SUGAR-FREE HIGH 2004-06-07 (2)

KAREN DEMASTERS

Americans are looking in the mirror, and many do not like what they see. One compromise they're apparently willing to make is turning to dietetic, sugar-free candy to satisfy their sweet tooth.

Because of this, dietetic candy sales are skyrocketing -- with or without the help of retailers -- and there seems to be no end in sight.

"Diet candy flies off the shelves pretty fast, even without us promoting it," Ross Nixon, vice president of merchandising for Dahl's Food Markets, Des Moines, Iowa, told SN. "It sells so well that if we did heavy promotions, we might look stupid because we would be out of stock half the time."

The same dilemma is being faced by retailers across the country. Sales of dietetic candy in supermarkets, excluding supercenters such as Wal-Mart, rose from $31.6 million for the 52-week period ending April 22, 2000, to $33.3 million the next year, and $39 million a year later. Then the real diet crazes kicked in, and sales jumped to $56.4 million for the 52-week period ending April 19, 2003, and doubled to $133 million for the 52-week period ending April 17, 2004, according to Strategic Planner data from ACNielsen, Schaumburg, Ill.

Those monetary increases translate into percentage increases that went from 5% a year, to 18%, to 44%, to an astounding 135% this past year, the Nielsen information shows.

Dietetic chocolate saw the biggest increases, reflecting the fact that chocolate is still America's favorite candy. Sales jumped from $12 million a year for that same time period ending April 2000, to nearly $14 million the next year, to $19 million by April 2002. For the 52-week period ending April 19, 2003, sales were $32 million and reached $104 million for the 52-week period ending this past April 17. The last year alone saw a phenomenal 218% increase in sales for dietetic chocolate in supermarkets.

Dietetic candies other than chocolate experienced healthy increases in sales of 18% and nearly 22% for the past two years, while sales of sugared candies were holding steady, seeing slight gains or in some instances experiencing losses, according to the Strategic Planner data.

"Right now, there is a low-carb frenzy in all categories," said Nixon of Dahl's, which has 11 stores. "But there are also a lot of people aware of diabetes. It used to be just the people who were in trouble because of their sugar intake avoided sugar candy, but now there are people who do not want to get into trouble who also buy it.

"The candies we have the most success with are the high-quality ones," Nixon continued, "but we let the individual store managers decide which new products to stock and which old ones to eliminate. They know best."

Michael Madigan, merchandise buyer for Camellia Food Stores, Norfolk, Va., agreed that not much promotion is needed from the retailer to make sugar-free candies sell. The company has 18 stores in Virginia, Maryland and Delaware.

"Sales increases have been huge, mostly because of the large number of new products," Madigan said. "We do not have to do much to promote them. I put the low-carb and sugar-free candies together, and I group them in the same section as the regular candy. We try most of the new products, especially if they are supported by heavy advertising from the manufacturer. We give new items six months and see how they perform."

Madigan said new product lines are often first displayed in the aisle in a manufacturer's shipper to catch the customer's attention. Many sugar-free candies are labeled as a good alternative for those counting carbohydrates. They also come in smaller packages than sugared candies, and are slightly more expensive.

"But the expense is not a problem," Madigan concluded. "I don't see this trend abating."

Most candy manufacturers have come out with new sugar-free lines lately. Jelly Belly Candy Co., Fairfield, Calif., has an entire line of sugar-free jelly beans and Jelly Belly Sours, and is promoting them with new recipes that use the sugar-free candies. Each is labeled for low calorie and low carbohydrate content.

Everyone remembers the little red and white peppermint candies, Star Brites, made by Brach's. These, too, now come sugar-free, along with sugar-free Butterscotch Hard Candy and sugar-free Cinnamon Hard Candy. Each has 50% fewer calories than traditional Star Brites. Brach's, which started as the Palace of Sweets in Woodridge, Ill., in 1904, was recently purchased by Barry Callebaut, a leading manufacturer of quality cocoa and chocolate products based in Zurich.

It is not just the candy manufacturers that are experiencing increases in sales. Those making the many sweeteners used in candy are also seeing sales jumps. Global Sweet, based in Rehoboth, Mass., produces a wide range of sweeteners, the three most popular being sugar alcohols called Xylitol, Maltitol and Erythritol. Each has a different healthful quality, such as aiding digestion or promoting healthy teeth, according to the company. The ingredients that end up in the sugar-free candies are made from such things as birch trees, corn, melons and mushrooms.

Companies such as Hershey's, the largest seller of chocolate candy in the United States, and M&M Mars and Nestle, the other two top sellers, use these types of products to produce their sugar-free candies. Hershey's now has a line of sugar-free chocolate and sugar-free Reese's products, although they are not low-calorie because they have the same amount of fat as sugared varieties, according to a company statement.

New companies have sprung up around the sugar-free and low-carb crazes. Prime Health Dietary Supplements, which produces Think Thin nutrition bars, has branched out into dietetic candies.

Likewise, a Brooklyn-based kosher company, Eda's, produces sugar-free hard candies in a wide range of flavors, sold in supermarkets and other outlets. Eda's is promoting itself as a low-carb manufacturer as well.

"We always were zero carbs, but now that is what people are asking about," said Virginia Cedeno, general manager of Eda's. "In September, we want to introduce a new line of all-natural candies that are sugar-free and zero carbs. It will be a fruit mix such as lemon, cherry and orange."

The familiar boxes of Russell Stover chocolates also come today in sugar-free varieties.

Supermarkets that cater to a particular clientele often have extra reason to try the new sugar-free candies and snacks. Seal Beach Market in Seal Beach, Calif., has a clientele that is almost exclusively elderly, and sugar-free products have always been important.

"It is a health factor for elderly people to cut out sugar," said Steve Scarpa, store manager. "We have an entire aisle of candy, and a third of it is sugar-free, and an entire aisle of cookies -- and half of that is sugar free."

The store never runs special promotions, although Scarpa said he always uses the manufacturers' in-aisle shippers for display as an attention grabber, and he tries most new products from manufacturers that he knows and trusts.

"When the customers see something they want us to stock, they tell us," Scarpa said. "Sometimes, it is trial and error with new products."

Other stores with more diverse clientele are stocking new products at customers' requests and finding success in increasing sales.

"Sugar-free products of all kinds have been increasing, not just candy," said Tim Huffman, owner of Huffman's Market in Columbus, Ohio. "But sales in sugar-free candy have doubled in the last couple of years. We determine what to stock by what customers ask for. If we have 10 different new items, that is about the limit for what we can stock, but it is going to be something totally new. We are not going to stock sugar-free next to the same product with sugar in it. We do not have the room."

Huffman's, a small store with 7,000 square feet of total selling space, has increased the candy aisle as much as possible, he added.

Charles Jones, senior buyer for Scolari's Food and Drug Co., based in Sparks, Nev., has been equally successful with the new sugar-free candies. Scolari's has 19 stores in Nevada and California.

"We do not promote sugar-free and low-carb candies, and people are still buying them," he explained. "Sales of sugar-free candies were increasing for a couple of years. Then the Atkins diet fad hit with even more of an impact on sales because sugars are carbs. The only thing that might be holding back sales a little is the price."

Sugared candies that sell for $6.99 or $7.99 a pound will be $9.99 a pound for sugar-free, and a bag of sugared hard candy that sells for 79 cents will be 99 cents for the sugar-free variety, he said.

"But people want it, so they are willing to spend the extra," Jones added. "We have increased our offerings recently because you have to strike while the iron is hot."

CRUNCHING THE NUMBERS

Americans are facing an obesity problem. Candy retailers, wholesalers and manufacturers are debating this problem's effect on candy sales.

Thirty years ago, 14% of Americans were obese. That number has now climbed to more than 30%. Two-thirds of Americans are overweight to some extent. The crisis is being addressed by schools and fast-food chains -- and by candy purveyors.

The surging popularity of low-carb diets means many people are limiting their candy intake. An estimated 32 million Americans are on some kind of high-protein, low-carb diet, according to a recent Harris Interactive poll. This spring, the National Confectioners Association, Vienna, Va., conducted a State of the Industry Conference focusing on how candy and snack manufacturers and retailers can deal with these trends.

The amount of candy consumed per person grew steadily through 1998 from a little under 19 pounds per person per year in 1984, to a high of 25.4 pounds per person per year in 1997. Then it began a slow decline to 21.9 pounds in 2002 and 22.3 pounds in 2003, according to the NCA.

Dollar sales have increased slightly, but more from increased costs than from increased consumption. Dollar volume hit $15.2 billion for all candy sales in the United States in 1997, but increased only to $15.7 billion by 2001 -- while consumption actually dropped from 7.3 billion pounds in 1997 to 7 billion pounds in 2001, according to the NCA's latest figures.

Sales in supermarkets have done a little better, but are still not breaking any records as consumers limit sugar intake. Sales of non-diet candies in supermarkets, excluding venues such as Wal-Mart Stores, rose only 5.3% from $3.58 billion to $3.77 billion when comparing the 52-week period ending April 22, 2000, to the 52-week period that ended April 17, 2004. During that same time, actual consumption decreased by almost 1%, according to ACNielsen Strategic Planner.