From their humble beginnings as little bears, gummi candies have undergone a sea change in shapes with flavor proliferation to match, and just as dramatic has been the sales growth.
“The overall $1.1 billion (measured retail sales) gummi segment is currently experiencing unprecedented growth,” says Jill Manchester, senior vice-president of marketing and brand strategy for Ferrara Candy Co., Inc. She explains the sector had a compounded annual growth rate of 4.3 percent during the past three years.
Driving these results are increased awareness for the sector among consumers as well as retailers devoting more space to gummi items, according to Sangeetha Ragavan, brand manager for Haribo of America, Inc.
“A lot of manufacturers are spending heavily to build the segment,” she adds.
“If we look across the market, the thing about gummies is it’s a flavor or form game,” says Nicole Rivera, director of marketing and innovation for Bazooka Candy Brands. She notes the company has capitalized on this with wearable gummies, such as chains and rings.
Noting the flavor and “fun factor” are critical to the sector, Ragavan says the texture is also an important point of differentiation.
Mitchell Bernstein, national sales director for Vidal Candies USA, says the sector’s biggest challenge is a need to always innovate. “Everyone is looking for that next hot seller and the lifeblood of this industry is new products,” he says.
However, product development is not “a question of throwing it at the wall and seeing what sticks,” Bernstein says. “We think through this. You have to think the same way consumers think. Is the product appealing and is the pack appealing? We always put windows on our gummies because I like to see what I’m buying.”
When looking to extend its offerings outside of licorice and chocolate lines, Gerrit J. Verburg Co. saw a dynamic opportunity, according to CEO Gerrit Verburg.
“A lot of manufacturers are spending heavily to build the segment.” — Sangeetha Ragavan, Haribo of America, Inc.
While the company’s black licorice offerings have a loyal consumer-base, Verburg admits those items do have a limited demand. “Obviously, gummies have a much wider appeal,” he tells Candy & Snack TODAY. “From that perspective, if we want to sell more, that’s the way to go. Gummies are easy to eat and have good flavoring that almost will imply automatic repeat sales.”
As with much of the category, gummies are fairly well segmented into branded lines, commodity products and niche items, according to Lena Mull, area marketing director from Ragolds GmbH.
She tells Candy & Snack TODAY the commodity market will become more difficult to compete in because of decreasing margin potential as these items are mainly differentiated by price. “Therefore, commodities will be dominated by suppliers that can produce cost efficiently — either because of lower quality or labor costs, or by automation of the manufacturing process.”
For branded lines, marketing expenditure will be key, according to Mull. She explains that pressures in commodity and branded items will force some smaller manufacturers either out of the market or lead them to focus more on innovation and niche offerings to succeed.
“Soft candy and non-chocolate continue to have high upsides and will possibly continue to have good growth at the potential risk of some other candy sectors losing some to this space,” says Tyler Merrick, founder of Project 7, Inc.
More widely known for its gum offerings, the company recently jumped into the chewy candy realm with a line of uniquely flavored gummies, such as Birthday Cake and Front Porch Lemonade. (For more on Project 7’s foray into gummies and where the company is heading, see the May/June issue of Candy & Snack TODAY.)
Another important innovation leading to success in the sector occurred well away from the shelf with a move from a starch to gelatin production process, according to Mull. “This offers a better flavor release, higher clarity of colors as well as a better definition of shape,” she explains.
While not exactly an earth-shattering breakthrough, the gummi market is also seeing increased facings of pack types unique to the sector with gusseted and laydown bags experiencing growth, according to Bazooka’s Rivera.
“It’s a value play, if you look at price per ounce in front of store versus back of store section,” she explains. “Our Juicy Drop Gummi gusset bags are almost four times the size at just twice the price.”
Rivera notes laydown bags are up 40 percent in the segment compared with the year prior and gusset options have increased 10 percent in the same timeframe. “Again, these bigger packs help drive growth,” she adds.
For Haribo, peg bags still reign supreme, as the gold packs have become industry icons. In addition, those packs offer an attractive point of entry for consumers seeking value, according to Ragavan.
“When I say value, it’s not price points, but more utility value. It’s more about the quality Haribo offers,” she says.
Verburg also offers up unique packs, as its Freeway line — foamy gummi Monster Trucks, more traditional gummi Wacky Racers and Double Decker Duos, which blend gummi candy and licorice — in boxes featuring lamination inside. Verburg says the company is leveraging these packs because of their popularity in Europe.
“We are transplanting that success to the U.S. market,” he says. “From a retail perspective, it doesn’t matter if they are on a low or high shelf because the boxes are very visible, even though they have a very small footprint.”
But what is it about gummies that lead consumers to pick them up over other chewy items? Sources agree the sector’s ability to shift into novel forms and flavors are the major points of differentiation.
“A candy such as taffy or licorice is almost always the same format, but gummies are malleable from a production standpoint,” Rivera says, adding: “Gummies are able to be something new and different, but in a familiar way.”
Gummies are also capturing sales from the booming sour flavor sector, according to Matt Montei, senior marketing director, confections and seasonal for Wm. Wrigley Jr. Co.
“Sour flavors have also been extremely popular within fruit-flavored confections, and while both flavors are performing well, our Starburst Gummies Sours are outpacing Starburst Gummies Originals in sales,” he says. “In our most recent Shopper Decision Tree research, a new sour break has emerged in non-chocolate candy and we expect this growth to continue.”
Wrigley uses the decisions tree approach to get a better understanding of how shoppers choose items in the category.
“In our most recent Shopper Decision Tree research, a new sour break has emerged in non-chocolate candy and we expect this growth to continue.” — Matt Montei, Wm. Wrigley Jr. Co.
Also taking on the sour sector, Haribo released Twin Snakes earlier this year. The reptile-shaped gummies combine sweet and sour flavors with six varieties per pack, according to Ragavan.
Ragolds’ Mull explains the flexibility of gummies, from a production standpoint, allows manufacturers to innovative, in turn offering consumers a wider selection of products.
She adds that some of the growth is driven by shoppers seeking items for on-the-go consumption as well as indulgent products with better-for-you attributes such as fat free, natural flavors and vitamin content from fruit juices.
When it comes to better-for-you trends, none seems to be gaining traction faster than organic product claims. Capturing this momentum, Ferrara became one of the first major players in the sector — the company accounts for 20 percent of branded gummies volume sales in the U.S., according to Manchester — with the launch of organic gummies under the Black Forest brand.
“Our Black Forest Organic line is off to a monumental start, driving new users to the category at a rate seven times greater than other new non-chocolate confections,” she explains. “It’s also currently driving 17 percent of gummi peg bag growth and ranking in the top 25 percent of all non-chocolate pegged items.”
Manchester adds that repeat purchase rates are high, at 2.8 times that of any other organic snack products.
“Shoppers are looking for alternatives, and initially Ferrara will have success with organic items,” Bernstein says. “But the consumer will have the final say. It’s something that is evolving at this point.”
Ferrara delved into the organic market after recognizing “the opportunity for confections to quickly achieve a 5 to 10 percent share of the overall organic food category based on consumer desires and retailer needs,” Manchester tells Candy & Snack TODAY. The company projects that organic non-chocolate items have the potential to account for $400 million in sales.
To capture this growth, Ferrara invested $25 million to develop an organic product infrastructure.
With an item for every consumer group, the outlook for the sector looks bright.
“As long as people keep innovating and capitalizing on the hand-to-mouth trend, the segment can continue to grow,” Bazooka’s Rivera says. “During the past five years it’s up 9 percent and there doesn’t seem like there’s any ceiling.” CST