Candy Industry Rises to Meet Its Challenges

MIAMI BEACH, Fla. — First-day attendees of the National Confectioners Association's (NCA) 2015 State of the Industry Conference included numerous companies that compete for market share and consumer dollars, but according to new NCA President and CEO John Downs, that's fine because competitors are also partners when it comes to overcoming industry challenges.

"This industry has an abundance of riches," Downs said during his opening remarks, which also touched upon the art and science of candy making, and the varying techniques and expertise suppliers have.

Retail Insights Thought Leader Todd Hale and NCA Vice President of Industry Affairs Larry Wilson delved deeper into the state of the candy industry during the Tuesday morning business session.

"For many industries, flat is the new up," Hale said.

The candy industry can aspire to more than just flatness, however. Confection growth is improving ahead of the industry sector as a whole, and while shoppers buy candy across many outlets, convenience stores stand out as a big driver of category growth.

Wilson noted that a recent trend to be aware of is the 30 percent of people who now report buying candy online, up from 24 percent in 2014 and 21 percent in 2013. The primary reason for online purchases is simple: Consumers are going after what they want that they don't find on local store shelves. "They're looking for specialty items," he explained.

Regarding ways in which suppliers and retailers can reach more consumers, Wilson said that while market penetration is generally equal in all demographic groups, there is less demand for candy in non-white households, leaving room for improvement there. Additionally, today’s focus on health and better-for-you products "is not a passing fad" and while shoppers do feel responsibility for their own eating habits, they appreciate a helping hand, he remarked.

Wilson also highlighted notable growth drivers in today's market, including:

• Frequent introduction of new items that aren't just line extensions;
• Premium products;
• Hybrid branding, such as the M&M'S chocolate bar; and
• Seasonal growth, which is outpacing the growth of everyday candy purchases, although everyday candy leads in actual sales.

To close out the Tuesday morning session, NACS President and CEO Hank Armour and NACS Chairman Steve Loehr, vice president of operations support at Kwik Trip Inc., presented an overview of the convenience channel. With c-stores making up approximately a third of all retail outlets, they are "in virtually every community in the United States," Armour said.

Along with candy, foodservice and packaged beverages are seeing continuous and substantial c-store growth as cigarettes decline (while remaining too big to lose focus of). Discussing major strategic issues, Armour cited government intervention, the c-store industry's image acting as an impediment to growth, the cost and future of payment systems, and the decline of historically core strategies.

The National Confectioners Association's 2015 State of the Industry Conference continues today and concludes Thursday morning.