2001 despite an early Easter, the terrorist attacks, an anthrax scare (during the Halloween selling season) and a slower Christmas holiday season. In fact, the category grew despite slower sales at most of the key holiday periods, according to the NCA's annual report. Chocolate candy sales increased 3.6%, it reported, while non-chocolate sales grew 0.9% and gum sales rose 6.4%. Overall, the industry grew by 2.9% to $9.4 billion in sales in 2001.This moderate but consistent growth has typified the industry's sales for the past five years, Corcoran says. "It's really fantastic to have such steady growth despite the events in the market, especially for such a high-margin product." Just as significant, NCA research indicates that all channels (supermarkets, mass merchants and drugstores) experienced growth in 2001. The group's annual report also noted that "Candy and gum grew at faster rates than any other major snack category and enjoyed a healthy year compared with the soft drink and cereal categories."Candy makers still face significant hurdles in gaining retail space. A key obstacle is the low price point for candy. Despite its high margin, it must vie against higher-priced products for merchandising space. "It's a small price point, but it's tremendously profitable, and it's a large business," counters Corcoran.The sheer quantity of new products also makes it difficult for any one item to gain attention. And clean floor policies make it tougher to find real estate. "The concern is that stores are getting crowded," says Doreen Perini, product manager at Just Born Inc., Bethlehem, Pa., maker of Peeps, Zours and Mike & Ike candies. "Candy needs to stand out to consumers with attractive displays, but before that, we have to get the displays up in the stores. That's a challenge for every category."Novelty Candies GrowThe rapid growth and high turnover for trendy novelty and licensed candies makes it critical for buyers to make the popular choices on hot products. Novelty products grew 8.7% in 2001, according to NCA reports. It marked the sixth straight year these products have grown faster than the rest of the category. The products offer a higher register ring while maintaining candy's high margin, Corcoran points out.Novelty candies rely on unique packaging, marketing, shapes or flavors. "Interactivity" is a growing trend, with items often incorporating a toy into their design to provide longer play value or distinctiveness. The candies also have to cut through the clutter by appealing to kids' unique desires. Novelty candies promoted at the 2002 All Candy Expo this summer in Chicago included New England Confectionery's Stinky Feet Candy, Squire Boone Village's Atomic Fizzzion Candy and Moon Crater Candy, Family Sweets Candy's Toxic Waste Hazardously Sour Candy, Gimmie Candy's Germ Juice and Bug Gunk, and CandyRific's Slinky Finger Pops.Such items tend to be promoted in bright, colorful counter shippers that sell out quickly and allow buyers to bring in another new item, marketers say. "It's a very competitive market with a focus on packaging to create big, oddly shaped items that sell the products," says Katherine Owens, vice president of business development for Sherwood Brands LLC, the Rockville, Md.-based maker of Gum Powder and Christmas Coal bubble gums.Licensing Is HotThe other hot area, which can be linked to novelty candies, is licensed brands. "Everybody is looking for licensed products," says Dave Jupp, director of packaging and design at Flix Candy Inc. The Niles, Ill.-based company recently produced Spider-Man candy to tie in to the blockbuster movie and sold out its production run.Maramor Candy Co.'s license from the National Hockey League to produce hockey puck-shaped chocolate candy was also successful this past year. "It was great for us, especially in NHL cities," says Scott Sher, president of the Columbus, Ohio-based company. "It opened a lot of doors for us that we couldn't get into before." The company offered an orange floorstand and a countertop unit, with the floorstand gaining the most comments. "It makes a splash, and that's important with licensed candies," Sher says. "You can't just stick a hockey puck on the shelf. It's got to have some strong P-O-P and be displayed well to be successful.""Licensing is growing and it will continue to do so because it is a tremendous engine for business today," agrees Stephen Wolff, president of Ovalette Inc. The New Rochelle, N.Y.-based company holds licenses for artwork by painters including Monet, Picasso and Van Gogh. The company packages its chocolate mints in small tins depicting the artists' works and sells them in museum gift shops. "That is an easily expandable license that we see growing steadily." The high-end tins serve as display packaging, he notes. "Collector tins are definitely a growing market that we see continuing to be strong."Sherwood Brands has also had considerable success with licensed products, including a recently introduced Got Milk? Candy utilizing the popular slogan from The California Milk Processor Board. It also licenses Pepsi, Muppets and Norman Rockwell products as gift items that sometimes include candy. "Buyers are very receptive to familiar brands expanding with new ideas," says Owens. "They're looking for what has been successful in the market and what consumers are comfortable with already. Licensing also brings more equity to the original brand by expanding its visibility."Licensed products appeal to buyers because they lend themselves to expansive in-store marketing programs that can boost total-store sales, she notes. Last year Sherwood Brands overhauled its entire line of Easter baskets to feature Muppet products. That allowed the line to tie in with other Muppet products and create a total environment. "Buyers are looking for entire programs that let them produce a collection of products. So when we look for a license, we don't look at just one SKU, we want to license the brand for as many product categories as we can."That expands the company's value to the seasonal buyer, she notes, who often is different from the candy buyer. The company now markets Muppet products for Easter baskets, holiday novelties, lollipops and Valentine's Day cards with lollipops attached. "We can show the buyer that we can provide seasonal items throughout the year and create a continuing program, not just one SKU for one season."The key to strong licensed marketing, stresses NCA's Corcoran, is to display the license and product type in equal measure on packaging and displays. "Displaying the license isn't enough to attract shoppers," he says. "The product has to be really unique to sell on that basis alone. You need a strong tie-in to succeed, so you have to select your partners well."Such a tie-in can be seen in the recent introduction of Butt Ugly Martian candies from Amurol Confection Co. The Yorkville, Ill.-based company produced three products to tie in with the children's animated TV show: bubble gum shaped like the three major characters, two-sided sour candy that reflected the characters' dual personalities, and a blueberry-flavored liquid that replicated the aliens' ability to take liquid form. Amurol staffers watched episodes of the show before creating their candy designs, notes Laura Hess, marketing assistant.Packaging Drives SalesPackaging plays a key role in both novelty and licensed products, and in some cases it serves as the driving force. "Packaging and merchandising work together as P-O-P to attract customers," says NCA's Corcoran. This is especially true for tinned candy, which is seeing growing sales. Both tins of mints and larger collector tins are growing in popularity.Marketers at Vitech America Inc. travel to Asia and Japan a few times each year and bring back new packaging ideas that can be Americanized, says Jerry Lessard, marketing director at the Kent, Wash.-based company. "Tins still are all the rage, in any shape, even dog-bone shaped," he says. That includes mini tins that fit in a pocket or purse, as well. "The quality of the package is half the battle for candy sales. You have to attract consumers to the product so they buy it. Then they have to enjoy it enough to come back." The company tends to use countertop displays for its Dropz, Sqyntz! and Myntz! brands, but as the products' flavor options have expanded, marketers have begun offering floorstands to present the range of flavors. Vitech also recently introduced a power wing that combines Myntz! and Sqyntz!Vitech has also launched a major sampling effort using countertop displays. "Sample packets are becoming a major trend across the industry," Lessard says. "They have a more significant impact on sales than any full-page ad can have. Sample packs cost squat, and if they convince a shopper to buy a tin, they're well worth it." The challenge is gaining space at the checkout stands to make sampling effective, he adds. "It can be expensive to get that space, but it's well worth it. You need great exposure."New package ideas can also help boost a category that begins to decline, which has happened with breath-freshening mints. Its double-digit growth of recent years has slowed in favor of new high-flavor, longer-lasting gums, NCA reports. To stem that tide, Vitech has introduced a thin, egg-shaped package for its Dropz breath fresheners that fits easily into a purse or pocket.Ovalette introduced its new Flip-a-Mint brand in June with a thin, pocket-size package. The package fits neatly inside an oval-shaped display that features two to four stacked units for countertop usage. "Package, display, display box and wire merchandisers all have to work together as one integral program of merchandising to make the product effective in a variety of environments," says Wolff. "Retailers have different needs in each channel, and you have to meet those needs."The need to attract attention extends to the display shipper, adds Just Born's Perini. "You can't have a displayable brown case any more. Those cases are our main advertising, so we're working to ensure they are as attractive as possible. They have to look good for the store, but they also have to communicate the brand because that may be all the display material you get."New Products ProliferateAs packaging, licensing and new products expand, so do the special occasions on which such products are purchased, Perini adds. Once an Easter specialty, Just Born's Peeps are now offered in styles for Valentine's Day, patriotic holidays, Halloween and Christmas as well. The company is also introducing new flavors. This year for Halloween, it has added Peeps Cocoa Bats, which will ship in a 24-count case and a 72-count floor display. The product follows the introduction of Vanilla Ghosts last Halloween. And it is introducing four-piece Spooky Cats and eight-piece Pumpkins to give to trick-or-treaters."We aren't going to leave our mainstays behind, but we still need to move forward to build our brands," says Perini. But gaining that additional space at new times of the year takes a strong message, she notes. "We have to have our selling story really buttoned down and present how the products will benefit the store. That means we have to do our consumer research upfront and show that the retailer will get quick turns and higher sales and profits. A P-O-P program can be a big part of that overall message."Retailers have an incentive to buy into new merchandising programs that can add new products with a small commitment, stresses Mike Grindstaff, trade marketing director for Chupa Chups USA Corp., Atlanta. "New products are a staple of the candy department, but chains more and more are locked into a planogram and are changing their sets less frequently," he says. "So they have to be more speculative with what they put into displays and at the checkout, because products don't get onto the shelf until they prove themselves."Sherwood Brands' Owens agrees. "Retailers are always trying to create more retail space, and displays are a great way to do that. And especially in the candy category, buyers have to be attuned to what's coming next and want to have it in their stores, because new items attract customers who are looking for new things. If the store has a reputation for carrying new products, consumers will come in to see what's new this week and the retailer will become a destination store."Channels Are ExpandingIn fact, the types of stores carrying candy are expanding along with the types of candies, especially in licensed and novelty areas. "There really is no retail outlet where you can't sell candy," says NCA's Corcoran, noting that candy lines are being sold in clothing stores, flower stores, sporting goods stores, home improvement stores and department stores. "Today, if there's a cash register, candy will be for sale."Candy has long been a strong seller in theme parks, and this year Six Flags Inc. agreed to sell Chupa Chups lollipops specially branded for specific rides and park sections. The candy maker also is offering joint promotions to win free tickets to the parks inside multi-packs of the candy."Gift stores, toy stores and department stores that never carried candies are now carrying some of our novelty and specialty candies because the products do well as gifts if they're displayed well," says Rick Conway, ceo of Squire Boone Village Inc. The New Albany, N.Y.-based company makes such treats as Rock Crystal Candy, offered in acrylic counter displays that include a front panel with samples of the colorful candies. The company's test-tube candies hold colorful granular candies and are displayed in acrylic test-tube holders that attract attention. "Stores that wouldn't put in a line of candy bars will take these, and many have been surprised at the profit and sales they can generate," he says.The candy category has great potential for expansion, notes Corcoran, if retailers are willing to merchandise the products effectively. "Visibility produces sales, and usage occasions can be increased easily, which isn't true for many categories, even in grocery stores." No matter how well grocery stores merchandise orange juice, for example, most people won't drink more than one glass a day, he points out. "That's not true with candy, which can be a gift, a kid's treat or an impulse buy."New Display EnvironmentsMarketers are creating display ideas to fit the new channels and new locations. Just Born, for instance, has had success with displays in Wal-Mart's video department, playing off the popularity of Mike & Ike and Hot Tamales in movie theaters' candy counters. The company is also working with video rental stores to create displays that generate the same impulse buying. "The candy department itself isn't growing in size, but we're finding other placements throughout the store," says Perini. "Most of the displays we do are geared to other locations besides the candy aisle."As a result, marketers are looking at new types of displays beyond the basic corrugated promotional piece, at least when budgets will allow. "You have to think in terms of what will make the display most attractive to the target audience of adults, teens or kids, depending on the product," says NCA's Corcoran. "The state of mind that is created for the product will depend on the merchandising."Marketers at Squire Boone Village are big proponents of flashy displays with movement and color, says Conway. The company creates longer-lasting displays for specialty stores that achieve strong results. This includes an upscale bubble-light fixture for its Rock Crystal Candy. "Our own numbers show that upscale displays that draw attention through visual stimulation, activity, light and color increase sales 5 to 10 times and quickly pay for the display."Flexibility Is KeyBut other channels want fast-moving displays they can discard when empty. In fact, one trend has been to produce smaller and even quicker-turning pieces that offer flexibility in placement. For instance, Chupa Chups introduced its Smint line of mints with a display that serves as a floorstand, power wing and countertop unit in one. "It's more efficient for us to use one display so we can learn how retailers want to use it," says Grindstaff. "It would have been more profitable to design it only as one size, of course, but this lets the brand evolve and find the best configuration.""We're reducing our counts as much as possible to streamline the space we take up," Grindstaff says. "Retailers are demanding it, because they're not willing to take multiple weeks of inventory. So our goal is to make our pieces as impactful and efficient as we can so they turn quickly and leave a

Sweets Sales Get Sweeter

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