Chicago — Consumers are searching for value — and “value isn’t about ‘cheap’ — it’s about making my life better,’” Larry Levin, executive vice-president, industry insights at Information Resources, Inc., said during Tuesday morning’s keynote at the Sweets & Snacks Expo.
evin teamed with Larry Wilson, NCA vice-president of trade relations, to discuss opportunities for unlocking growth in candy and snacks in a two-part program.
According to Levin, total store sales in 2013 increased 2.3 percent for candy and 4.5 percent for snacks from the year prior, driven by consumers’ search for products that improve their lives. In addition, shoppers are shifting from grocery to dollar stores, he said, noting dollar store snack sales reached $829 million, up eight percent from 2012.
And the potential for growth is enormous: Snacks are the second most profitable item and candy, 11th, across more than 100 categories with snacks logging $42 billion in sales in 2013 and candy, $33.6B, according to Levin and Wilson.
Because the snack business is fiercely competitive, Levin advises: “The keys are increasing the shopper experience, which can increase sales 5.5 percent and dwell time by 30 percent.” He recommended leveraging megatrends: ethnic, organic, on-the-go and local items.
Wilson added: “Candy has 98 percent household penetration, so if you’re not putting your people against this business, you’re missing opportunity.”
Levin called out six consumer segments and their attitudes toward spending: optimists, cautious and worried, downtrodden, carefree, savvy shoppers and startups.
Savvy Shoppers Up Close
Understanding and building a durable connection with upscale consumers are critical next steps in driving candy and snack sales, according to Levin.
The reward for doing so is huge: This group comprises 15 percent of all consumers, who drive 67 percent of growth in candy and 20 percent in snacks, Levin said. Furthermore, one in three of this consumer’s baskets contain both candy and snacks.
Addressing attendees yesterday morning in part two of his keynote, which built on the presentation he made Tuesday, Levin asked “Who are these consumers?”
He went on to explain they are between 45 and 65 years old, have an annual income of more than $100, 000 and live in the metropolitan areas of San Francisco, Washington, DC, Minneapolis-St. Paul, Green Bay, WI and Denver. They prefer salty snacks and non-chocolate candy and shop at stores such as Safeway, Inc., Raley’s Supermarkets and Sprouts Farmers Market. On average, they spend 45 minutes each week preparing to shop.
Seven shopping characteristics of these consumers are integral to crafting a personalized experience for them, according to Levin’s co-presenter, NCA Vice-President of Consumer Relations Larry Wilson. “They pursue value, so variety packs, promotions, and everyday pricing strategies attract them,” he explained. “They’re into health and wellness, so they consume confections in moderation, and they like premium products.
“These consumers are well-educated, and appreciate retail opportunities where they can engage and learn about ingredients and products,” Wilson continued. “They shop multiple channels: You need to understand their trip mission, why they are shopping, and because they also shop online, you need to become part of their shopping experience before they shop.
He added these shoppers seek variety when they indulge: They like to sample, and experiment with items, flavors and ingredients. “You need to leverage that desire for variety,” Wilson urged.
Acknowledging that only seven of the 1,900 completely new UPCs earn more than $100 million in sales, Levin said to succeed, innovation must deliver on three key points: making life more manageable, addressing wellness, and creating excitement. “Those products are faster, easier and simpler; offer ways to be healthy longer; and bring indulgence and surprise, stimulate or soothe the senses, and are customizable,” he explained.
Wilson noted that of more than 280 items submitted to this year’s Most Innovative New Products Award competition — 24 percent more than in 2013 — the majority focused on sharing and wellness megatrend ingredients: superfoods, grains, nuts, vitamin enrichment, real fruit juice, dark chocolate and sea salt. “The successful ones leverage those trends with excitement,” he noted.
Caption: (top) Larry Levin, of Information Resources, Inc., details the differences in today’s consumer demographics and explains how to reach savvy shoppers. (below) The NCA Vice-President of Customer Relations Larry Wilson shares the profit potential and strength of the candy and snack categories.