Although some might consider it a cliché, the National Confectioners Association (NCA) 2014 State of the Industry Conference made one thing clear: It?s a sweet time to be in the candy industry, and business is only expected to get sweeter for both suppliers and retailers this year.
?I think candy makers have a reason to be happy,? NCA President Larry Graham said as he kicked off the event, held March 2?5 at the Fontainebleau Resort in Miami Beach, Fla. He went on to note that the confectionery industry has seen 10 straight years of growth despite troubled economic times. Still, Graham urged those in attendance to continue advocating for the industry. ?We really want to encourage you to be politically involved,? he said.
The conference included a special tribute to Graham, who will retire this year following 22 years of service to NCA. He was lauded for his diplomatic skills and achievements such as forming the World Cocoa Foundation, dramatically increasing the NCA?s political presence and developing the annual NCA Sweets & Snacks Expo, which takes place in May.
Graham praised his colleagues, attributing much of his success to their support, and said throughout his career, he never looked forward to retiring. ?I looked forward to the job,? he said.
THE STATE OF CANDY
Candy is ?a big, growing and profitable category,? according to NCA Vice President of Customer Relations Larry Wilson. While business was strong for the candy industry throughout 2013, he said business is on track to be even stronger this year.
In regards to the trends driving the category, chocolate indulgence is a winner, said Wilson, who discussed the current state of the industry alongside co-presenter Leslie Liss, vice president of commercial solutions at dunnhumby USA. Sales of milk, dark and white chocolate all grew in the past year, but hazelnut chocolate saw the biggest jump at 16 percent, driven by chocolate spread products and its popularity with Hispanic customers. Seasonal candy also saw promising growth.
Sharing the results of NCA consumer research, Wilson cited that the number of consumers who purchase candy online increased 3 percent over the last year to 24 percent, and these customers primarily shop at online specialty stores. ?Online has to be part of your strategy going forward,? he said. Interestingly, these consumers say their main reason for purchasing candy online is to buy items they can?t find in person; it?s not to take advantage of the best value for their money. This is something retailers may be able to leverage if they can provide these consumers what they want, Wilson stated.
Consumers today also understand the balance between candy vs. health and wellness. Ninety-two percent believe they as individuals are responsible for maintaining a balanced diet; 75 percent believe candy is a little indulgence for when they want to treat themselves; and 74 percent believe candy can be part of one?s diet in moderation.
?They get it ? shoppers get it,? said Wilson.
To get the most out of candy consumers, conference speakers urged retailers to apply the NCA?s E5 characteristics of candy: experience, emotion, effectiveness, efficiency and environment. Additionally, retailers can retain their best candy customers by getting to know them, rewarding their loyalty and personalizing their experience. ?Candy Champions,? in particular, are extremely valuable because they make an average of 42 visits per year and generate 24 percent of sales.
CANDY & CONVENIENCE
The classic children?s movie ?Willy Wonka and the Chocolate Factory? features a song declaring that ?the candy man can.? But according to Brad Call of convenience store chain Maverik Inc., the lyrics should actually say ?the c-store man can.?
Call, executive vice president at the Utah-based chain and current chairman of NACS, the Association for Convenience & Fuel Retailing, shared insights into both the c-store industry and the candy and snack categories with conference attendees.
C-stores make up 34 percent of the retail universe, and ?everyone is our candy competition,? he said. In today?s highly competitive world and difficult economic times, many c-store customers face money troubles, but the channel is still growing and c-stores remain a top place to purchase candy, according to Call.
Noting that ?snacking is hot,? he described Maverik?s decision to celebrate consumption as consumers gain and burn calories, which fits with Maverik?s brand positioning as ?Adventure?s First Stop.? Overall, Call acknowledged that the c-store industry can improve its reputation for offering mostly unhealthy products, but ?no one wants salads every single day.?
TOO MANY CHOICES?
Recognizing that even health-minded consumers will want a treat now and then, the question becomes what to offer them ? and how much to offer them. If candy consumers have too many choices, is that a bad thing? Barbara Kahn, professor of marketing and director of the Jay H. Baker Retailing Center at The Wharton School, tackled this question.
She pointed to an experiment centered around making multiple jam selections available to consumers, known as the ?famous jam study.? This study suggested that fewer choices are better, as people delay making choices and make worse choices when faced with too many options.
Kahn tried similar experiments with jelly beans, however, and found exactly the opposite.
?That doesn?t ring true with me,? she said. ?People like variety, they want variety. But you?ve got to make it so people can appreciate it.?
In categories with high variety such as candy, very large product assortments can overwhelm consumers, so the key for retailers is to balance actual variety vs. perceived variety. This can be achieved by offering variety, but making it easier to understand by aligning product attributes or giving products some kind of consistent scale, such as calorie counts.
Retailers can also help consumers learn their own preferences by guiding them through different features one at a time, and arranging the product assortment on shelves in a manner that matches the ways consumers categorize products in their minds.
Conversely, perceived variety can be increased for categories with low actual variety by adding verbal descriptions of products (which is most valuable for online shopping); displaying products horizontally to help consumers view products more systematically; adding subcategories; and using interesting names for products, according to Kahn.