Sugar-free candy has yet to click as a mainstream sweet option, which could be a missed opportunity for food manufacturers and retailers
In a nation with a major obesity problem and a growing interest in healthier eating, you might presume that sugar-free candy sales would be experiencing some mild uptick if not an outright boom.
But in reality the picture is much more muddled, and generally not favorable for the oxymoronic sugar-free sweets, though candy sales in general have been faring well.
According to the SymphonyIRI Group, Chicago, for the 52-week period ending June 12, 2011, sugar-free chocolate candy sales declined 3.3% to $78.1 million in food, drug and mass outlets (excluding Wal-Mart Stores). That followed sales drops of 2.6% in 2010, 5.2% in 2009 and 6% in 2008. Non-chocolate sugar-free candy performed a little better over the past year, growing 1.3% to $72.1 million in those retail outlets, though unit sales dropped 1.8%.
In supermarkets, SymphonyIRI's data shows a slight dip in sugar-free chocolate candy over the past year (0.7% to $35.7 million). In the non-chocolate category, sugar-free sales for food retailers fell 4.6% to $30.8 million.
The only confectionery category that shows consistent sugar-free growth is gum, in which sugar free accounts for the vast majority of sales and grew 2.1% in food/drug/mass (sans Wal-Mart) and 2.1% in supermarkets over the past year, according to SymphonyIRI; this is actually less growth than in recent years.
Along with their diminishing sales, sugar-free treats represent a miniscule slice of the overall candy pie.
For food retailers, sugar free accounts for just 1.2% of chocolate candy sales and 2.2% of non-chocolate sales. The lion's share of sugar-free sales comes from gum, with $1.2 billion across retail outlets in the past year.
Sugar-free candy sales at one major retailer, Publix Super Markets, Lakeland, Fla., reflect these trends. “We are not seeing a strong rate of growth with sugar-free candies,” said Maria Brous, a spokeswoman for the 1,036-store chain. Still, she said, Publix recognizes the importance of offering a selection of sugar-free candies. “While they are not top sellers, we do offer a variety of offerings to assist our customers with their dietary and health needs.”
Brous' remarks suggest that sugar-free candy remains a niche segment catering mainly to people who need to reduce their sugar intake. Unlike diet soda, for example, sugar-free candy has not made the leap to the mainstream population looking for an easy way to cut calories.
Higher prices compared to regular candies may be one obstacle to sugar-free sales growth. But perhaps a more bedeviling issue is image. “Consumers think it's boring - just for diabetics and old ladies,” said Marcia Mogelonsky, global food analyst for Chicago-based Mintel. “Manufacturers haven't found a successful way to make sugar-free candy appealing to a younger audience.”
And many consumers are not willing to sacrifice taste for a health benefit when it comes to candy. “A lot of consumers see snack or candy time as a time for pleasure and not being concerned about what's healthy,” said Susan Viamari, editor, Times & Trends, a newsletter published by SymphonyIRI.
Unlike sugar-free candy, the candy and chocolate candy category as a whole has been growing despite — or perhaps because of — the slumping economy. According to SymphonyIRI, chocolate candy sales have jumped 6.1% to $5.6 billion — and non-chocolate sales have grown 2.4% to $2.8 billion — in food, drug and non-Wal-Mart mass outlets during the 52 weeks ending June 12.
Lackluster sugar-free sales have been especially evident for chocolate candy, where taste rules, said Jenn Ellek, director of trade marketing and communications for the National Confectioners Association (NCA), Washington. “People are very particular with chocolate so I don't think the turn [to the mainstream] has been made yet,” she said. “Right now you're just looking at consumers with health issues.” That may change, she added, as sugar-substitutes like Splenda and stevia improve their ability to make sugar-free chocolate taste like the real thing.
But Marion Stricker, candy buyer for Jungle Jim's International Market, a one-store independent in Fairfield, Ohio, believes candy makers have already “greatly improved” the taste of sugar-free candy as well as the aftertaste, “which used to be a problem.” The better flavor, she added, also helps parents who purchase sugar-free candy for their candy jars at home, “probably hoping the kids won't notice.”
Apart from gum, sugar-free candy sales have also been stymied to some degree by the debate over the nutritional soundness of artificial sweeteners, though most are FDA-approved. “There's a firm belief among a lot of consumers that sugar-free translates to bad-for-you,” said Mogelonsky, adding that this belief is enhanced by warnings on some sugar-free packaging that the candy could have a laxative effect. As a result, many moms are wary of giving candy with artificial sweeteners to their kids. “But I would say there's not enough understanding among consumers of the relative merits of sugar-free vs. [regular] candy,” she said.
Notwithstanding consumer misgivings, sugar-free candy provides clear health benefits, including fewer calories and no risk to dental health, Mogelonsky noted. “Manufacturers should explain what's in the product and what good it can do,” she said. “They have to prove it's wholesome and won't hurt kids.”
Complicating the health debate has been the growing consumer interest in “natural” ingredients, such as agave syrup or all-natural cane sugar. Some consumers, particularly younger ones, prefer these sugars to artificial sweeteners like Splenda or aspartame, as well as refined sugar, said Mogelonsky.
But emerging “natural” sugar substitutes like stevia, derived from an herb, represent an opportunity for sugar-free candy makers to tap mainstream consumers who want to consume less sugar and eat healthier, noted SymphonyIRI's Viamari. “A lot of folks are looking carefully at what they're eating so the timing is right.”
For large manufacturers like Hershey, sugar-free, reduced-fat and reduce-calorie products “are essential to maintain current market share,” said Richard George, food marketing professor at St. Joseph's University, Philadelphia.
One sugar-free candy introduced last year — Refresh hard candy, from Halls — is being successfully marketed to the general public as “everyday refreshment” with moisturizing action, noted Viamari. In the 52 weeks ending June 12, sales of Refresh were up 11% in food, drug and mass (without Wal-Mart) and 3.6% in food stores alone, according to SymphonyIRI.
Retailers may have discouraged sugar-free candy sales by not doing enough to merchandise candy generally and sugar free in particular.
NCA's Ellek believes sugar-free candy should be merchandised liberally throughout the store, including near the pharmacy, creating multiple “points of interruption.” In the candy aisle, she recommends creating a sugar-free section. “A blocked-off section seems to do better than integrating it with the brands,” she said.
Mogelonsky suggests making sugar-free look “contemporary” and putting it in front-end displays “in smaller bags with more dynamic wrappers.” Retailers could put a sugar-free candy display in the toothpaste aisle to “make it stand out.”
“The key for retailers is to identify sugar-free easily and let consumers know you've got it or they could gloss over it very easily,” said Tomi Holt, director of communication for Jelly Belly, Fairfield, Calif., which makes sugar-free versions of its candies.