Chicago — While seasonal candy tends to attract the limelight, everyday candy is an enormous and growing opportunity, according to latest NCA Sweet Insights research and data.
Introducing the ground-breaking report at an industry briefing this week, Larry Wilson, the NCA’s vice-president, customer relations, first established that in-aisle confections are the third most profitable item in supermarkets behind gum and soup, generating 65 cents per unit in adjusted gross profit.
Examining the numbers in more detail, co-presenter Larry Levin, executive GTM practice leader for IRI, said confectionery outpaced growth in GDP in each of the past four recessions, and while consumer packaged goods are currently growing at two percent, confectionery is growing at three percent and is expected to add more than $6 billion is U.S. sales during the next five years.
However, said Wilson, as encouraging as that is, it must be recognized that everyday candy accounts for 78 percent of sales, and its strength is felt across most channels, including higher counts in drug and c-stores. He added that everyday candy business is more profitable than seasonal, especially when regarding front-end sales.
Referring to new product introductions, which are often seen as the lifeblood of the industry, Levin pointed to consumer research revealing that only 30 percent of shoppers actively look for new items, which means, he said, their needs expectancy must be met with quality, innovative items.
But, he warned, new product launches are fraught with problems, not least the failure rate showing that out of 1,900 new items, fewer than than 500 hit $10 million is first-year sales. He further cautioned that second and continuing year support is vital, with data revealing that support in the second year drives disproportionate success.
Wilson added that when looking at items, including new products, there is no one-size fits all for candy sets, with research proving that regional tastes must be accounted for when selecting product mixes.
Providing a framework to maximize everyday sales, Wilson and Levin unveiled five principles — Experience, Emotion, Effectiveness, Efficiency and Environment, with key takeaways for each principle. They revealed that confectionery has one great advantage over other categories: Candy blends experience and emotion with corresponding great reaction from consumers.
Wilson said, for example, that leveraging shoppers’ in-store experiences will win shopper loyalty, which is becoming increasingly important in today’s economic landscape. By making associations with childhood, nostalgia, family and celebration, emotion can be a powerful way to connect with shoppers.
A full report, Maximizing Everyday Business will appear in the next issue of Candy & Snack TODAY, and research details are available from the NCA.
Caption: The NCA’s Larry Wilson (left) with Larry Levin, of IRI, co-presenters of “Maximizing Everyday Business” in Chicago.