Novelty, sugar-free candy reign in burgeoning segment - Food - Confectionery market valued at $24.5 bn - Statistical Data Included

DSN Retailing Today, June 24, 2002

CHICAGO -- The $24.5 billion confectionery market has proven over and over that tough times don't stop Americans from indulging in sweet tooth satisfaction. Despite retailer consolidation and the lull in consumer spending following September's terrorist attacks, sales of candy and gum thrived last year. For 2001, the confectionery category grew 5.3% in all retail channels, as estimated by the National Confectioners Association. Candy sales were strongest at mass, with sales up 6.7%. Sales at supermarkets rose 1.5%, drugstores 0.8% and convenience stores 4%.

Despite the appeal of chocolate, which accounts for 56% of candy sales, the big news has been in non-chocolate sweets. Novelty candy and sugar-free gum emerged as the hottest segments, growing 15.3% and 8.7%, respectively.

The launch of longer-lasting, breath-freshening gums without sugar picked up the pace as sales of intense mints leveled off. Over the past five years, breath-freshener confectionery sales soared 56%, while sugar-free gum rose 60%.

As for what's hot this year, an overview of new candy products introduced at the All-Candy Expo in Chicago earlier this month provided clues. Sour is going to make a bigger splash than ever and mints are still big news, this time in interesting new flavor combinations and added benefits, such as herbal energy additives, weight-reduction properties or caffeine.

Novelty candy remains a top priority with nearly every candy manufacturer, with items tied to Marvel's comic book characters and nostalgic items a popular theme. Another trend was combining two flavors or types of candy.

Retailers also are trying to become more familiar with the tastes of Hispanic candy consumers, adding to stores unique new candies popular in Mexico that feature tamarind, chili powder, sweet tropical fruits and marzipan. Hispanic Americans comprise the largest and fastest-growing ethnic group in the United States and, as such, already have begun impacting food retailing strategies.

Family Sweets used the candy show to launch a Hispanic treat called Rolly Pop. The liquid candy in a small roll-on container features the tropical fruit flavor tamarind with a hint of chili powder. After a phenomenal response in Mexico by the company, called Tinajita in Mexico, the product is being introduced to the U.S. market by Family Sweets, the exclusive U.S. distributor.

"The kids just love that flavor. It has a spice, but sweet taste. It's selling 1,000 cases locally in Guadalajara," said Laura King, regional sales manager for Family Sweets.

Lupita Mora Torres, a representative of Dulces De La Rosa, one of the largest Mexican candy companies, said Mazapan, which features a peanut-based paste confection, and Pulparindo, a candy made of hot and salted tamarind pulp, are its biggest sellers.

While some of these flavors may not suit the tastes of Anglos, spicy and sour concoctions are taking center stage in new candy products. Sour seems to have become the flavor of the year, based on offerings at the candy show. Among new items that now come in sour variations are Starburst from Masterfoods USA (M&M/Mars), Altoids by Kraft, PEZ Sourz candy and dispensers, Wonka sour Pixy Stix, Rip & Roll fruit snacks from Foreign Candy Company, and even cotton candy by Taste of Nature.

Along with the shock taste sensation of sour, vendors are becoming more sophisticated in their delivery of this type of candy, from candy foam to user-created vials of candy powder.

A merchandising display from Pucker Power that allows kids to create flavor concoctions of sour powder candy drew interest from retailers such as Toys "R" Us and Wal-Mart. Similar to sand sculptures, the large machine features up to 12 different flavors of candy powder and allows kids to create tubes of candy art. Co-owner Bruce Goldstein said the merchandising unit, which costs a retailer $1,800, already is popular in theme parks and Sweet Factory candy shops. The company is now expanding the concept to other retailers.

A different kind of taste sensation, popping candy, has made a comeback. Squire Boone Village has combined popping candy, novel flavors and creative merchandising in a testtube packaged line that carries the message "Shock Your Buds." New items include Kaboom Rocks in assorted fruit flavors; Moon Crater candy in freezedried ice cream flavors; Atomic Fizzzion, a red-hot cinnamon flavor; and Miner's Gold, a pineapple-orange flavor.

"Sales have been phenomenal. We have been behind and barely keeping up [with retailer demand]," said ceo W. Rick Conway of Squire Boone Village's new line.

Along with sour, foaming and fizzing candies, novelty candy items featuring interactive dispensers or some other type of play value remain popular. Cap Candy continues as leader in this niche, this year debuting new dispensers with tie-ins to Harry Potter, Star Wars, Lilo & Stitch, Bob the Builder and Spy Kids 2. Also new are edible candy notes, Lunar bubble dust and candy clip-along containers.

Appealing to adults are new flavors in mints and new sugar-free candy. Simply Lite Foods debuted the first Equal sweetener-branded candy line, Perfect Pleasures.