INDUSTRY LEADERS TALK SWEETS AT CANDY SHOW

NANCY BRUMBACK

CHICAGO (FNS) -- Candy sales topped $23 billion in 2000, and the industry recently celebrated its strong growth with the National Confectioners Association's largest All Candy Expo to date.

In its fifth year of existence, the All Candy Expo moved from the outgrown Navy Pier exposition center to the Lakeside Center at McCormick Place here, almost doubling the available exhibit space.

Some 450 exhibitors, more than 100 of them from outside the United States and 120 of them at this show for the first time, wooed candy buyers at the early June event.

In remarks at the opening session, Sal Ferrara, president and chief operating officer of Ferrara Pan Candy Co., and NCA chairman, announced NCA's new electronic marketplace available to the industry, located at www.eCandy.com.

The site includes information on manufacturers, suppliers and brokers, and on products. It offers purchasing and selling capability, news updates, industry events and research data.

In a "State of the Confectionery Industry Review," Jim Corcoran, NCA vice president, trade relations, and Michael F. Gilmore, COO, Ferrero U.S.A., described the industry's performance and outlined likely growth areas.

Of the $23.3 billion in sales last year, more than half, or $12.9 billion, came from chocolate, while non-chocolate candy accounted for $7.5 billion, and gum, $2.2 billion.

By retail channel, $4.1 billion in sales were in food stores; $3.4 billion in convenience stores; $3.1 billion in mass merchants; $1.8 billion in drug stores and $0.2 billion through vending machines. The remainder of the $23.3 billion in sales were through a variety of channels not tracked by NCA or the U.S. Department of Commerce, such as airport shops and specialty stores.

While candy and gum enjoy one of the highest household penetration rates of any consumer product -- 98.8% -- candy is "still one of the most expandable categories, even with current users," said Corcoran.

He cited IRI data that showed candy and gum together ranked third in food categories purchased in 2000, behind only carbonated beverages and milk.

In growth by retail channel, candy and gum sales in supermarkets and mass merchants was just slightly ahead of total overall sales growth by those channels. In drug stores, however, candy sales were flat while overall drug store sales rose 2.2% last year, a fact Gilmore attributed to the increased pharmacy sales in the drug store channel.

Breath fresheners were the leading growth category for candy in 2000, with sales up 15.4% from the previous year, Corcoran said. The other top categories were diet and sugarless candy, up 11.6%; sugarless gum, up 11.3%; seasonal candy, up 5.4%; and novelty candy, up 3.4%.

The growth in seasonal candy for Valentine's Day, Easter, Halloween and Christmas, is outpacing that of total candy and gum sales and represents a strong opportunity at retail, said Corcoran.

Early merchandising of seasonal candy, generally at least eight weeks before the holiday, can boost sales by creating repeat purchases and "can tell consumers your store is their destination for all their seasonal merchandise needs," added Gilmore.

Valentine's sales in 2000 were up 4.7% over 1999 because the holiday did not fall on a weekend, and Easter sales were ahead 11% because the holiday fell in April instead of March as it did in 1999.

This year, Corcoran pointed out, retailers have a chance to strongly increase Christmas sales because Thanksgiving is early, Nov. 22, allowing five full weeks until Christmas.

The pair cited IRI data that showed candy moves better with displays than with price promotions. In supermarkets, of the candy sold with some merchandising support, 22% had special displays while 4% was a price promotion.

"Candy does not have to be given away," Corcoran said.

Both manufacturers and retailers will have to adjust their candy mix to take into account major demographic changes in the U. S., they said.

The aging baby boomer population may become nostalgic for the candy brands of their youth or may cut back candy consumption, noted Gilmore, who added that the drug store distribution channel may become more important for reaching this group as their need for prescription medicines increases.

And "there is no bigger opportunity for confectionery manufacturers today" than the rapidly growing Hispanic population, Corcoran said.