Indulge And Be Healthy

Can healthful also be fun? That's sort of the predicament facing candy and confectionery producers today.

On the one hand, the candy and confectionery segment isn't suffering as much as some other non-essential categories, sales-wise, during these economically trying times. Candy continues to be an affordable treat, says Eric Duchene, director of development at Andros Foods USA, Harrison, N.Y.

"Even during an economic downturn, confectionery remains a luxury," he says.

Olivia Tang, industry analyst at IBISWorld, Santa Monica, Calif., agrees, saying where other industries have done poorly, candy has done well.

"Because consumers have less disposable income, they cut back on bigger luxury items and bought candy as an inexpensive luxury that they could indulge in," she says.

On the other hand, adult candy consumers are looking for more-healthful options today, a reality that has cut into candy's annual growth. In its August 2012 report, "Candy Production in the US," IBISWorld says a health trend from 2010 to 2012 tapered growth, as did a rise in the price of sugar. The firm forecasts revenues for the industry to rise less than 1 percent in 2013.

"I think what remains the same — and will always remain the same — is the candy shopper wants innovation and fun," says Barry Rosenbaum, president, Nassau Candy, Hicksville, N.Y. "They're looking for newness, always, but within that newness is a real interest in wellness."

Nassau carries 6,000 specialty items used in private label programs and is the largest importer and distributor of specialty confectionary, he adds.

Do

consider product development that addresses the better-for-you trend.

Don't

discount nontraditional flavors such as chipotle and rosemary in new candy products.

Better-for-you takes off

To ease their guilt, consumers are looking for products that are all-natural, non-GMO or enhanced with vitamins and antioxidants. Regarding the latter, Tang explains consumers are looking for a little added extra from their candy. She cites the rollout of Stride Spark as an example. The gum brand from Cadbury Adams USA, a subsidiary of Kraft Foods, claims to supply 25 percent of a person's daily intake of vitamin B. She also points to interest in candy that has caffeine to boost energy or gum products that carry a seal of approval from the American Dental Association.

In addition, Rosenbaum says consumers are becoming more knowledgeable about what ingredients are better for them — such as almonds and dark chocolate.

"The consumer is actively looking for better-for-you products," he says. "They still want to indulge. They still want to treat themselves, and they still want to enjoy everything that candy represents, but they want to do it when they can, and in as healthy a way as possible."

Tang is quick to point out that sugar-free candy is a more healthful alternative to sugar-laden versions, but Rosenbaum says items here serve mainly a niche: the diabetic consumer.

But healthful isn't everything

Of course, better-for-you options are just one trend within the candy segment. A number of other trends also are underway.

Duchene says licorice and fruit candies with exotic flavors such as pineapple are doing well in his business. Gummies are performing well, too.

Tang says the surge in gummies is because of their versatility. They can be specially designed or specially packaged and perceived as premium while maintaining a relatively inexpensive price point.

Rosenbaum agrees, adding that gummies can be produced in innovative and fun shapes.

Other trends include candies that have a surprise element. On the national brand side, for example, Skittles launched Crazy Cores, which put surprise flavors inside rainbow-colored Skittles. And Hershey's rolled out limited-edition "Inside Out" flavors for Kit Kat and Reese's (the cups came with peanut butter on the outside and the chocolate on the inside).

Speaking of flavors, nontraditional choices such as salted caramel, chipotle pepper and even rosemary are of growing interest within the category, Tang says.

"[This trend] complements the popular foodie and culinary trends," she says.

Sweet-and-salty products are yet another trend — one that has exceeded expectations across the board for Nassau Candy, Rosenbaum notes. He also sees a trend in upscale products being offered throughout the mass market. Traditionally, high-end chocolates have been found in high-end stores such as department stores.

"Today, we're seeing tremendous interest throughout every class of trade to be able to present those products at popular price points," Rosenbaum says. "Because we're a manufacturer, we're able to do that in private label. I'm talking c-stores, big box retailers, mass merchants — there's interest in all of those classes of trade."

Tang points to the improving economy. With more disposable income becoming available, many consumers are willing to spend the money for premium chocolates at a good price point.

Not just for kids

A push toward higher-end chocolate, including products that incorporate nontraditional flavors such as rosemary and chipotle, also ties into a trend of marketing candy to adults. Healthier candy is another example of this trend, as adults are generally the demographic looking for better-for-you products.

According to the IBISWorld report, about 97 percent of children younger than 12 in age consume candy products, making them the leading market for such products. However, with Americans having fewer children, that key customer group is expected to decline, the report adds. The U.S. Census Bureau reports that the number of households with no children increased from 37.3 million in 2000 to 43.6 million in 2010.

"I believe because people are having fewer children, it's become a main driver to shift the candy audience to adults rather than children," Tang says.

Matt Macero, sales executive for The Original Gourmet Food Co., Salem, N.H., says his company's lollipops actually appeal to consumers of all ages and demographics.

"Typically, lollipops are a kids' item, but over 50 percent of our customers are adults," he adds.

But Duchene counters that kids are still a huge focus. For that reason, licensing with properties such as "SpongeBob SquarePants" or any Disney or Pixar characters, for example, remains a popular marketing tactic that works and will continue to work in the future.

Do

consider going premium with chocolate — at a price point that beats that of specialty stores.

Don't

ignore the trend away from lay-down bags — and toward theater boxes and gusseted bags.

Packaging counts

For store brand candy products, retailers not only need to meet today's product-related trends, but also invest in packaging that shows the products off best. Tubs, bags and boxes — what the industry always has seen — are still prominent, Macero notes, but he also sees a trend toward theater boxes and gusseted bags.

"People are getting away from the traditional lay-down bags in the candy aisle," he says.

Tang agrees with the trend toward theater boxes. She mainly sees a trend toward the development of smaller packaging for smaller-sized candies. The idea essentially is portion control — helping consumers tackle that guilt-free indulgence.

However, another reason retailers might want to consider going with a smaller size is to increase the profit margin, she says — and to help them deal with rising sugar prices. The IBIS report forecasts the price of sugar to increase at an average annual rate of 1.7 percent over the next five years.

Duchene also views the squeezable pouch, seen with a lot of fruit snacks for children, as a bright innovation in the candy arena.

In addition to meeting key product and packaging trends, retailers will want to put some marketing muscle behind their candies. Rosenbaum says it essentially involves "putting the candy where the shoppers are," helped along by couponing, scan-downs and multiple display areas.

Retailers also should develop fixtures "that will create impulse buys," Macero adds.

Look what's new

Nice! Dark Chocolate Covered Thin Mints from Deerfield, Ill.-based Walgreen Co. are said to be all-natural and made with 63 percent cacao. They retail in a 5-oz. box.

New from Trader Joe's, Monrovia, Calif., are Trader Joe's Dark Chocolate Honey Mints. Said to contain just three ingredients — honey, chocolate liquor oil and oil of peppermint — the mints are free from gluten, artificial colors, flavors and preservatives. They retail in a 7-oz. flexible package.

Smart Sense Deluxe Mix from Kmart, Hoffman Estates, Ill., consists of butter toffees and assorted hard candies. The candy retails in a recyclable 9-oz. flexible package.

Minneapolis-based Target debuted The Candy Store At Target Filled Gummy Strawberries. The artificially flavored candies are shaped like strawberries and retail in a 9.9-oz. plastic jar.

Source: Mintel's Global New Products Database