SUGAR AND SPICE

AMANDA CHATER

Move over, Hot Tamales. The candy aisle is getting new flavors like chili and tamarind as retailers try to appeal to Hispanics' sweet tooth.

United Supermarkets in Lubbock, Texas, will add five Hispanic product lines by early 2006 to stores with a big Mexican customer base. Many of the new products will feature tamarind; tropical flavors such as mango and pineapple; and cajeta, a caramel-type product made with goat's milk; in individually wrapped and in six-ounce peg bags.

"Hispanic candy is in its infancy and is one area we're looking at expanding," said Michael Osornio, confections category manager. "We've got the customer base, and we now want to give them the products they're looking for."

Hispanic candies are largely specialty items, leaving retailers to decide whether to merchandise them in the candy section or the ethnic food section.

"Retailers can start them off in a more specialty section of the store and then migrate over to mainstream," said Raymond Jones, managing director of Dechert-Hampe, a marketing consulting firm in Northbrook, Ill.

Others argue for an integrated approach. "People like to see all of their choices in a certain aisle," said Jim Corcoran, vice president of trade relations for the National Confectioners Association in Vienna, Va.

At the Houston location of Central Market, H.E. Butt Grocery's upscale, fresh format, Hispanic candy is merchandised in the Mexican food aisle. That's because these products tend to be bought by non-ethnic shoppers, and they expect to find them there, said specialty food director Fortino Godinez. "They come here, recipe in hand, looking for a specific Hispanic chocolate," he said. Selections include a dark chocolate baking bar called Ibarra Authentic Mexican Chocolate; Popular, a dark chocolate bar; cajeta-filled chocolates that are in the shape of Tootsie Rolls; and certain brands of cajeta. (Other brands are positioned as an ice cream topping and sold from the toppings section.)

Hispanic candy lends itself to other merchandising opportunities, though.

Hispanic shoppers tend to visit the meat and produce sections multiple times per week, so candy should be placed near those sections as well, said Beatriz Mallory, chief executive officer and chief strategist for HispanAmerica, a marketing and advertising agency in New York.

Darren Kolinsky, director of candy for specialty distributor Distribution Plus in Wilmette, Ill., suggested that retailers use clip strips to encourage impulse buys in those areas.

Distribution Plus offers over 45 varieties of candy under the Casa de Dulce brand, imported from Mexico. Ralphs in Southern California is testing the products at its cash registers.

In deciding what products to carry, retailers need to research their customers' country of origin.

"It's a big mistake to look at the whole Hispanic market as one homogenous market," said Corcoran. "Good marketers have segmented the market to different regions, such as Mexicans and Caribbean Hispanics."

Mexicans gravitate toward strong flavors, Mallory said. They add salt and chili to fruits and vegetables such as cucumbers. Unacculturated consumers tend not to eat as much candy as Anglo-Americans and lean toward fruit instead.

Among South Americans, tropical flavors such as mango, pineapple and papaya are popular, Mallory said. Since these flavors have wide appeal, retailers can use them to appeal to Hispanic shoppers without alienating non-ethnic customers.

Ethnic candy's greatest growth potential lies with shoppers of Mexican origin, however. Fourteen percent of the United States population is Hispanic, and that figure is expected to jump to 20% by 2020, when it will represent $1 trillion in purchasing power. Mexicans are expected to represent 67% of the Hispanic population growth.

Most of the existing products available in the United States target Mexican consumers. Three of United Supermarkets' five new Hispanic lines are Mexican imports (De la Rosa, La Palma and Linares), and two are from American candy companies (Hershey's Pelon Pelo Rico and Masterfoods' Lucas World brand).

Observers expect manufacturers to react to growing demand through existing and new products. Mallory said she expects the number of Hispanic candy products on the market to grow through activity by Latin American companies.

Corcoran, however, doesn't expect many new Hispanic products on the market. Rather, he expects to see existing products get bilingual packaging. Many products from American candy makers are already being distributed in Mexico and gaining recognition, he said.

"If [Hispanic customers] see a new product with a quart of familiarity, they will buy it," Dechert-Hampe's Jones said. "They are looking for brand name first, followed by flavor."

That's why Jungle Jim's International Market in Fairfield, Ohio, focuses on branded name products in its Hispanic candy set. "Hispanic shoppers are pretty brand loyal and like what they grew up on," said Tom Hann, director of the international food department. "If we have enough of one brand name, we group the products together, which helps our customers to focus."

Hershey's and Masterfoods are leading the way among American candy makers in pursuing the Hispanic consumer. Hershey's has two Hispanic lines. La Dulceria Thalia is a partnership with Latin singer-actress Thalia. It includes Dulce de Leche Kisses, Jolly Rancher lollipops in both hot and spicy and tropical fruit flavors, and Hershey's Miniatures in two flavors. Hershey's Lorena USA product line includes Pelon Pelo Rico, a tamarind and chili candy.

Masterfoods distributes Mexico-based Lucas World brand in the United States. Most of its products incorporate chili, tamarind and chamoy. A popular one is Salsagheti, watermelon-flavored candy straws that come with tamarind sauce to pour on top.

By including ethnic candy in their candy assortments, retailers stand to capture more than just Hispanic grocery dollars -- potentially good news for an otherwise flat category.

American tastes are changing. "Kids are into extreme flavors like sour or strong flavors," Jones said. "Young people today are into intense experiences like bungee jumping and intense music. Young people are looking for more interesting and unusual things. Our society is also changing, and we're becoming more global. And the more global you become, the more you adopt things from other countries."

He expects Hispanic candy's appeal with non-ethnics to grow. One reason is that as people get older, they seek out stronger flavors. But Americans' taste buds are changing in general, as evidenced by interest in the heavily-roasted flavor of Starbucks coffee and stronger beers, he said. "People have become more sophisticated, and I think the candy industry is ripe for this."

Asian Creations

HOUSTON -- Some of Central Market's best-selling candy is Asian, despite low candy consumption among that population group.

The H.E. Butt Grocery banner here finds that while Asians make up 20% to 25% of its customer base, it's non-Asians who are buying the candies.

"Asians are typically not going to buy what we have to offer because our product isn't authentic enough," specialty food director Fortino Godinez said. "We're catering to those who are curious."

Among the products in Central Market's Asian food section are:

Ting Ting Jake, a ginger candy from Indonesia, $2.69 per 8-ounce bag.

Botan Rice Candy from Japan, nuggets of sweet rice, corn syrup, water and lemon flavoring. A bag of six costs 89 cents.

Marukawa bubblegum from Japan. Eight mixed-fruit packs with orange, strawberry, melon and grape cost $1.39.

White Rabbit Creamy Candies from Japan. An 8-ounce bag of 40 pieces costs $2.19.

Pocky, also from Japan, a chocolate-covered biscuit stick that Asians often serve as an hors d'oeuvres at parties, Godinez said.

There's not a lot of choice in Asian candy, but there isn't a lot of demand for it, either, said Tom Hann, director of international foods at Jungle Jim's International Market in Fairfield, Ohio.

Asians in the United States, whose share of the population is expected to more than double from 2000 to 8% by 2050, consumed 38.4 pounds of sugar per capita in 2002, according to the Food and Agriculture Organization of the United Nations in Washington. Non-ethnic Americans, meanwhile, consumed 158.5 pounds per capita.

"The pure sugar-bomb candies we're used to just don't sell with Asians," Hann said. This group tends to eat more nuts, seeds and chocolate-covered pretzels, along with tropical fruit-flavored hard candies and gummies, and prefers traditional-looking products, he said.