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Waxing Bright

Supermarket retailers surveyed by SN are optimistic about candles as they anticipate brisk sales during the winter the peak selling season for the category. According to the National Candle Association, 35% of candles are sold during the holiday period. However, this season the category will be hampered with rising costs due to high crude oil prices, and a weak economy that discourage discretionary

Supermarket retailers surveyed by SN are optimistic about candles as they anticipate brisk sales during the winter — the peak selling season for the category.

According to the National Candle Association, 35% of candles are sold during the holiday period. However, this season the category will be hampered with rising costs due to high crude oil prices, and a weak economy that discourage discretionary spending.

ICIS, an online chemical industry news service, reported last week that the cost of U.S. paraffinic wax, used in candle making, soared 86% from last year with supplies tight and rising demand going into the holiday period. Even with the recent decline in energy costs, wax prices are expected to remain high due to two major suppliers exiting the market and taking with them 20% of the wax supply, according to the report.

Despite these economic factors, food retailers are finding space for candles. They said candles' multiple benefits tie into home decor-fashion, aromatherapy-wellness and religion.

“As our consumers get into aromatherapy, they're buying more and more candles for relaxation at home, and the fragrances are becoming very important. For us, the in-line candle business is an emerging category, and we're seeing a lot of really good offerings from domestic suppliers,” said a nonfood executive with a West Coast chain.

“The candle category is one that represents opportunity for us in food,” said Larry Ishii, general manager, general merchandise/health and beauty care sales, Unified Grocers, Los Angeles.

He said Unified has encouraged retailers to merchandise candles in the HBC area as well as traditional placement in greeting cards and the household section. “We really prefer to see the retailers tie candles in more with HBC, particularly with bath-time products to take advantage of the idea of aromatherapy, and to try to encourage multiple purchases of candles with other bath items that a female shopper might be purchasing for her needs at home. It opens up an opportunity for us to get multiple purchases,” he added.

Lanny Hoffmeyer, corporate director hardlines, photo and lobby, Center Store merchandising, GM/HBC, Supervalu, Eden Prairie, Minn., made this comparison: “Candles are a little bit like batteries. The more places you put them, the more they should sell. The more brands that you have, the more that you will sell. It's a great category for us. The margins are good and it's almost an infinite number that you can sell.”

Various sources put the size of the candle market between $2 billion and $5 billion. Chicago-based Information Resources Inc. statistics show candle dollar volume sales in supermarkets down 1% to $595 million, and units off 5% to 233 million for the 52 weeks ending June 15, 2008. Nevertheless, in a report on the U.S. candle market 2008, Mintel International, a leading research company, projects annual sales growth of candles to be 5% through 2012.

Mintel segments the candle market between non-food/drug/mass channels, which account for 85% of sales, and food/drug/mass channels, which account for 15% of sales. The Mintel report stated F/D/M is hard-pressed to stay competitive with non-food/drug/mass outlets because of the wider range of candle merchandise and the high-end candle selection that carry higher price points in the latter outlets. However, the report states that any sign of migration of affordable high-end products to F/D/M could result in less distinction between the segments, similar to the “masstige” trend that has occurred in the skin care market.

Some food retailers indicate they are offering three price levels in an effort to trade shoppers up. Others, who are conscious of the changing trends in fragrance and scents, offer in-and-out promotions of popular candles.

“We've seen good strength in the upscale area of the range of candles. The good, better, best program is definitely something you need to have. We also supplement our candle offerings with DSD programs that address particular niches where a retailer might position that program in a different part of the store than the basic in-line candle programs, so you're trying to capture extra sales in different places in the store,” Unified's Ishii stated.

Christina Melillo, merchandiser of grocery and nonfoods, Buehler's Food Markets, Wooster, Ohio, said the retailer often promotes candles outside its everyday offering of Yankee Candles to stay on top of current trends. “We try to do in-and-out promotions of things that are newer; things that are tied to different trends; things that have a label on it. We've brought in the Snapple candles. We're looking at the Cinnabon candles.”

Candles made with natural products such soy, beeswax and vegetables that use natural scents of herbs and fruits can be positioned as environmentally appealing.

“It's another example of how we're going to constantly reinvent product to meet consumer needs, and at the same time, support sustainability of the earth,” said Christopher DePetris, director of wellness programs, Global Market Development Center, Colorado Springs.
Additional reporting by Dan Alaimo

Devotional

According to a recent New York Times article, prayer candles — part of Hispanic tradition — are being embraced by a broader-based population for remembrance, luck and good health. The estimated $100 million-$300 million segment is said to be growing 15%-20% annually, according to the news report.

“There is profit in it. It's a real fast turn, good business. It's one that anybody in California should really be looking at, or on the West Coast, and, frankly, in the United States,” said a West Coast retailer.

He explained that in early November — All Saints Day in North America or Día de los Santos or Día de los Muertos in Mexico — Hispanic consumers will light a separate candle for every loved one that has passed. “They may buy 10, 12, 13 religious candles for each one of their loved ones that have departed. It's very important to them. They don't want a really poor paraffin candle. They want something that is going to burn the wick the length of time that it's supposed to burn and they want the graphics to be right, so again it goes back to being price-sensitive but not price-driven.”

Larry Ishii, general manager, general merchandise/health and beauty care sales, Unified Grocers, Los Angeles agreed: “For [grocery] retailers, particularly where there is a very significant, Hispanic consumer base, it's a must-have category, no question.”