Candy Aisle Poised for Growth Despite Economic Pressures
INDIANAPOLIS — Economic pressures are affecting how today's consumers shop retail, and the candy and snacks aisle is not immune to the impact.
When asked how they are feeling financially today vs. where they were about a year ago, few consumers said "the same," which points to "a little bit more of a stabilization," according to Anne-Marie Roerink, president of 210 Analytics, a market research provider.
At the same time, a higher percentage of consumers said they are worse off financially today than better off, which points to "a great concern out in the marketplace" about grocery and restaurants, and about being able to afford treats and being able to afford life altogether, she noted during the "State of Treating" session at the 2024 Sweets & Snacks Expo, held last month.
[Read more: U.S. Consumers Continue to Enjoy a Snacking Lifestyle]
The reason is not necessarily inflation — which is around 2% currently. The problem really is the cumulative impact of all the inflation over the past several months. Citing Circana data, Roerink pointed out that the average price per item in every food and beverage segment has increased 33% to 35% compared to 2019.
"I have to imagine there are very few people here in the room that are making 33% more than you did in 2019, and that means there is simply a lot of pressure on what people have to spend and how they have to balance," she said. "Oftentimes, people still look at convenience and nutrition, and what they're in the mood for or whatever the family is in the mood for but, at the same time, it is about price and promotion."
Things are looking up, Roerink emphasized. Examining consumer confidence, 35% of consumers believe they are going to be a little bit better off next year than they were last year — and people who feel a little bit more optimistic are more likely to spend a little bit more freely, she noted.
"[Consumers are] starting to engage more with restaurants again and they're really starting to live life a little bit more the way they did in 2019," she said.
The Candy Aisle
Consumers are not wrong in their belief that prices are up, and that is true for the treating categories. According to Circana research, 70% of consumers believe confectionery is more expensive than pre-pandemic.
"Cocoa prices this year have seen tremendous increases, so we are not quite out of the woods yet. The only good news in that is we are not the only ones," Roerink said. "But if you look at chocolate, it is up 37% compared to 2019 and nonchocolate candy is up 44%. Those are some robust increases and that means we are seeing manufacturers and retailers working together to really engage consumers in different ways. It might be more of a package size variety. It might be running more aggressive promotions or more promotions in general, and secondary displays."
Noting that higher prices are the reality for consumers, Roerink called out candy's triangle of success: affordability, favorability and permissibility. Notably, 86% of consumers believe it is fine to occasionally have a treat.
As for affordability, candy has always fared well against other categories when it comes to affordability, but that perception is shifting. In 2023, 74% of consumers agreed that chocolate and candy are more expensive but still affordable. That number dropped to 55% this year.
"This is something to keep in mind; consumers are feeling a little bit more pinched when it comes to buying our category and that's why we see a lot of unit and volume pressure in our category," said Roerink. "Over the past year, it also has led to a tremendous amount of change. Forty-one percent of consumers have changed the way they engage with confectionery as they're shopping."
The top changes made are:
- 44% buy chocolate/candy less often;
- 30% buy what is on sale;
- 26% buy smaller pack sizes;
- 26% buy larger pack sizes; and
- 25% buy only their favorite products.
Overall, the confectionery category is still a strong and powerful category, though it cannot completely escape the pressures, Roerink noted. 2023 confectionery sales reached $35 billion and 2023 dollar sales were up 8.9% vs. a year ago.
While these numbers are good, she explained that there are three ways to drive growth:
- You can get more consumers to buy.
- You can get consumers to buy more often.
- You can get consumers to spend a little bit more per trip.
"At the end of the day, there's three levers of growth and depending on where you're sitting and what you want to accomplish, you tend to focus on one of the three or all three," she said.
The 2024 Sweets & Snacks Expo took place May 14-16 at the Indiana Convention Center in Indianapolis. The annual trade show features new product launches, business-building solutions and merchandising innovations. The event is sponsored by the National Confectioners Association, the leading trade organization for the $48 billion U.S. confectionery industry.
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