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09/23/2022

Sugar-Free Confectionery Products Gain Momentum

Growth in the segment is attributable to innovation and strong in-stock rates.
Danielle Romano
Managing Editor
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NATIONAL REPORT — Consumers want to satisfy their sweet tooth, but don't always want the dietary impact that's a result of indulgent decisions. Because of this mindset, the popularity of  sugar-free chocolate and non-chocolate candy continues to grow.

A recent webinar entitled "Understanding the Better-for-You Candy & Confectionery Market," hosted by Candy Industry Magazine and sponsored by Cargill, explored key trends in better-for-you candy, particularly when it comes to sugar-free confectionery items.

IRI data shows that over the past year, sugar-free chocolate and non-chocolate is outpacing the category in both dollar and volume sales. Year-to-date dollar sales for sugar-free chocolate was up 20.2 percent vs. 7.4 percent in chocolate. For sugar-free non-chocolate candy, the segment was up 18.2 percent vs. 12 percent for non-chocolate candy.

"Volume sales of sugar-free chocolate have nearly doubled since 2017. As we look at sugar-free non-chocolate, [sales are flatter], and we did see a dip in 2020 during the pandemic, but we're starting to see a more positive trajectory for sugar-free non-chocolate," said Dan Sadler, principal, client insights for IRI.

The growth of sugar-free chocolate and sugar-free non-chocolate is twofold, according to Sadler, who pointed to item innovation and in-stock rates as key factors:

  1. Item innovation — There are 23 percent more sugar-free items on the shelf, which is attributable to innovation of products boasting sugarless, no sugar added or low sugar claims.
  2. Strong in-stock rates — "A challenge in the industry in the last six to nine months has been supply chain issues and a lot of out-of-stocks, but we're seeing really strong in-stock rates for sugar-free chocolate and non-chocolate," he said.

When it comes to getting to know who the sugar-free confectionery consumer is, IRI found that these buyers are willing to pay premium prices for the benefits that sugar-free confectionary possesses.

This cohort also commands higher basket rings. A basket featuring sugar-free confectionery items rung up at $79.85 vs. $69.23 for an average candy basket ring.

"Here's the money's moment: when sugar-free candy is not in the basket, the ring falls to $47.54, so, this is indeed a segment that needs to be heralded by the industry to drive variety and to drive alternative choices to consumers," Sally Lyons Wyatt, executive vice president and practice leader, client insights for IRI, told the audience.

She recommends co-promotions and targeted communication to ensure consumers continue to think about sugar-free candy. This can occur across multiple product categories, including low-calorie soft drinks, nuts/seeds, protein/nutritional bars, and meat snacks/jerky, to name a few.

Across channels, more than 90 percent of sugar-free confectionery volume is sold through grocery stores, drug stores and mass merchandisers. In fact, sugar-free chocolate exhibited both dollar and volume year-to-date growth in all channels except for dollar stores and club retailers. Sugar-free non-chocolate, on the other hand, posted year-to-date dollar growth across channels, with volume growth displayed within grocery stores and e-commerce.

Sadler and Lyons Wyatt had these final tips for success with sugar-free confectionery products:

  • Invest in omnichannel assortments by monitoring, and measure channel dynamics and ensure incrementality vs. cannibalization.
  • Promote sugar-free confections throughout the year in addition to holidays highlighting its benefits.
  • Drive for additional placements throughout the store for impulse purchases.
  • Further customize communications to be relevant and resonate with various types of consumers via targeted and/or known buying behavior activation.
  • Evaluate price trends, especially sugar-free chocolate where elasticities are high.
  • Continue to innovate to provide variety to the segment and generate excitement.

More information on the "Understanding the Better-for-You Candy & Confectionery Market" webinar is available here.

About the Author

Danielle Romano
Danielle Romano is Managing Editor of Convenience Store News. Read More