Consumers willing to pony up for candy

Candy is a powerhouse category for the drug channel. Candy and gum represent more than 6% of center-store sales, according to the National Confectioners Association, and contribute $3 billion annually to the channel.

Chocolate, which has been a strong category, is experiencing sales deceleration since manufacturers and retailers have passed higher production costs onto consumers.

For the 52 weeks ended Oct. 30, 2011, sales of chocolate candy were up 4.8%, according to Jenn Ellek, a spokeswoman for the National Confectioners Association. “That’s half of the sales increase the category posted a year ago,” she said. Ellek also said the drug channel saw the strongest sales in the segment.

While manufacturers have put the brakes on limited editions, key brands continue to introduce extensions that boost category sales. Mars Chocolate North America recently introduced new flavor extensions to its M&M and Dove brands.

In the drug channel, Ellek said sales of individual candy bars were up 17% for the same time period, while king size bars also saw strong movement. “The increases are probably due to promotion,” she said. CVS has been running a buy-two-get-one-free candy bar promotion for months.

Sales of licorice also have been strong. “There’s been a lot of innovation in the category,” Ellek said. “British-style licorice and Australian-style licorice have become popular with consumers, and all-natural and organic licorice is a growing segment. The category isn’t just Twizzlers anymore.”

Novelty candy, both in chocolate and nonchocolate, also is a perennial growth segment. “That’s where the real innovation is happening,” Ellek said. She said consumers, while deferring on large purchases, still are willing to pony up for smaller indulgences.

Evergreen licenses are strong in novelty. This year CandyRific has a number of new “Star Wars” products, including M&M’S brand Star Wars character flashlights with clip.

The article above is part of the DSN Category Review Series. For the complete Candy Buy-In Report, including extensive charts, data and more analysis, click here.