Changes in consumer attitudes about sugar-based snacks and a shift to on-line shopping are among factors pressuring the U.S. confectionery category.
KANSAS CITY — The news announced in June that Vevey, Switzerland-based Nestle S.A. had conducted a strategic review of its $925 million U.S. confectionery business placed potential consolidation for the category front and center.
Nestle’s U.S. confectionery unit features such brands as Butterfinger, Baby Ruth, Skinny Cow, Raisinets and others.
In 2016, Nestle ranked fifth in U.S. confectionery market share with 4.5% of the market, according to data from Nielsen for the 52 weeks ended Oct. 8, 2016. Category leaders included The Hershey Co. (31%), Mars Inc. (29.1%), Mondelez International (5.3%) and Lindt/Ghirardelli (5.3%).
Nestle’s U.S. confectionery unit features such brands as Butterfinger, Baby Ruth, Skinny Cow, Raisinets and Nestle Crunch.
Changes in consumer attitudes about sugar-based snacks and a shift to on-line shopping are among factors pressuring the U.S. confectionery category, which grew 0.8% to $24.8 billion in the year ended April 15, 2017, according to Information Resources, Inc., Chicago. The top four manufacturers generated 70% of sales, while other national manufacturers accounted for 27% of sales, and store brands delivered 3% of sales. Top category performers were chocolate bars, boxes or bags ($9.6 billion), followed by seasonal packaged candy ($3.5 billion), non-chocolate chewy candy ($3.4 billion) and sugarless gum ($2.6 billion), according to I.R.I.
Committing to transparency
Several leading companies have announced a commitment to provide greater transparency, portion guidance and consumer education over the next five years. Joined by the Partnership for a Healthier America, participating businesses include Mars, Inc., Nestle USA, Ferrero, Lindt & Sprüngli and Ferrara Candy Co.
Mars recently debuted 100-calorie candy bars.
Over the next five years, half of individually wrapped products made by the participating companies will be available in sizes that contain 200 calories or fewer per pack. Currently, more than 60% of such products produced by the companies contain less than 250 calories per pack. Consumers may see more options in smaller sizes, as well as innovative new products, in the next few years.
Additionally, by 2022, 90% of the best-selling chocolate and candy products made by the companies will feature front-of-pack calorie information. A new web site, AlwaysATreat.com, over the next five years will become a digital resource for consumers to better understand how confections may fit into a balanced lifestyle.
“Chocolate and candy have always been a treat, and this is a big commitment by the participating companies to keep it that way,” said John Downs, president and chief executive officer of the National Confectioners Association, Washington. “We are proud to make this five-year commitment with The Partnership for a Healthier America, a highly regarded nonprofit organization that will help us track and verify this meaningful initiative. This is the first step on our journey to recruit other companies to join us as we work to help consumers manage their sugar intake and ensure that they feel empowered to make informed choices.”
By 2022, 90% of the best-selling chocolate and candy products made by several companies will feature front-of-pack calorie information.
Progress of the commitment details will be monitored and reported by the Partnership for a Healthier America in conjunction with the Hudson Institute, a policy research organization.
“Over the next five years, the participating chocolate and candy companies will help consumers better understand the unique role that confections can play in a happy, balanced lifestyle,” Mr. Downs said. “As we focus and leverage the companies’ expertise in marketing, innovation, and distribution, our goal is to reinforce for consumers that chocolate and candy are treats.”
Mars Chocolate North America and Wrigley U.S., a business unit of Mars, Inc., McLean, Va., have committed to invest more than $200 million in the project.
“Over the past decade we have been laser-focused on continuously pushing ourselves and our peers to offer consumers more choice and transparency while keeping the same great tastes and experiences our fans love,” said Tracey Massey, president of Mars Chocolate North America. “By joining forces with P.H.A. and other leading confectionery manufacturers to create even deeper commitments, we are taking an important step forward to transform the entire industry so we can evolve to meet and exceed the demands of today’s consumers.”
By the end of 2018 ,100% of Hershey's confectionery products will have easy-to-read nutrition information on front-of-pack.
Separately, The Hershey Co., Hershey, Pa., in April set a goal that by the end of 2018 100% of the company’s standard- and king-size confectionery products will have easy-to-read nutrition information on front-of-pack. In addition, the company said 50% of its total portfolio of standard and king-size confectionery products will have 200 calories or fewer by 2022. Hershey said it expects to achieve its 200-calorie commitment through a combination of reformulation, new product introductions and adjusting the size of certain products.
“Consumers are at the heart of all that we do, and we have been at the forefront of providing the choice and transparency they want,” said Michele Buck, president and c.e.o. of The Hershey Co. “We aim to delight our consumers, and these steps will provide an even wider range of portion options and clear information to help them select treats that fit their lifestyle.”
Trends in new product development
Transparency was a top theme at the National Confectioners Association’s Sweets & Snacks Expo held in May in Chicago. Other trends in new product development seen at the show include sweet and spicy flavor combinations and crunchy textures.
Confectioners are raising the bar on premium, with new products, including “hand-painted chocolates, coffee and liqueur fillings, more interesting and unusual artisanal flavors than we’ve seen before, high quality ingredients and very sophisticated packaging,” said Susan Whiteside, vice-president of public relations and marketing communications for the National Confectioners Association.
Premium products such as coffee-filled chocolates are rising in popularity.
Dollar sales of premium chocolate grew nearly 10% last year, on top of 16% in 2015, according to the National Confectioners Association. But, as Ms. Whiteside noted, “While artisan chocolate in particular has been very popular with consumers over the last five years, it still represents a small fraction of the total confectionery market.”
Brittles, bites and barks also remain popular among consumers seeking a portion-controlled treat. Additionally, manufacturers are balancing indulgence with ingredients positioned as healthful or natural.
Seasonal items accounted for a quarter of global chocolate new product launches in 2016, representing the biggest area of new product development in the category, according to research from Mintel International, Chicago. Twenty-eight per cent of seasonal launches last year were positioned for Easter, Mintel said.
