SWEET SPOT 2004

JON SPRINGER

Supermarket operators are trying for another sweet year in candy sales.

According to the National Confectioners Association, Vienna, Va., sales of candy in the supermarket channel increased by 3% last year, outpacing growth of candy overall. The growth came from manufacturers providing new products and packaging, and retailers finding effective new merchandising strategies, observers said.

Retailers this year will again have plenty of new items to sell, as candymakers aggressively move to exploit health and diet trends. Meanwhile, retailers are finding more and more places to merchandise candy -- not just at the registers and in-line anymore.

"We're experimenting with tertiary placements of candy all around the perimeters," Chuck Beebe, category manager for Brown & Cole, Bellingham, Wash., told SN. "For us, candy seems to do best when it's sprinkled around the store."

A four-sided merchandising unit on wheels provided by Hershey's has allowed Brown & Cole to experiment with various placements, Beebe said. "We've put it in the deli, in the video section and front end, and we're seeing what works best," he said. Brown & Cole is also using a lane-blocker in some aisles to merchandise candy.

Beebe said limited-edition candies and brand extensions have been the most significant trends within the category. These create excitement and encourage trial.

"It's like what a lot of the pop companies have done: releasing a limited edition and, if it does well, bringing it out as a main item," Beebe observed.

Hershey's mint-flavored Kisses, for example, began as a short-term product. "The companies are able to introduce products on a limited basis while at the same time determining consumers' likes and dislikes," explained Jim Corcoran, vice president for trade relations at the NCA. He added that merchandising limited-edition products has tended to raise sales for the entire category.

Many of the new products have come as the category's major manufacturers seek a bigger chunk of candy's holiday business. Supermarkets overall tend to do around 25% of their total candy business during the four major holidays, Corcoran said.

"Some of our Valentine's candy sales have fallen off a bit. I think that business is going to drug stores like Brooks and CVS," lamented Guido Giantonio, manager of Highland Park Markets, Manchester, Conn. Yet, Giantonio said his focus is on merchandising candy every day. His store features candy in a farm wagon placed near the entrance. The display allows for cross merchandising with toys and other items appropriate for the selling holiday.

"We do very well merchandising candy here, no matter what the holiday," said Giantonio. "The wagon is something we do in all five stores. It's a real eye-catcher."

Manufacturers in the meantime are offering plenty to fill those displays. The addition of low-carbohydrate and sugar-free items into the mix is the category's hottest trend, according to Corcoran. Sugar-free chocolate lines from Hershey's and Russell Stover were introduced last year, and this year will see the arrival of Hershey's 1g Sugar Carb bars, which the manufacturer said are compatible with the increasingly popular low-carb lifestyle.

"Sugar-free at one time was a limited product offering within confectionary," said Corcoran. "Today, I think retailers are looking at sugar-free as a permanent fixture in the category, backed by strong national and regional brand names."