Confectionery industry looks for ways to avoid being 'lost in the shuffle'

by Staff
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SCOTTSDALE, ARIZ. — The confectionery category may be one of the largest and most profitable for retailers, but that doesn’t mean it receives the attention it merits, according to analysis conducted by Dechert-Hampe & Co.

Ray Jones, managing director of Dechert-Hampe, presented the management consulting firm’s findings at the "State of the Industry Conference" of the National Confectioners Association. The presentation, based on industry interviews, was given Feb. 17 at the Fairmont Scottsdale Princess hotel.

With retailers preoccupied by a range of issues, including labor, technology and strategy, the confectionery category receives scant attention. Taking the view that "candy sort of takes care of itself," buyers often are responsible for several other categories as well, Mr. Jones said. Seasonal product lines receive the greatest attention.

The indifference toward confectionery exists even though candy sales exceed those of any single product in a supermarket. As a category, confectionery sales rank third behind milk and carbonated beverages.

The surveys indicated that retailers are concerned about excessive proliferation of products and a consensus among retailers that confectionery has moderate, but not high, growth potential. Retailers and suppliers both view seasonal candy as a particularly strong growth opportunity with less negative impact from health and weight issues, Mr. Jones said.

He said both groups also agree that obesity and diet issues are a threat to overall consumption as is the emergence of alternative snacks such as energy bars, granola and seeds.

"Pop culture diets, such as South Beach and Atkins, have given carbs, and particularly sugar, a bad name," according to the presentation. "They also fear demographic and cultural changes may not be positive for growth in candy consumption."

Asked what is the key to growth in the confectionery business, new product innovation ranks at the top for retailers and near the top for suppliers. Suppliers ranked increased shelf space first (4.6 on a 5-point scale), but retailers placed shelf space near the bottom (2.7).

Over the past 11 years, shelf space dedicated to confectionery has held fairly steady at 22.2 running feet in 2004, versus 21.7 in 1993, Mr. Jones said. By adding more pegs, the linear feet in the candy aisle have increased to 176.6 feet from 160 feet. Meanwhile the median store size has increased sharply over that period, to 44,000 square feet from 33,000. As a result, "confectionery has lost presence relative to store size," according to Mr. Jones’ research.

The research study conducted by Dechert-Hampe is part of a larger effort aimed at triggering growth in the confectionery category.

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