Weak Economy Good for Candy

Unemployment is high, stock portfolios are low and… candy sales are up between two and three percent in the past 52 weeks.

Unemployment is high, stock portfolios are low and… candy sales are up between two and three percent in the past 52 weeks. Despite sagging returns in other grocery categories, sales of candy and gum continue to meet expectations, according to the National Confectioners Association (NCA). 

“We are seeing some increases when other industries have seen some declines, and there are many reasons for that. Among them is that candy is an affordable luxury. At a time when we’re making tough decisions about our family budgets, finding room for candy seems easier than finding room for new cars or vacations,” says Susan Whiteside, Vice President of Communications for the National Confectioners Association.

Sales are up across all major trade channels and in all major product sub-categories. Leading the pack is chocolate candy, with growth at 4.4% over the four-week period ending August 9, 2009. Non-chocolate candy sales are up 5.9%, followed by gum at 2.3%. These sales patterns are also reflected in the 12 week and 52 week sales periods.

Meanwhile, after a slow 2008, Hershey’s continues to improve in the second quarter of 2009 with a net sales increase of 5.9% as compared to the same quarter last year. The upcoming Halloween and Holiday seasons, which represent about one-third of Hershey’s domestic revenues in the second half of the year, are forecast to bring the company within their three to five percent full year net sales growth objective. Cadbury, for their part, saw revenue growth of four percent. Chocolate sales for the global confectionary company were up 10%.

It seems that tough times have been good to the sweet tooth industry – a phenomenon that appeared during the Great Depression of the 1930s when many of the big name companies not only managed to stay in business, but even thrived, introducing many popular candies that are still available today, like Mars and Snickers.

Although Whiteside says nothing is recession proof, candy does not seem to be as influenced by economic factors as some other industries, and rarely sees huge spikes or declines. Why? On the most basic level, candy is inexpensive, and as such is an easy “extra” to pop into the shopping cart. And then there’s the instant spirit boost that sugar provides. Lastly, there’s an element of nostalgia involved. When buying a favorite gummy or tootsie pop, consumers are reminded of simpler times.

“There are many factors at work, but that’s certainly part of reason candy seems to be somewhat insulated from the current economic climate. Candy is part of the American fabric. Many of our favorite candies have been made the same way for 50 to 100 years,” says Whiteside.

Overall, the best seller of 2009 is the chocolate bar, followed by licorice, chewy candy and novelty candy. Industry experts predict that these items are likely to thrive in the third quarter too. In fact, a recent NCA survey found that more than half of consumers (52%) plan to deliver chocolate candy to trick-or-treaters this Halloween, with 62% planning to hand out their personal favorite candy item. 

Already America’s favorite flavor, the NCA expects chocolate to emerge as one of the largest growth drivers for the industry over the next five years. Seventy percent of industry experts report that chocolate will help drive the organic market; 73% report that chocolate will pop up more frequently as a key ingredient in main courses. In addition, classic candies are likely to prevail. Thirty-five percent of experts say that new flavors of classic favorites will be a leading trend as the American palate looks for innovative takes on old standbys. 

Times may be tough, yet the sweet life goes on. Candy is one of the first foods we eat purely for pleasure and we continue enjoying it all of our lives. Retailers can expect to see more experimentation with spicy and exotic flavors, fruit fusions and unexpected twists, says Whiteside. Interest in chocolate and its potential health benefits will continue to grow as well.

“Candy is a solid bet for retailers. Because it’s both an impulse purchase and a planned purchase at many times of the year, there is always a market for it and it appeals to people of every demographic group,” adds Whiteside.