Reinventing traditional brands puts chocolate back on top in candy

Drug Store News, Oct 6, 2003 by Rob Eder

Single-serve candy, and the chocolate bar in particular, has become a huge mover at the front end of drug stores, driven largely by the innovation of candy makers this past year to explore new versions of old favorites.

The limited edition has become a popular tool to generate excitement in impulse candy. Those items that perform well may graduate to everyday items, while those that don't are quietly discontinued after the specified promotion.

"One of the most exciting trends in helping the category has been the limited editions Hershey has introduced," said Jim Corcoran, director of trade relations for the National Confectioners Association. "Those are all impacting front-end sales."

Drug stores are reaping those rewards, with sales of chocolate candy bars up 11.6 percent to $192.9 million for the 52-week period ended in mid-July, according to Information Resources Inc. In contrast, non-chocolate items remain in a slump. Gum sales were down 0.2 percent, while breath freshener and mint sales in the drug channel declined 15 percent and 10 percent, respectively.

The resurgence of chocolate as a growth category is an ironic twist, considering that in recent years, higher growth rates had been in non-chocolate candies, fueled by novelty items targeting kids and breath fresheners for adults.

Hershey has been especially busy and deserves much of the credit for revitalizing the chocolate niche. White and dark chocolate versions of Kit Kat debuted as limited editions earlier this year, while the summer kicked off five limited editions in the Reese's brand: honey roasted, Inside Out, white chocolate, Big Cup and dark chocolate. Hershey spokeswoman Judy Hogarth said the white chocolate Reese's item was so successful that it will become an everyday item this December. Only the honey roasted version has yet to hit stores.

Though not a limited edition, Nestle has reported phenomenal success with its caramel version of Nestle's Crunch that launched in December. Combining a beloved brand with a second candy sensation has emerged as a popular trend.

"The success of that product has truly exceeded our expectations," said Tricia Bowles, a Nestle spokeswoman. "It really goes back to the impulse nature of single-serve products. It is such a critical SKU or pack size."

Another new item will debut this month that Nestle hopes will be just as big a hit. The Toll House candy bar will launch in regular cookie and chocolate brownie flavors, leveraging the brand equity of the company s Toll House cookies recipe.

New launches from Masterfoods USA this year included a new Starburst flavor, fruit and creme, as well as a breath freshener, Aqua Drops, positioned as a thirst quencher. Just now getting on retailers shelves is Snickers Marathon, a variation of the Snickers bar reformulated as an energy bar.

As for novelty candy, sales in the drug channel were up 4 percent in non-chocolate varieties and were up 28.9 percent in chocolate, according to IRI data, proving again that chocolate is king right now.

The nearly $193 million spent on chocolate candy bars in the drug channel represents about 17 percent of chocolate sales in that channel, Corcoran said, and is quite a strong ratio considering the business drug stores do in seasonal candy.

Given the space devoted to candy at the front end of most drug chains, the category must be a significant contributor to sales. In contrast, far less space is devoted to candy at the checkouts of supermarkets, discount stores and super-centers, where assortments typically are repeated at each cashier station. Corcoran said the extra space at checkout has given drug chains the opportunity to experiment more with private label, as well as evidenced in the advent of breath strips and mints.