While candy is a strong category throughout the year, there are four impressive spikes in both incremental and base sales as Valentine’s Day, Easter, Halloween and the end-of-year winter holidays roll by. The grocery and supercenter channels are seasonal rock stars, but many specialty stores now take advantage of the nostalgia and excitement that surrounds the seasons.
America loves its candy seasons. Seasonally-themed candy, whether in shape, flavor, packaging or other, generates more than $6 billion in sales and has been a solid performer of category growth in recent years. With its high operational efficiency and opportunity to prompt trial, seasonal can be a great way to drive both short-term and longer-term sales and revenue.
Household penetration is high, at 97 percent for seasonally-themed chocolate and 88 percent for seasonal non-chocolate. Additionally, seasonal gets people in the store with above-average trip growth, while many other categories around the store are seeing trip contraction. These are all important reasons for the specialty channels to get involved in the candy seasons as well.
Specialty stores, such as Whole Foods, Sprouts and Trader Joes, often cater to their core audience with organic and free-from options in popular seasonal candies or items using natural ingredients. Stand-alone candy stores see impressive sales spikes in novelty candy, both chocolate and non-chocolate and heavily play on the gifting occasion.
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In deli, flavorful and spicy cuisines are added to the usual lineup of rotisserie chicken and sandwiches. In produce, hot peppers are growing double digits. The number of spicy marinades, dressings, desserts and even alcoholic beverages are growing at their fastest rate ever.
Millennials are a driving force as they prefer sophisticated combinations incorporating hot and spicy flavors. Beyond the heat, Millennials seek out complex and flavorful blends, whether purchasing nuts, snacks, chocolate or gummies.
Experimentation of unexpected flavor combinations is popular, with shoppers hearing about tastes that used to be obscure or unknown like ultra-hot Ghost pepper now on popular foods and cooking shows. Tabasco’s new Scorpion Sauce, its hottest variety yet, sold out online in one day – it did not even make it to store shelves.
These flavor trends are growing in candy and snacks as well. In fact, Mintel found that snack foods showing the strongest category growth were for hot and spicy foods, followed by prepared meals and sauces.
Looking to spice up your candy and snack aisles?
Here are some of the highest scoring hot and spicy entries by category.
Thai Satay Bar
Chili Crunch Bar
Chocorocks Hot Rocks
Dark Chocolate Covered Flame Raisins
Duke’s Cajun Andouille Smoked Shorty Sausages
Cinnamon Spice ProBurst Bites
Sweet Heat Starburst
Sweet Heat Skittles
Extreme Heat Worms
AM Hot and Spicy Breakfast Sausage
Gouda & Romano Cheese with Cracked Pepper Quinoa Chips
Korean Barbecue Chips
Tandoori Spice Pita Chips
Sriracha Chili Kale Chips
Mango Chipotle Macadamias
Honey Sriracha Macadamias
Wasabi Ginger Protein Chips
Honey Habanero Jerky
Jalapeno Meat Stick
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Lollipops generate more than $380 million in sales annually, with innovative new varieties adding millions of dollars each year. Variety is key in this segment. It takes more than 200 lollipop varieties to represent 90 percent of the total category sales. Shoppers use lollipops for gifting, crafting and treating themselves and others to a fun, new or nostalgic treat.
Lollipops have the great potential to transform a regular product into something with premium potential. Just like chocolate and other candy, the lollipop segment is experimenting with fun and daring new flavor combinations. While traditional fruit flavors, such as cherry, blueberry and strawberry continue to ring up the bulk of the sales, how about watermelon chili, cotton candy, tamarind, mint fudge or vanilla creme marshmallow pops?
Other innovation comes in the shape of the lollipop. Manufacturers are also increasingly developing specialty lollipops for the four big candy seasons as well as secondary occasions, like the red, white and blue American holiday lollipops. Other trends involve customization, a trend we see play out in many food categories, with make your own flavor combinations or changing flavors. Or how about glow-in-the-dark sticks?
Retailers are experimenting with creative merchandising for gourmet lollipops. Lollipop displays are popping up in greeting card aisles, wrapping paper/gift bags areas as well as at checkout. After all, with high consumer favorability across the ages, lollipops are the perfect little treat to sweeten someone’s day.
As the popularity of specialty items grows, so does their distribution. While many items still launch in natural and specialty stores, traditional supermarkets and mass retailers are ramping up sales quickly, according to Susan Szymanski, VP of Marketing for SPINS who spoke at the 2017 Sweets & Snacks Expo.
The Natural Channel
SPINS puts the channel sales in the natural channel at $8.2 billion, reflecting a robust +6.3 percent growth. Natural retailers include retailers such as Sprouts, Natural Grocers and Earth Fare. Natural products comprise the lion’s share of the sales mix and drove bottom line growth with dollar sales up +6.6 percent . Specialty/wellness items grew +5.5 percent in this channel.
Channel sales in the specialty/gourmet channel is very similar, at $8.2 billion, reflecting retailers including Bristol Farms, Heinen’s, Marianos and the Fresh Market. While the natural channel saw robust growth, dollars were down -0.9 percent for specialty/gourmet channels driven by declines in conventional item sales. While natural products did better, they too did not achieve the level of growth they did in the natural channel, at 0.8 percent. Specialty/wellness products grew +0.4 percent.
Dwarfing the first two, channel sales in traditional supermarkets and mass, total $607 billion, reflecting growth of +0.5 percent. Importantly, the power of specialty items for these channels is very evident in the growth rates. Natural products in traditional stores grew a whopping +8.9 percent. Likewise, specialty and BFY products saw strong growth, at +4.0 percent.
These kinds of growth percentages clearly indicate the power of specialty to drive differentiation and sales in a challenging marketplace for retailers trying to offer an array of product types to their shoppers. To get the full array of the most candy and snack specialty products, people and trends in one location, join us at the 2018 Sweets & Snacks Expo – be notified when registration opens!
More than two-thirds of consumers said that the candy aisle at their primary grocery store isn’t any more exciting than the bread aisle, according to the 2016 NCA Shopper Survey. While painful to realize, it is also a reminder that in today’s highly competitive environment, building a strong and differentiating offering is needed to ensure visitors are shopping down your aisle instead of a competitor’s. Like gourmet, novelty candy has a strong ability to help diversify assortment. Fun items that catch the shoppers’ eye when looking for a little gift or indulgence can help drive the trip basket. Additionally, Millennials are known to seek out fun, unique and different items.
At $7.5 million, novelty chocolate is by no means a big category, but with gains of $1.1 million, novelty chocolate gained more than 17 percent in 2016. In addition to strong everyday novelty sales, 2016 also pointed to opportunity for novelty chocolate during Valentine’s Day and Easter. While on a small base compared to non-chocolate, dollar gains topped 100 percent for the 2016 Valentine’s Day season. Easter was close behind with gains of 90 percent for novelty chocolate.
Novelty non-chocolate generates the lion share of the novelty segment, ringing up nearly $770 million in annual sales. Dollar gains were flat in 2016, much like the rest of the candy and gum category.
But where novelty items make a powerful argument to be added to the assortment of brick and mortar stores, this is a stronghold for online sales as well. One quick search on Amazon on “novelty candy” delivers more than 1,000 options for shoppers looking for retro, fun or hard-to-find items. Other big online candy websites carry close to the same. This is directly in line with what shoppers reported in the Sweet Insights research. Price and convenience are big reasons to shop for candy online, but the biggest reason is to find items they cannot find at their regular store. This underscores the importance for traditional channels to strengthen and rotate the novelty assortment in everyday and regular candy to keep shoppers in the aisle to look for their little treasure. Gain more knowledge on flavor trends, shopper insights and category solutions by attending the show with more candy and snacks than any other event: 2017 Sweets & Snacks Expo. Learn more
Shoppers are increasingly focused on transparency into the production process and product ingredients. This is driving significant growth in categories across the store, from organic produce to antibiotic-free meat and poultry. Oftentimes, shopper focus is on “free-from” — looking to avoid or limit certain substances. Other times they’re simply seeking more information to make informed decisions. Transparency is making inroads in candy and snacks as well, particularly among Millennial shoppers. This is one of the driving forces behind the vibrant market for specialty candy and snacks.
Specialty can mean small, artisan manufacturers or products by traditional CPG brands that have added value such as organic content, fair trade or allergy free. Both are seeing significant sales growth, with the latter increasing 16.7 percent, according to Spins.
NCA Sweet Insights shopper research looked at the kinds of features shoppers seek out when purchasing chocolate and candy. Artificial sweeteners are high on the shopper radar as something shoppers look to avoid in their confectionery items (27 percent), but instead about two in 10 actively seek out the use of natural flavors, organic attributes, portion control packaging and fair trade practices. Millennial shoppers, as the information generation, often display a much higher interest for transparency and confectionery is no exception. With Millennial buying power still on the rise, it is highly likely that consumer demand for these attributes will strengthen in future years.
|All shoppers||Millennial shoppers|
|No artificial sweeteners||27%||33%|
|Use of natural flavors, such as real fruit juice||25%||30%|
|Portion control packaging||17%||15%|
|Fair trade practices||16%||20%|
|Country of origin||15%||14%|
|Use of natural colors||14%||20%|
|Use of added vitamins||5%||4%|
Often combined under the umbrella of “specialty foods,” these items are ringing up significant dollars. Additionally, the weekly spend on groceries is 29 percent higher for specialty food shoppers. Specialty candy and snack items also provide retailers with the opportunity to offer a mix of proven favorites and unique items. Specialty can be a real point of differentiation with 56 percent of shoppers saying they would be less likely to shop elsewhere if their primary store carried more specialty foods. This is reinforced with specialty items being an important reason for purchasing candy online. With candy and snacks being among the leading specialty foods, expanding and optimizing assortment with big name brands and specialty items is crucial for differentiation and continued success.