Novelty is the best policy - for Kids

We can all recall our favourite lollies from when we were kids. Kids still love lollies but what they buy has changed - not just across the generations, but year to year and month to month. Now, they are always looking for something new. Here we find out from suppliers how to make more of this sometimes neglected category.

According to AC Nielsen Scantrack data on convenience and route (i.e. including newsagents, service stations and pharmacies), kids' confectionery was valued at $6.9 million and grew 21% in 2003.

In Tier 1 and 2 C-Stores, Cadbury brands dominate the category. More than half of the top 20 children's confectionery items are variants of the Cadbury creatures - Freddo, Caramello Koala and Yowie.

Another key brand in the category is Kinder Surprise. In 2004, Kinder Surprise is being re-launched nationally with a second surprise - a magic code for kids to go online and play a game. During the trial in Queensland, sales increased 95% (MAT 23 November 2003).

Pester power

C*track data tends to reflect what parents buy for kids in response to "pester power". The major manufacturers such as Cadbury, Nestle and Wrigley agree that adults buy tried and trusted brands, including products they remember from their own childhood.

"Milky Bar and Smarties appeal to the younger end of the kids market, where the parent is in control of the purchase decision and seeks brands that are trusted, well established and offer portion control for their children," says Michele Phillips, Chocolate Marketing Manager, Nestlé.

This follows through to gum. Whereas kids buy Hubba Bubba, Extra for Kids appeals to parents who believe sugar-free gum is good for growing teeth and helps prevent tooth decay. It's a gum they can share with their kids.

With candy and chocolate, sugar is less of an issue, but parents still look for "permissible" confectionery such as marshmallows which are fat-free and "natural" confectionery.

"If parents are buying, they choose national brands that they recognise and that their kids will eat," says Sean Issell, General Manager, Mike and Jack. "Kids are less brand-conscious and more fad-conscious. When they buy for themselves they look for the cheeky and extreme, with shock value in colour, noise and taste. That is why Roller Beltz sold well in 2003."

In the broader route and convenience market, kids are more likely to buy their own, and when kids go shopping they look for more than just a sweet. They want fun, excitement and most of all, something new. It's the 'surprise' that appeals to kids who buy Kinder Surprise. The toy inside is renewed twice a year and they are collectible.

"Even though Kinder Suprise is a leading brand, sales were levelling out globally and needed invigorating," says Kylie Roe, Trade Marketing Manager, Ferrero Australia.

"With the re-launch in Europe in 2001, the age group expanded to include older students, up to age 18, and at one point the website was number one for hits."

Kids also respond to the whacky and the clever, as well as different experiences. This explains the success of some odd products. For example, Wonka Nerds Rope has been one of Nestle's most successful product launches because of the 'play' value. They can stretch, pull and twist the product before eating it!

And, only a kid would buy an oogle - a realistic gummy eyeball.

"Oogles are made by Trolli, the world leader in gummy candy," says Rick Shapiro, General Manager, Universal Candy. "They are the best in look, texture and quality. We are also launching Tangy Tongue (a pair of lips with a tongue poking out), and Sour Ghecko. All these appeal to kids' taste for offbeat, unusual and clever products."

In kids' confectionery it is the 'sour taste of success'. Sour flavours, such as Universal Candy's Zappo Tutti Frutti did well last year and are still popular. The same goes for fizzy sensations, changing flavours and bright colours - all extreme sensations. This desire for entertainment and experience explains the perennial popularity of bubble gum and blowing bubbles. But, kids still look for new flavours and forms.

Wrigley's Hubba Bubba not only launched Hubba Bubba Vanilla Cola flavour which was the most successful new flavour launch yet, they also introduced Hubba Bubba Bubble Tape in the second half of 2003. Value sales for Hubba Bubba in the convenience channel have grown 36% on this brand in the past six months.

Even though kids will try new things, they are discerning. They know value for money and are very conscious of price. They give careful consideration to purchases out of precious pocket money. That means you need kid-friendly price points, up to $2. To warrant a higher price, the product needs to be unique or collectible.

Licensed to sell

One source of extra value can be found in licences. Since Christmas 2003, Stuart Alexander has successfully combined a range of kids' confectionery and licensed movie characters. In June 2003, they launched the Marvel super heroes range, combining Xmen II, Daredevil, The Hulk and Spiderman with a range of jelly pops, bubble gum tapes and gummy candies.

"Range such as this lasts through the cinema release and then the video and DVD," says Kay Partington, National Business Manager, Stuart Alexander.

"In 2004, we will be distributing more Spiderman products with the release of the movie mid-year, as well as new products such as Blow Up - a liquid-filled bubble gum, and Snerdles, a fruit strip with granulated candy attached."

The Finding Nemo licence with Jelly Pops and Slide Pops was very successful in 2003.

"Kids are critical and want something special for the premium," says Sean Issell.

JNH Confectionery's Pez Dispenser at $3 and the more elaborate Spin Pops, at nearly $9, are lifting the price point, at least for adult buyers.

"We have found that it is Mum that understands the licence and is happy to put this amount on her credit card along with say $50 of petrol and some groceries," says Steve Natsis, Divisional General Manager Homewares & Confectionery, Funtastic Limited.

Movie characters dominate the licencing category. Cat in the Hat, Schrek and Spiderman will be the big sellers in 2004 and the products will be available in time for the movies: Cat in the Hat (April), Shrek II (June) and Spiderman II (July).

Licencing was perfected in the big variety stores such as Big W, Kmart and Target. Now, the licence/toy/confectionery combination is lifting sales for C-Stores. More toy than lolly, Spin Pops are selling well in Caltex, Mobil Quix and Coles Express stores.

Hubba and Bubba

Wrigley is taking a different tack by creating and promoting its own characters, Hubba and Bubba, who now feature on packs, point of sale materials and advertising.

"Licensed characters create good growth in the short-term; we are creating long-term growth with our own characters," says John Batistich, Marketing Director, Wrigley

Brand recognition is already strong. According to Wrigley's research, 100% of Australian kids have a prompted awareness of Hubba Bubba and 82% will come up with it spontaneously. Hubba Bubba has been around for 25 years. The new characters are designed to establish a brand icon and maintain brand recognition.

Learn from route

As suppliers come up with the latest fad, you need to stock them, but only for as long as they work. This is a category that needs to be continually refreshed.

"Retailers need to respond quickly to new products which have a lifespan of about 3 months," says Rick Shapiro. "They can be very profitable with around a 40% margin and high turnover while they are the 'in' thing."

"Kids go in to a store to buy lollies, but once in there, will go for interesting products with added value such as a container or a toy," says Kay Partington. "But kids get bored very quickly, so product lines don't last long. The best strategy is to buy the latest popular product at wholesale then move on to next line."

For this category, the convenience channel needs to learn from the route channel which takes a more coordinated approach and structures a range to suit the store. It is the laboratory for new products.

According to Aztec C*Track, the kids' self consumption category in the convenience channel is worth $18 million but the segment has remained flat over the past year (-1% Nov MAT 2003). However, Caltex and 7-Eleven have grown their kids sales by 6% over the past year.

"The kids' confectionery category has significant growth potential in the convenience channel," says John Batistich.

"Key elements of success include keeping the range fresh, placing eye-catching point-of-sale materials and positioning products where kids can find them - at their eye level."

For example, Kinder Surpise introduced a new wrapper and a new eye-catching tray for its re-launch.

Think local

Kids Korner Confectionery is introducing locally-designed Australian icon pops and Sweet Moments in 2004. These themed candy pops target kids, adults buying for kids and young adults. The icon pops include Australian native animals, birds and tropical fish, as well as bushrangers, Sydney Harbour Bridge, the Australian flag and tropical fruit. In 2004 new state icons such as the swan in Western Australia and the tram in Victoria will be added to the range. Aimed at convenience and route stores that are expanding their range to cater for travellers and tourists, retailers can choose the icons that appeal to their customer base.

Have fun

The distinctiveness of the kids' confectionery category is reflected in the number and enthusiasm of contributors to this story. There's a surprising number of things to think about. However, the one message from everyone is,
... play more and have fun ...

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