The only way is up

Daisy Phillipson considers the recent drop in hard candy sales in the US and the implications this has for confectionery manufacturers.

US confectionery companies are known for producing innovative and colourful products and candy remains a popular snack across the country. However, the market is constantly adapting, causing a shift in various segments.
One area that has been affected by changes in consumer purchasing habits is hard candy. According to a recent report, Sugar Confectionery and Breath Fresheners – US – December 2014, by Amanda Topper, Mintel food analyst, the hard candy segment was one of two areas to experience a sales decline from 2012-2014. Sales within the segment reached €700m in 2014, representing an 11 per cent market share, the smallest within the sugar confectionery category.

And while hard candy sales have increased 24 per cent from 2009-2014, sales dropped three per cent from 2013-2014, showing a gradual decline.

The hard candy market is comprised of fewer brands than other sugar confectionery segments, and is the smallest segment within the category. Hershey’s is currently the leader due to sales of its Jolly Rancher brand. Hershey’s sales reached €87m in 2014, a decline of six per cent from 2013-2014. Tootsie Roll represents the next largest segment in terms of sales of hard candy. Total sales reached €86m in 2014, a decline of two per cent.

Changes in the market

“Sales have declined slightly in recent years, as a result of minimal innovation, compared to other category segments such as chewy candy and seasonal products. The segment competes directly with other non-chocolate and chocolate confectionery sectors including gummies, chocolate, mints and gum,” states Topper.

Half of consumers buy sugar confectionery on impulse, highlighting the importance of promoting purchase at both the checkout and in the aisles. This can make it difficult for manufacturers of traditional hard candy products, when there is so much competition within the various sectors of the total confectionery market.

Topper adds, “The negative perception of sugar and its impact on health also harms the segment.” Consumers are becoming more awake to the link between obesity and health issues and sugar consumption. Therefore candy manufacturers are increasingly innovating with sugar alternatives and sugar reduction in order to create appeal for their products.

According to Beneo fibre research, sugar reduction is still a very relevant trend, with six out of 10 consumers expressing a desire to eat less sugar. Thomas Schmidt, marketing director, Beneo, says: “This is being seen in the continued development of the healthy snacking category and the quest of manufacturers reducing sugar in their formulations. In addition, confectionery producers are increasingly focusing on portion sized, calorie controlled snacks.”

The health aspect of confectionery has been affecting the industry for years now and while consumers still see candy as an indulgent treat, they are looking for products that contain less sugar and artificial ingredients and more natural inclusions. This has been driving innovation, but has proved a challenge for hard candy manufacturers.

Branching out

“In order to boost sales in this category, some hard candy brands, including Jolly Rancher, have begun innovating with other segments such as chewy candy,” continues Topper. In this context, Jolly Rancher introduced its Crunch ‘N Chew brand, which features a crunchy candy shell with a chewy filling in flavours including cherry, green apple, watermelon and blue raspberry.

The trend towards blurring categories can also be seen in the gum and mints segments. Varying brand innovation appears in other sugar confectionery categories where the Jolly Rancher brand has expanded, including a line of Jolly Rancher Bites within the ’other sugar confectionery‘ segment. By combining textures and flavours, manufacturers are able to create exciting new products and boost customer interest.

Another way in which manufacturers are seeking to boost sales in this area is by offering alternative pack sizes. “On the go eating is impacting practically all food and beverage categories. Single serving sizes, resealable packaging and miniature formats all help cater to this trend,” says Topper.

An increasing number of adults who buy or eat non-chocolate candy eat it on the go, for instance in the car or on the train. This suggests that manufacturers should look to produce hard candy products that can be bought in smaller packages or in larger packs that consumers are able to reseal and save for later.

One of the strongest trends within the confectionery sector is consumer interest in ’better for you’ eating. “This makes it more important for manufacturers to offer products with natural ingredients,” says Topper. “Twenty three per cent of those who buy non-chocolate candy indicate natural ingredients are something they look for when buying these products, according to Mintel data,” she continues. “Interest in products made with real fruit juice goes hand in hand with interest in natural ingredients. Twenty six per cent of non-chocolate candy buyers indicate they look for these types of products, making it the most important characteristic overall. Products with no artificial colours or flavours is also a trend we are seeing,” she adds.

This trend is evident as companies such as Nestlé recently made a commitment to remove these ingredients from their chocolate confectionery products.

New innovations

Hard candy manufacturers are already facing up to a more health conscious consumer, which is a factor that should be taken into account when developing confectionery that is both sweet and enjoyable, yet also provides a healthier nutritional profile.

With this in mind, Beneo recently developed a range of sugar free and low glycaemic hard candies. According to Beneo consumer research, in Europe consumers are looking for healthier confectionery with more adventurous flavour combinations, while also trying to eat less sugar. Beneo supports this concept by using its ‘Sweets Collection’ as a platform to present innovative ideas for sugar free and low glycaemic hard candies. All of the samples contain natural flavours, are calorie reduced and use isomalt in place of traditional sweeteners.

Retailers are now looking for a wider choice of appealing, healthy impulse items at the check out area and ideas such as this provide a way in which manufacturers can fill those gaps.

A large proportion of adults eat hard candy (77 per cent) according to Mintel data. Now producers are looking to cater to younger audiences with new innovative items that generate excitement and interest.

In a mature confectionery sector such as lollipops, packaging is an important promotional tool for making sure products stand out in retail outlets and grab attention from younger consumers. An example of this is a new way of packaging lollipops from GEA.

The Aquarius BunchWrapper lollipop wrapping machines have been enhanced to offer two new possibilities including the label on film and label on stick techniques. The label-on-film technique places a fun label, sticker or tattoo underneath an opaque or transparent lollipop wrapper.

The label-on-stick technique, which accurately applies a double-sided, flag-like label to the stick just below the wrapper, provides two flat surfaces for additional branding and other promotional information. Using packaging can be a powerful marketing tool for traditional hard candy products such as lollipops and can drive sales among younger consumers.

While many hard candy producers are aiming their products at younger audiences, some companies are using tradition and tapping into nostalgic marketing campaigns in order to boost sales with existing buyers of their products.
Last year Tootsie Roll announced a new product on its Facebook page, Tootsie Pop Drops, which are Tootsie Pops without the stick. Topper explains, “The company uses a theme of nostalgia in its promotional efforts, including reusing old commercials that have become an integral part of their brand.” A final trend noted by Topper within the segment is upscale or gourmet confectionery products. “Premium packaging, ingredients, or small batch manufacturing are becoming more common with these types of products,” says Topper.

“Upscale products are well suited for treating oneself (39 per cent of those who eat sugar confectionery do so to treat themselves), or for giving a gift,” she continues. According to Topper, some 45 per cent of those who buy or eat sugar confectionery would give someone non-chocolate candy as a gift for a special occasion. “Boutique candy stores, such as Dylan’s Candy Bar, or fashion designer Cynthia Rowley’s CuRious candy bar in New York City, are likely driving interest in some of these higher quality retail offerings,” she adds.

Conclusion

While sales of hard candy have dropped in recent years, market trends suggest that consumers are still willing to purchase such products and are looking for various attributes such as healthier and sugar reduced items, premium products, innovative packaging, merged segments and on the go packaging. Overall the future looks bright, with Mintel predicting that the segment will grow an additional 21 per cent from 2014-2019 at current prices.

Customers are drawn to a variety of innovative and affordable products in the hard candy market. Although some consumers have concerns about ingredients, or specifically look for ingredients lists that include natural claims and sugar replacements, many still want the opportunity to indulge freely. Innovating with new ideas, flavours and combinations can help to ensure that sales within the hard candy segment rise once again.

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