The Outlook Is Sweet

Candy category growth is expected through at least 2026, powered by product innovation

By Brian Berk

IF THE CANDY category’s performance in 2021 is any indication of the results that will be seen this year — which industry insiders believe will be the case — then convenience store retailers have reason to be as enthusiastic about the category as “a kid in a candy store.”

The total confectionery category reached a record $36.9 billion in retail sales in 2021, according to the third-annual State of Treating report published by the National Confectioners Association (NCA), the trade association that supports the U.S. confectionery industry.

Convenience stores enjoyed the largest growth in confectionery products of any retail channel last year. Sales at c-stores totaled $6.8 billion, an increase of 12.6 percent compared to the prior year. The convenience channel is fast approaching supermarkets and food stores, which accounted for the most confectionery sales last year at $7.6 billion.

Anne-Marie Roerink, principal at 210 Analytics, who collaborated with NCA on the report, acknowledged that inflation was certainly a factor when comparing 2021 candy sales to 2020. However, even without the impact of inflation, candy had an excellent year in 2021.

“Candy sales got a boost from price increases across items, and while the industry was and is certainly not immune to the supply chain disruptions, out-of-stocks seem to be a little better than in departments such as frozen foods,” Roerink told Convenience Store News. “All of this helped candy achieve a record year with doubledigit increases.”

What’s Selling

According to Roerink, non-chocolate candy had “an enormous year” in 2021, which contributed to strong sales for convenience store retailers. Chocolate also managed to grow over a strong 2020, and gum and mints staged a full comeback from a difficult 2020.

“An all-around win” is how Roerink described the convenience channel’s results.

In the chocolate segment, dark chocolate keeps vanishing quickly from retailers’ shelves, noted Molly Jacobson, director of business development at Frankford Candy, known for its eponymous brand, as well seasonal treats such as Peeps and Elf on the Shelf.

“There is increasing demand for dark chocolate as it has less sugar and a stronger cocoa taste than milk or white chocolate,” she said.

The chewy non-chocolate segment is also having a moment, Roerink stated, pointing out that overall non-chocolate sales saw a year-over-year gain of 19.6 percent in 2021.

“Chewy non-chocolate is an amazing story. [It] represents half of all non-chocolate sales,” she explained. “Usually being that big of a segment means that your growth rate is going to be small, but not for chewy. Chewy candy still had a massive year and that’s on top of having a tremendous 2020, 2019, and

Consumers today are seeking products that enhance their sensory satisfaction through a combination of texture and taste.

so on. Chewy candy has done a great job in innovation — whether package, flavor, ingredients, callout; you name it.”

In particular, sales of gummies have been robust in the non-chocolate segment, Jacobson reported. “The pandemic has spurred growth of the gummies segment, as gummies are a popular candy variety among kids and parents who use these sweet treats as a reward for their kids. According to Market Research Future, the global gummy and jellies market is expected to grow at a 4 percent compound annual rate to $44 billion by 2027.”

Lou DiMarco, executive vice president at Hilco, known for its novelty candy products featuring such brands as Paw Patrol and Kool-Aid, said his company has experienced “extreme growth in popping candy innovation, gum as candy vs. functional breath fresheners, and candy with high numbers of times to the mouth (TTMs).”

Roerink also noted that in convenience stores, the morning meal occasion has been very different since the onset of the COVID-19 pandemic, and is still very different. “That has an impact on items that are bought along with that morning cup of coffee,” she said.

Additionally, a lot of convenience stores are doing more business out of their grocery set and “that affects items such as larger bags and even seasonal that weren’t big sellers for convenience stores before,” she added.

The Innovation Story

Hot chocolate bombs, new forms of gum, popping candy, functional candy with high fiber, cotton candy that turns into gum, and low-calorie chocolate have all entered the market recently and become popular, noted Hilco’s DiMarco.

Consumers are increasingly interested in trying new, innovative flavors and are seeking products that enhance their sensory satisfaction through a combination of texture and taste, said Frankford Candy’s Jacobson, who shared a similar sentiment regarding hot chocolate bombs.

Meeting those needs starts with new flavors and exciting packaging, according to Clark Taylor, senior vice president of sales and marketing for CandyRific, known for its novelty candy products featuring brands such as Disney, M&M’S, Marvel and Nickelodeon.

“Candy is a treat and consumers are looking for ways to create small personal events around these ‘treating’ opportunities,” Taylor said.

The NCA’s latest State of Treating report found that 78 percent of all adults believe it is perfectly fine to occasionally treat themselves with chocolate or candy.

Year after year, candy’s role as an indulgence for consumers is unwavering.

“We know that consumers are snacking for indulgence and we expect this momentum to continue. Eighty-five percent of consumers snack for indulgence at least once a day, per the State of Snacking 2021 report,” cited Annie Faile, portfolio marketing manager for Kellogg Co.

Better-for-You Treats

Along with indulgence, though, comes a growing desire for moderation as industry insiders report significant sales growth in the “better-for-you” candy segment.

Craig Cuchra, vice president of marketing for Perfetti Van Melle USA and Canada, noted that the company recently introduced Fruit-tella Soft Gummies, a fruit-first brand that calls out fruit puree as the first ingredient. Also, lower sugar brands and products that remove artificial colors and flavors are becoming increasingly popular, according to Cuchra.

“While these areas are still often small, they are rapidly growing and likely something that all retailers should consider in terms of their assortment in this area,” he advised.

CandyRific continues to expand its candy offerings into the organic and natural categories as well, as it offers licensed products with low sugar and organic options, stated Taylor.

Not all better-for-you claims are a positive for the industry, however, DiMarco believes. Companies stating that fiber is a better-for-you ingredient because it “cancels out carbohydrates” is sending the wrong message, he maintains.

“We as an industry have increased fiber and use some products like Monk fruit sugar but, at the end of the day, carbs are carbs,” he said. “Candy was not meant to be functional and the more educated our consumers become, the more transparent false functional food becomes.”

Environmental Stewardship

Today’s consumers are not only seeking healthier products, but a healthier planet as well. As such, they expect manufacturers to be good stewards of the environment.

Frankford Candy is always looking for ways to reduce waste and plastics in its packaging, noted Jacobson. “We are also streamlining production efficiencies and ramping up domestic production in the United States,” she reported.

Environmental stewardship is very important to Perfetti Van Melle as well, Cuchra stressed. The company’s global organization is committed to taking meaningful measures to eliminate plastic packaging where possible.

“We have a global holistic approach on packaging development and innovation with considerable focus on its environmental impact,” said Cuchra. “In fact, a recent example, which we’re very excited about, is the unique, widely recyclable Mentos Pure Fresh Gum 90% Paperboard Bottle. It is now available to U.S. customers and is beginning to launch in other parts of the world.”

Growth in Spite of Adversity

Candy sales have been enjoying a great run as of late, but that doesn’t mean the future is without adversity. Supply chain disruptions are proving to be a challenge

“Candy has always been known as an affordable treat and a look at the price per unit across other items that people think about when treating themselves shows that indeed, candy is one of the most affordable treats.”

— Anne-Marie Roerink, 210 Analytics

for every industry, with the confectionery industry being no exception. Retailers are having a hard time promoting products not knowing what will be in stock. Hence, there are fewer promotions happening now, as well as prices that just aren’t as enticing as they have been due to inflation.

For the foreseeable future, Roerink believes the biggest challenge for all food-related industries will be inflation. She pointed to higher gasoline prices as one example.

“Filling up the tank is so much more expensive than it was last year,” she said. “Consumers have to offset that spend somewhere else. That could be eating out at restaurants less often or watching a movie at home instead of going to the movies. Or that could be buying ground beef instead of a steak, or skipping the candy bar and cup of coffee when filling up the car.”

Still, the candy category is expected to continue growing despite the challenges. The most recent State of Treating report projects considerable sales growth through at least 2026, with confectionery sales projected to reach $44.9 billion by 2026.

“Candy has always been known as an affordable treat and a look at the price per unit across other items that people think about when treating themselves shows that indeed, candy is one of the most affordable treats,” Roerink said. “When interviewing shoppers, we heard things like substituting a bakery cupcake for a bar of chocolate. So, between the record engagement in 2021, the growth in online sales and consumers’ love for the category, continued growth is highly likely.”

Cuchra agrees with this outlook. “Candy is a staple of how we celebrate many life moments, it’s a key factor in many major holidays, and something that is simple and affordable to lift spirits during times like the pandemic and recessions,” he noted.

Fueling candy sales for the next four years will be the hunt for “new and different products,” predicts Taylor. “Packaging will continue to evolve with new colors and designs,” he said. “Consumers love the ‘treasure hunt’ that the candy category can offer.”

“Sweet heat,” defined by the NCA as flavors such as chili, sriracha, jalapeño and habanero, is being eyed as just one emerging trend that will be appearing in candy aisles more often, presenting consumers with even more opportunity for exploration. CSN