Founder of Funday Natural Sweets, Daniel Kitay says there has been a continued rise in the health and wellness trend within the confectionery category over the last 12 months, despite economic pressures.
“This trend is reflected in the premium segment’s resilience, where FUNDAY Sweets operates with its high-quality, health-conscious offerings,” says Kitay.
“Consumer spending habits, as reported by industry analyses, show a willingness to pay a premium for products that align with personal health goals and ethical standards, even in tighter economic times. This shift indicates a broader consumer movement towards value-based purchasing, where the intrinsic value of a product’s health and ethical credentials outweighs its cost.”
Kitay says the shift towards products with low sugar content, clean label ingredients and natural flavours are driven by a more informed consumer base that demands transparency and healthfulness in their snack choices.
“According to Food Standards Australia New Zealand, there’s a growing demand for products that offer clear nutritional information and health benefits, reflecting changing consumer expectations towards healthier, more sustainable snacking options,” he says.
Rising demand for US confectionary
While a fascination with American culture is nothing new to the Australian market, GC Brands Brand Manager Guy Bennett, says there has been a steady rise in demand for US confectionary, cereal and snack foods.
“We’re seeing some big players take notice of the consumer demand for a trend that was initially confined to niche independent or specialty stores,” says Bennett.
“As a distributor with strong partnerships with US confectionery manufacturers including Ferrara and Jelly Belly, GC is working with a number of major retailers to realise the sales potential of this trend in the first half of 2024.”
CTC Australia Brand Manager Lisa Pushkin says when it comes to confectionary purchasing decisions, familiarity, tradition, and comfort remain top of mind for consumers, however more than one in three are now looking for new flavours.
“Today’s consumers are seeking flavours that are interesting or exotic and are also basing purchasing decisions on indulgence,” Pushkin says.
“Customers are also searching for a point of difference when shopping in P&C retailers. For example, buying products or brands that can only be found in P&C and aren’t available in the major supermarkets.”
Kitay says Funday’s nostalgic flavours like raspberry frogs, fruity snakes and strawberries and cream resonate with consumers seeking comfort in familiar tastes without compromising their health goals.
“These products align with a broader trend towards nostalgic consumption, where consumers gravitate towards brands and products that evoke a sense of nostalgia while adhering to modern health standards,” says Kitay.
“The success of these products in the P&C channel underscores a significant consumer shift towards health-conscious indulgence, where taste and health are not mutually exclusive.
“Industry reports indicate that products offering a combination of health benefits and indulgent experiences are seeing increased preference among consumers, particularly among millennials and Gen Z.”
Lu says introducing innovative products and flavours can attract customers and drive sales in the P&C market.
“Shopper studies showed that consumers within the P&C channel are particularly captivated by novel and inventive offerings,” says Lu.
“As customers perpetually seek indulgence and delightful treats, P&C confectionery retailers can seize the moment by pushing the boundaries of innovation, satisfying cravings and establish themselves as the ultimate destination for irresistible confectionery delights.
Embracing technology can also unlock opportunities for the P&C market, according to Lu.
“Implementing digital solutions, such as mobile apps, loyalty programs and personalized marketing can enhance customer engagement, streamline operations, and provide valuable insights for targeted promotions,” says Lu.
Pushkin echoes Lu, pointing to the fact that younger consumers favour social and digital media as key sources of food inspiration and information.
“TikTok will continue to set trends in novel use of products and ingredient, whereas older consumers are still more likely to turn to friends, family and old-school recipe books,” says Pushkin.
“The challenge this poses for P&C retailers is meeting consumer needs via a strong digital media strategy, whilst ensuring the older consumers are still catered for.”
In 2024, GC Brands will be targeting growth in ‘Peg Bags’ with HI-CHEW, Nerds and Jelly Belly. Previously these brands had focused on impulse offerings.
“Our fastest growing products are Nerds Gummy Clusters and HI-CHEW Sticks,” says Bennett.
“Gummy Clusters is a simple yet addictive evolution of the classic Nerds formula and one which we’re seeing adults embrace. The result is sales which exceed classic Nerds products in many retailers. Meanwhile HI-CHEW, a giant of Asia, is proving to be just as popular for Australian consumers with significant year on year growth marking this as a large brand for the future.”
GC Brands has also enjoyed significant growth of NOMO, a UK vegan chocolate brand that was launched into the market last year.
“NOMO has already carved out a strong presence across structured retail. While we very much view this as a product of scale in two to five years’ time, we have already seen significant growth in the range on the back of an incredible flavour profile.”
Nestlé Australia’s KitKat, Allen’s and MilkyBar continue to have a strong presence and consumer appeal in the channel, says Lu.
“The KitKat milk chocolate bar (45g) is the top selling medium chocolate bar in the market, while the KitKat Chunky Bar (50g) has moved up to the third ranking,” says Lu.
“Also delivering strong growth are the KitKat Share Bar and KitKat Chunky Share Bar, both sitting in the top five best-selling chocolate share bars. Additionally, MilkyBar, the top white chocolate brand in market, is leading the white chocolate segment, experiencing growth of 18 percent.”
Nestlé is set to launch the KitKat Honeycomb Buzz Share Bar (65g) exclusively to the P&C channel in April this year.
“Offering a channel-exclusive product means Nestlé can create a sense of exclusivity and excitement among P&C customers, enticing them with a unique product tailored in the right format,” explains Lu.
“This aligns with Nestlé’s strategy to not only drive customer engagement and loyalty, but to also strengthen the P&C channel’s position as a go-to destination for exclusive and innovative confectionery options.”
CTC will launch two new flavours into its range of Fini Confectionery in a cup this year.
“The Fini Confectionery in a cup is perfect for drink holders in the car,” says Pushkin.
“In addition to this, we have a proven off-location system called Kandy Kingdom. This point-of-sale unit carries a range of exciting novelty confectionery products that are perfect to keep kids happy in the car. Other new novelty lines from CTC include Soda Cans, Mallow Burger and Minions Sherbet Dips.”
Market forecasts
Bennett notes the single biggest challenge for retailers over the 12-24 months will be consumer spending.
“While this will no doubt pinch many categories, the slowdown is likely to hit on premise consumption in particular as consumers switch to look for better value options.”
While Kitay echoes Bennett’s sentiments on consumer spending habits, he notes the confectionery sector, particularly the niche occupied by healthier options like Funday, presents an opportunity for growth.
“Historical data suggest that confectionery sales remain stable or even increase during economic downturns, as consumers seek indulgences or elements of joy in otherwise a dark economic environment,” he says.
Lu advises P&C retailers to offer seamless omnichannel experiences.
“Customers are increasingly looking for convenience in their shopping experiences, not only in physical stores but also through online platforms,” Lu says. “P&C retailers will need to adapt by offering seamless omnichannel experiences, providing convenient services like click-and-collect or home delivery, and ensuring a smooth transition between online and offline shopping.
This article was written by Lizzie Hunter and originally published in the April/May issue of Convenience & Impulse Retailing magazine.
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