Confectionery is undeniably a part of everybody's everyday life. Americans reach for chocolates and candy at virtually every meal and many times during the day. Not surprisingly, sugar and confectionery exceeded $24 billion in sales in 2002 and is expected to increase.
Contrary to popular belief, however, Americans are not the world's biggest consumers of confectionery products. On a per capita basis, the U.S. consumption rate of 25 pounds per year pales when compared to that of European consumption. The Danes top the list with per capita consumption of more than 35 pounds of confectionery per year.
Almost two-thirds of all confectionery consumption is driven by "emotional" as opposed to functional "need states" , presenting endless branding and consumption opportunities for manufacturers. With the current tendency to do away with the three traditional meals each day, confectionery has evolved to meet consumers' snacking needs throughout the day. In addition to being convenient and portable, confectionery products almost always taste good.
Consumers reach out for confectionery for one or more of the following purposes: immediate consumption; stocking (for later consumption); gift giving; or seasonal.
Confectionery purchased for immediate consumption is usually motivated by an impulse and need for instant gratification. Typically, these purchases are made in retail outlets such as newspaper stands and coffee shops, convenience and grocery stores. The purchase may be motivated by wanting a "treat" or abating "hunger" or "boredom," or "seeking quick revival." More than 40 percent of the confectionery is purchased this way. This market can be further segmented into specific "need" states , freshening breath, satisfying hunger or energizing moods.
Confectionery intended for stocking and later consumption is generally purchased in grocery stores, supermarkets or warehouse stores. More than 30 percent of all confectionery is purchased this way. Usually packaged in poly bags and multi-packs, these products are intended for stocking, for use in the home, for popping into lunch boxes, for reaching out when bored, or for easy grabbing while on the go. This segment may be classified according to "mints and gums," "family sharing confectionery," "treats," "for baking," or "while watching TV," "indulgences," and "lunch boxes" and "after school snacks" for children.
The brands are almost always selected by the female head of the family and may be influenced somewhat by youngsters and teens. Typically, brands selected in this category become synonymous with "nostalgia," "traditional" and "comforting," and have incredible consumer loyalty across many generations.
The gift segment, as its name suggests, is comprised of confectionery that is purchased as a gift -- as a romantic gesture or a token of gratitude. Accounting for about 15 percent of the total candy purchase, this segment usually consists of premium products and, more often than not, is made of chocolate. Niche confectionery products and premium and super premium products rule this category. Brand selection here is influenced considerably by a perception of the product as "classic," "premium," "indulgent", "deluxe," or "unique." Women are hugely influential in brand selection, with men adopting these brands in their influencing circles. While the genders differ significantly in the how and why of brand selection, the quantities and reasons for purchase are rather similar.
Seasonal confectionery makes up a little more than one-tenth of all confectionery purchases. Typically, these are only available at a certain time each year such as Valentine's Day, Easter, Halloween, and the winter holidays. Valentine's Day and Easter are by far the largest confectionery seasons and together account for more than 75 percent of the seasonal market. Valentine's Day week generates more one-week candy sales than any other holiday. Curiously, this is the only week during the year when candy sales in drug stores outdo those in grocery stores.
Distribution and retail trends
As the most widely distributed consumer food product in the U.S., confectionery can be purchased at more than 2 million venues throughout the country. The category is exceptionally attractive to retailers, since confectionery generally has a long shelf life, rarely requires special handling, and comes in a variety of sizes and packages that allow for creative merchandising alternatives. Confectionery also is typically low-priced, and usually offers high margins.
According to Information Resources Inc. (IRI), convenience stores represented the largest distribution channel for confectionery in 2002, accounting for more than 35 percent of all sales. Grocery stores accounted for 23 percent, while mass merchandisers/superstores trailed with an 18 percent share, followed by vending machines with an 11 percent share and drugstores with a 9 percent share. The remainder of sales was through specialty channels, including candy shops and gourmet and natural food stores. Chocolate candy retail sales increased 2.3 percent for the year and the gum category showed a 1.7 percent increase. On the non-chocolate side, everyday candy sales increased 1.7 percent, excluding breath fresheners. Breath freshener sales decreased 6.8 percent due to the tremendous increases in the Listerine PocketPaks and Eclipse Flash Strips. Sugarless gum continued to lead the gum category, which increased by 7.9 percent in 2002.
Nearly everyone, it seems, purchased and enjoyed candy, gum or chocolates.
Confectionery is an impulse purchase selected more often than any other impulse category. Moreover, the multi-billion dollar impulse food sector appears to be driven by men, women and children. In 2002, more than 95 percent of the population point-purchased candy and confectionery at some point, confirming that it's the most popular snack, according to ACNielsen. On average, confectionery was purchased about 80 times per consumer last year --more than any other snack in the snack category. Heavy users purchased confectionery more than 200 times a year.
Adult women maintain their position as the largest purchasers of confectionery across all age and gender segments. Women continue to be the traditional decision-makers and buy confectionery for themselves and their immediate circle. The majority of confectionery purchasers are in the 25 to 44 age group, are mostly parents with children, and purchase not only for themselves but for their young ones. Men, however, appear to shop more in the impulse sector, mostly for themselves and generally eat all that they buy. Men typically purchase for immediate consumption and account for a significant portion of confectionery "eaten on the run."
Undeniably, children and teenagers are key consumers of confectionery, particularly candy. Although children have little buying power themselves, their influence on household spending is remarkable. Children today, with their disproportionate ratios of confection consumption, free time, and tendency towards TV-watching and computer literacy, are natural sponges when it comes to new products and promotions. As a result, they significantly influence their family's confectionery purchase.
While there is no significant difference between genders in the amount of confectionery consumed, in general, women are more likely to consume chocolate confectionery than men. Taste is the number one driver of initial and repeat purchases, with convenience and price following closely.
Chocolate is a key component of confectionery growth and has benefited significantly from scientific studies that lend it functional food status in its own right. Women justify their love of chocolate and particularly dark chocolate on recent reports of its neutral effect on blood cholesterol levels and the possible antioxidant benefit of the polyphenols in chocolate (similar to the benefits of red wine). Women appear to be increasingly aware of research findings that chocolate may affect the brain's neurotransmitters, specifically serotonin and endorphins, to improve mood and outlook. Chocolate mega-marketers Hershey Foods and Mars Inc. appear to be actively pursuing the nutraceutical effects of chocolate and determining ways to create more room for chocolate on the daily menu.
Meeting the consumer need for convenience, confectionery is easily available, portable, and can be eaten practically anywhere. In an era of careful eating, the news that chocolate and nuts can contribute to a varied, healthy diet is indeed welcomed. It is logical then to expect confections that contain other healthful ingredients , products that appear different from today's candies and are positioned as legitimate meal components and healthful snacks. The trail blazed by the nutrition bars certainly makes such a category plausible to consumers.
The confectionery consumer of the future will be an educated and concerned individual who will not avoid indulgence but, out of concern for his/her health, will select snack-size, sugar-free and functional candy. By 2010, the population of Americans aged 50 to 64 will increase by 39 percent and have more influence on confectionery offerings significantly than any other age group. Fat and sugar will continue to be leading causes of concern and further the demand for portion control and sugar free products. Until or unless reduced-fat products improve their palatability, consumers will address fat intake via portion control, as evidenced by the annual 7 percent increase in snack-size chocolate sales versus an increase of less than one percent for single-serve chocolates. Consumers are leaning toward sugar-free confectionery. Sugar-free candy continues to post threefold increases in sales growth compared to regular candy; sugar-free gum now accounts for almost two-thirds of all gum sales. Look for Hershey's sugar-free chocolate to set the stage for the sugar-free chocolate category.
Kantha Shelke is a principal at Corvus Blue LLC, a Chicago-based firm that specializes in competitive intelligence and expert witness services. The firm helps businesses and professional organizations in the health and wellness sector to focus on what matters most. Kantha may be reached at firstname.lastname@example.org or (312) 951-5810.