Cleveland — Everything changed in 2020 with many more meals eaten at home, fewer grocery trips and larger baskets. That had a profound impact on the confectionery industry, which relies on both planned and unplanned purchases in food and nonfood stores, and other settings. Sales in movie theaters, candy stores, book stores and more were heavily affected by the various social distancing mandates and lockdowns.
At the same time, new trip patterns greatly benefited the grocery and club channels, but the biggest shift of all was ecommerce. Online ordering jumped about five years ahead on its former growth trajectory and household penetration for candy increased 58.6 percent. Not only did more people buy online, they also placed online orders more frequently. The average number of days between two online candy orders dropped by 13.5 percent. All this resulted in a 74.7 percent increase in online confectionery sales that totaled $3 billion.
|Dollar Sales Change vs. YA
|Dollar Sales %Change vs. YA
|Online Candy Aisle
Chocolate was the top seller in both the online and offline world. After several years of great strength for non-chocolate, 2020 was the year of chocolate with 4.2 percent gains versus year ago, according to Information Resources, Inc. (IR). Virtually everyone enjoys a chocolate treat with 95.9 percent household penetration.
Premium chocolate did particularly well, with double-digit gains in dollars, units and volume. Larger pack sizes also had a strong year, up 9.3 percent, with people buying for multiple consumption occasions in a single visit. Sugarfree chocolate had the highest gains, seeing growth of 16.8 percent for the third year running.
Virtually all chocolate subcategories posted gains with the exception of novelty and seasonal chocolate. Seasonal items (both chocolate and non-chocolate) were affected by purchasing decisions at retail. The Easter season was heavily disrupted by shelter-in-place mandates and participation in later holidays was an unknown.
Retailers bought a little less season-specific candy and backfilled with everyday chocolate and non-chocolate. While Americans celebrated differently, they very much wanted to participate in all the important traditions including Halloween and the end-of-the year holidays. Each of the four big holiday periods had big gains in 2020, led by the winter season.
- Valentine’s Day: +2.5 percent
- Easter: +2.4 percent
- Halloween: +4.3 percent
- End-of-year holidays: +9.7 percent
Source: IRI, traditional and ecommerce channels
Non-chocolate gained about 3 percent and reached nearly $8 billion in sales in 2020, according to IRI. But the sector had a slight drop in household engagement and a more mixed performance. Powerhouse chewy candy reached more than $4 billion in sales, up 6.9 percent. Caramel/taffy also had a big year, up 18.2 percent, but other areas were not able to match their 2019 levels. These include hard sugar, plain mints, seasonal, specialty/nut candy and sugarfree candy. Additionally, sales for gum and mints were heavily pressured by social distancing gripping the country.
2021 brings many opportunities, says Anne-Marie Roerink, principal of 210 Analytics. To start, the category saw a contraction in the number of items in the past year. But that was not unique to confectionery. Many categories reduced the number of options to optimize supply chain efficiencies. But as consumers point to variety as the number one improvement they recommend for their candy aisle, assortment optimization is a winning area in 2021.
At the same time, the continued trip pressure argues for high in-store engagement and points of interruption, through endcaps, secondary displays and innovative cross-merchandising, Roerink notes. Consumers point to baking, ice cream, movie night and many other consumption occasions with room for candy moments.
Another opportunity lies with visibility in merchandising. Retailer support was off in 2020, particularly resulting from fewer circular features. That affected quality support, lifts and efficiencies across all areas. With the strong brand awareness of candy along with it being loved by young and old, visibility in the circular and the aisle drives incremental purchases like no other category, Roerink points out. And as retail is going up against the biggest spikes in the history of food retailing, incrementality is exactly what’s needed to win.
The forecasts are good as vaccine rollouts continue. Consumer mobility is getting stronger with walking, driving, flying, eating out and many other indicators starting to move back to normal levels in many areas of the country. NCA, in conjunction with Euromonitor International, Inc., is projecting confectionery sales to increase from $37.3 billion to $39.5 billion by 2025, with solid contributions by everyday and holiday items.
To learn more, check the Sweet Insights research report series on www.candyusa.com.