One category that continues to excite and delight consumers is confectionery.
You’d be hard pressed to find a category that has such a broad customer base, from parents with kids on the way home from school, city workers at lunch time, to tradies at knock off, there aren’t many consumers that don’t like a sweet treat.
Despite the category’s overwhelming popularity, it suffered a slight drop in performance in the first half of 2022, revealed in the AACS 2022 State of Industry Half Yearly Update, which showed a decline of 1.3 per cent.
This drop was on the back of strong growth of 11.4 per cent in the first half of 2021, with several factors including record fuel prices slowing down the co-buy of confectionery with fuel purchases and the 10 per cent decline of gum and mint.
Guy Bennett, Brand Manager at GC Brands, capitalised on this shift in consumer behaviour and identified that across the Covid period, they saw a stagnation of the gum and mints category as consumers opted for flavour and sweet afternoon rewards over fresh breath, leading to the launch of Hi-Chew.
“Launching in Australia in 2020, having swept Asia, USA, and New Zealand, Hi-Chew has been perfectly placed to fill a need as a gum alternative bursting with flavour. Hi-Chew has enjoyed enormous growth of 68 per cent MAT vs LY in 2022 with another national petrol retailer the latest to jump on board with ranging of Cola and Grape kicking off in Q1 2023.”
The growth of Hi-Chew isn’t the only high-performing brand at GC, with Bennett revealing that the company’s entire confectionery portfolio enjoyed exceptional growth in 2022.
“As a supplier of international products, we anticipate this to accelerate in 2023 with Nerds and Hi-Chew in particular expected to grow significantly within P&C on the back of strong supply and significant brand investment into the Australian market.”
For CTC Australia, Lisa Pushkin, Brand Manager, says that their best performing product is the Aussie Drops 70gm Eucalyptus.
“The Distributors Group (TDG) supplied us sales data, which showed the Aussie Drops 70gm as our number one SKU. Even outside of the winter months, this product continues to sell well and is appealing all year around to comfort and sooth.”
Although depending on the retailer, Pushkin has also seen CTC’s Fini Pencil and Cups ranges perform well due to the brand offering something different and unique.
Kevin Pan, Channel Manager – Convenience and Impulse at Nestlé, said their best performing SKUs include KitKat Share bar 65g, KitKat Chunky Share Bar 70g, Allen’s Snakes Alive 200g, Allen’s Party Mix 190g, and KitKat Medium Bar 45g, but they have also seen growth elsewhere.
“The medicated category has grown significantly in 2022 compared to previous years, impacted by a strong flu season.”
Skye Jackson, General Manager of Merchandise at Ampol, said the snacking and confectionery categories are showing a strong compound annual growth rate (CAGR) of four per cent, and identified the trends behind this.
“Trends that are driving this growth are continued innovation within flavour and texture profiles combined with strong collaborations across trusted brands and traditional sensorial tastes and flavours.”
Sweet innovation
Even with the growing health and wellness trend, confectionery still occupies a large amount of prime positioning, but Pushkin has noticed an emerging trend amongst independent P&C retailers.
“Independent P&C accounts are offering more unique lines and moving away from the major brands, such as offering bigger novelty bays, plus USA lines.”
Pushkin believes it is important that retailers be open-minded when looking at what to range and that they offer unique confectionery products to both drive new sales opportunities and as a point of difference to competitors.
“Many of the majors are all so similar and lack any creativity. It’s good when retailers are open to trying new products and offering off location opportunities to smaller brands. Once given an opportunity, CTC products, sell very well.”
This heightened interest in unique and foreign products has been recognised by Bennett, who says he has seen an explosion of international novelty confectionery, and in particular, US candy.
“Brands such as Jelly Belly and Nerds are becoming the centrepiece of very broad ranges. GC enjoys exclusive partnerships with some of America’s largest candy companies and will be significantly broadening the range of US candy we distribute in Australia in 2023 with the guarantee of compliant packaging we provide on our entire portfolio.”
In addition to expanding the US candy range, in 2023 GC will also commence supply of chocolate in the P&C channel with Nomo Vegan and Free From (which contains no nuts, dairy, gluten, soy) chocolate.
“The brand is the UK’s number one in the category and is built to bridge the gap between specialty health and a mainstream audience as the market develops. Being able to distribute the brand cost effectively with temperature-controlled freight within a fractured channel will be a significant challenge until we can bring scale to the brand, however, leading national accounts have already shown great interest with health becoming more of a focus in convenience ranges.”
When looking at category decisions, Jackson said Ampol reviews who the customer is and what product is engaging, connecting, and exciting them to pick up and add to their basket while fuelling up at an Ampol site.
“We also review what the supplier support is for the activation in the market, but also what differentiated support plan we can execute with Ampol. Overall asking – do we have the right product range to drive total category growth and profit?”
Convenience still king
The accessibility of P&C makes it one of the most desirable channels for the confectionery category, allowing suppliers to test the waters with NPD.
Bennett said that the channel makes up a large percentage of revenue for GC’s confectionery portfolio, making it a significant factor in top line results.
“Aside from sales results, the fragmented nature of the channel means that there are significant opportunities to partner with retailers of all sizes to build brands incrementally and seed new products to consumers to demonstrate their potential. This is often not possible in other channels dominated by a small number of large retailers.”
Nestlé also sees the benefit of selling certain products primarily in P&C, which is evident in the recent introduction of KitKat Gold Cookies in a 65g share bar format, a twist on fan favourite KitKat Gold, which was the number one innovation launch in 2018.
“The P&C channel is a focus for Nestlé. We’ve recently launched KitKat Gold Cookies available exclusively in a share bar (65g), which will primarily be ranged in this channel,” said Pan.
CTC views P&C as extremely important to its brand, as it is their second biggest channel behind major retail.
“It offers us space with plenty of walk-in traffic and loads of opportunities for our unique range of products,” explained Pushkin.
Despite Pushkin recognising the benefits of having space on the P&C shelf, she says arriving at that outcome can often prove challenging.
“It is difficult in major P&C, as their ranging is prominently from the major suppliers who offer more rebates and spend more on promotions and off locations.
“Future opportunities will include offering products that are not mainstream so they can give their consumers a unique experience in-store. Things like our Pencils and Fini Gum range 60gm fall into this. Also, we need to tailor our offer to each customer. They are all looking for something different and to stand out from their competitor.”
Jackson identified that customers in the channel are not compromising experience and flavour, with continued love and purchases in trusted brands.
“Suppliers are focusing on fewer launches and making them have bigger impact, this is due to all the supply challenges and inflation pressures over the last 12 months.”
This article originally appeared in the Feb/Mar issue of Convenience & Impulse Retailing magazine.