Confectionery Industry Insights and Trends Amid the Pandemic
The confectionery industry has shown varied trends during the pandemic, with the bakery industry experiencing inconsistent rises in production levels. Insights from industry reports highlight sales fluctuations in different candy categories, workforce challenges, and consumer engagement. Despite challenges, the industry seeks ways to adapt and maintain growth.
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Bakery Industry Rising Inconsistently During Pandemic According to the two-part Industry Pulse Survey (March and June 2020) of bakery products manufacturers, wholesalers and snack manufacturers, 44% of the participants in the June survey said they had increased production, compared to 36% in the March survey. The survey respondents also reported less disruption to their equipment supply chain during June (17% some impact, 14% significant impact) than March (some impact, 18%, significant impact 18%). As with many industries during the pandemic, these survey respondents primary business concern during both March and June was finding qualified workers and an associated concern, workforce vacancies, was their second largest challenge.
Candy Categories Insights According to Candy Industry s 2020 State of the Confectionery Industry Report, some product categories have experienced large sales decreases while others have recorded smaller increases, as per IRI data for the 52 weeks ending 6/14/20. Sales in the gift-box-chocolate category decreased 8.3% YOY to $282.26 million and unit sales decreased almost twice as much, by 15.7% to 54.0 million units. Ferrero USA is the clear leader of this category, with a 41% market share. During the same period, novelty chocolate candy sales decreased 3.4% YOY to $13.0 million while the novelty non-chocolate candy category decreased a slight 0.4% to $802 million.
More Candy Categories Insights Candy Industry includes the gum category in its 2020 State of the Confectionery Industry Report. Sales for the entire category decreased 8.2% YOY to $2.88 billion and unit sales decreased 14.6% to 1.52 billion for the 52 weeks ending 6/14/20. Sugar-free gum, which accounted for 85% of the gum category, experienced an 8.1% YOY decrease in sales, or $2.45 billion, and unit sales -15.7%. Sales for the smaller sugar-gum category decreased 8.8% YOY to $421.7 million and unit sales -11.1%. In the non-chocolate chewy candy (gummies) category, sales increased 5.2% YOY to $3.9 billion during the same 52-week period, although unit sales were essentially unchanged at +0.4%, or 2.26 million units.
2019 in Review As with many consumer retail sectors, the confectionery industry performed better during 2019 than the first half of 2020. According to National Confectioners Association s (NCA) State of Treating Report, 2019 sales increased 2.4% to $37.5 billion. The grocery channel accounted for $6.5 billion of 2019 sales (+2.7%), the convenience channel $6.4 billion (+2.1%) and the drug channel $2.9 billion (-0.4%); however, online sales of chocolate increased 15.5%, non-chocolate +36.5% and gum/mints +40.4%. Measuring consumer engagement for the report found a 98.8% household penetration, an average of 35 annual trips to stores for treats and an average expenditure of $5.52/trip.
Envisioning an Enjoyable Halloween Although many traditional Halloween activities seem unsafe during the pandemic, a Harris Poll conducted for the NCA found 74% of Millennial-aged mothers and young parents think Halloween is an essential activity this year. Of those surveyed for The Harris Poll, 38% said they would purchase candy for their children and 46% expect to trick-or-treat with their children at neighborhood homes. Some stores are displaying Halloween candy early and promoting more family-size packs. A separate summer 2020 survey revealed 70% of parents anticipate a Halloween celebration with their children, with 35% saying they would buy children s costumes and 33% would buy adult costumes.
Adding CBDs to the Ingredient Mix With more media coverage of the potential health benefits of CBDs, many confectioners are also viewing the sales benefits, as 2020 sales of cannabis-infused products were forecast to reach almost $3 billion and gummies are more than 90% of solid edible products. Edible products infused with CBDs are very consistent, have a long shelf life and can be transported easily like most candies. According to a 2020 Brightfield Group study, the US CBD market will reach $4.7 billion during 2020, and then increase to $16.8 billion by 2025. The study also found 48% of surveyed CBD consumers purchased/used gummies/candies during Q2 2020, compared to 25% during Q1 and, as with many other consumer products, 47% of CBD consumers made their purchases online during Q2, compared to 29% for Q1.
Advertising Strategies Food stores may want to emphasize candies and other sweets in store displays more than other years not only during the holidays, but also throughout the winter as the pandemic is likely to require more people to remain at home. Food stores and bakeries could promote a Sweet Eats Week during Q1 2021, with daily specials, and offer a digital coupon for a 2021 Valentine s Day or Mother s Day purchase with a qualify purchase of the daily special. Food stores and bakeries may be able to partner with retailers and shopping mall owners who have converted their parking lots into drive-in theaters to promote a weekly special, and even distribute a few free samples.
New Media Strategies Stores selling confectioneries and local bakeries can create and post short videos to social media showing their increased safety standards during prep, baking and handling, so consumers are more confident to buy these products. Ask customers/local consumers who are entirely working at home to post short videos on social media showing their favorite confectionery products for snacking during their long work hours. Food stores and bakeries may want to invite a local nutritionist to record some short videos about how to enjoy confectioneries and similar treats and keep sugar intake low, including some recipes as more people are baking during the pandemic.
