Wednesday, June 7, 2006

Session: Grow Confectionery Sales

Tips and Techniques to Grow Confectionery Sales
presented by Ray Jones, Managing Partner of Dechert-Hampe, Inc

The first session of the Expo on Monday afternoon was an intricately researched report on the effective techniques for large stores such as grocers to maximize their sales of candy.

Candy is a $27.9 billion business. Confectionery is third to soda and milk as a category of product sold in stores.

Here are some interesting things I learned:

The gross margin (basically profit) on general groceries is 28%.

The gross margin on confectionery (chocolate, sugar candy & gum) is 30%. So basically, candy is one of the more profitable things that a grocer can sell in their store.

Studies have shown that people 70% of people who visit grocery stores buy candy more than once a month.

The more candy people buy, the more they consume. That sounds like a silly assumption, but when someone buys a lot of toilet paper or paper towels on sale, they don?t use more, they just keep them until they need them. Turns out when people ?stock up? on candy, they eat it just the same. Similar things were found with people who buy ?occasion? candy, such as movie theater boxes but the candy might not actually make it to that movie they?re planning to see.

The candy aisle is not a destination and is usually placed in the worst traveled place in the store ? the center aisle. Studies have shown that people are more likely to buy things that are located earlier in their path through the grocery store and further that most people shop the perimeter of the store.

What really surprised me about the study figures was that 27% of candy buyers will not compromise on what they want. If they don?t see what they want at the store, they?ll either go somewhere else to find it or not buy anything at all. So it?s important for successful grocers to carry the maximum variety.

Within the presentation there were a series of slides that showed ?best practices? from sample stores. These best practices were proven techniques that increased sales. Some of these were colorful and bold headers over the aisle, blocks of colors on the shelves to delineate candy categories and give a sense of organization, using peg bags of candy that span large portions of the aisle to give uniformity to large quantities. And the last thing that I found really surprising was that people were more likely to call a store?s candy aisle well stocked if they saw premium chocolate bars. Even if they don?t like them or don?t want to buy them, it made them think that there was a large variety.

Last year there were 2,767 new consumer candy product introductions and what?s interesting about that is that 1/3 of all sales were for these new items. This means that consumers are interested in incorporating new products into their lives and are pretty much willing to give things at least a try.

The industry as a whole recognizes that there are some trends and concerns.

One of those is diabetes. The curious part about that is that the candy industry invested quite a bit over the past ten years introducing a huge variety of sugar-free candies. But sugar free sales are struggling. The research into why this is turns out that even diabetics don?t buy the candy for themselves ? it?s usually bought for diabetics as a sign that they care about them but want them to have something good. There’s still either a stigma of buying diabetic candy for yourself, or perhaps no one really likes sugar free candy.

On the whole it was a highly technical seminar, but I was able to hold my own. There were a few times where there?s some jargon that I didn?t understand, but I?m getting the hang of it.

It?s interesting to see what grocers or stores might think about our behavior as consumers. And then it?s interesting to see where they?re right and wrong.

One of the things that was stressed (and I didn?t write down the figures) was that a successful candy aisle will be supported by other candy displays elsewhere in the store. They call it interruption marketing. You?re over in the cheese area and you stumble across a floor display of M&Ms and guess what? You?re 200% (or so) more likely to buy some candy, even if they?re not on sale.

It?s good to know how you?re being marketed to. It might not change your behavior, because the marketing plan may actually support what you want to accomplish ? like remember that you wanted to pick up a bag of Hershey Kisses.

POSTED BY Cybele AT 5:40 am Tracker Pixel for Entry     All Candy ExpoNews

  1. “It?s good to know how you?re being marketed to.”

    yup.  everyone should learn a bit about media/advertising literacy.  it’s amazing what stores will do to get you to spend more money.  for instance, we just got a little paper bag in the mail from a grocery store that just opened nearby… printed in big bold letters is “50% of any item you can fit in this bag!”  not so noticable is the “max discount of $10, to be used in conjunction with regular shopping, $25 minimum additional purchase required.”  my bet is there will be quite a few people out there buying $25 worth of stuff that they may not really need just to get 50% off a bottle of shampoo or something.

    with that said, i have a rather large chocolate stash… i’m amazed that i haven’t been going through it very quickly!  i might eat 2 or 3 blocks off a bar a day…

    Comment by erin on 6/08/06 at 4:35 am #
  2. I can’t say for sure why sugar-free candy sales are struggling but it has to be in part due to the three factors which make it harder to want/buy:

    1. price
    2. availability
    3. side effect

    Sugar-free candy is almost always more expensive than regular candy and it’s not sold in most places side-by-side in bars with regular candy. Also, the side effects of sugar-free candy can be most unpleasant (particularly the laxative effect), even for relatively small or normal portions of consumption.

    I’m not sure much can be done about the side effects as that’s a part of the sweeteners that are used but I do think the price and availability issues could be addressed. I don’t think major candy companies have tried for side by side positioning of their sugar-free versions of popular bars but I’d imagine it’d improve sales. It’s not like sugar-free sodas where the Diet Coke is right next to the regular Coke so buyers can ask themselves on impulse if they’d rather skip the sugar.

    Comment by Orchid on 6/09/06 at 6:26 pm #
  3. Speaking as a diabetic, no, I’m really not fond of most sugar-free products. The Murray sugar-free cookies are okay (I don’t like the chocolate sandwich cookies, the chocolate-covered shortbread and chocolate-covered grahams aren’t bad), and Harbor Sweets here in MA makes some fairly good sugar-free dark chocolate, though their sugar-free milk chocolate is no fun at all. Other than that, though, it’s a poor substitute for the real thing. I made the decision a long time ago that I’d rather have the good stuff in very careful moderation than eat the also-rans more regularly, and I’m really much happier with the occasional extra-special treat.

    And I do have to agree with the other part of that hypothesis: sugar-free candies are more often bought as gifts for diabetics than anything. I’ve finally managed to convince my friends and family that, while I appreciate the sentiment, I really don’t like them and won’t eat them, but up until a year or two ago, I was still getting stacks of them at Christmas and birthdays. I have to say, I harbor a tiny bit of resentment toward the geniuses who decided to market these products toward diabetics - I never really bought it, but the people in my life sure as heck did!

    Comment by Autumn on 6/10/06 at 7:59 am #
  4. Cybele's avatar

    erin - sometimes it’s like a game when you see a piece of advertising ... “What do they want me to think or do?” Then I like to do the opposite.

    orchid - excellent point about diet sodas being right next to regular ones. The same with gum ...why is candy so different?

    Autum - thanks so much for sharing your insights and experience in the area. I’ve had my share of sugarfree sweets when visiting my grandmother. The only thing I think we ever found that she liked were some sugarless meringues.

    I’m inclined to agree that a well-planned indulgence of a small amount of the good stuff is probably better in the long run. Craving satisfied and fewer compromises. But I know that’s not always easy.

    Comment by Cybele on 6/13/06 at 2:26 pm #
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