“What we’re seeing is a slight paradox in the growth rates,” Todd Siwak told ConfectioneryNews.
According to IRI Market Advantage, US non-chocolate confectionery sales grew 4-6% for the 26 weeks up to November 1 this year compared to the same period last year, while chocolate sales rose 1-2%.
Young and diverse population change the game
“We attribute that to the consumer demography. The frequency of purchase and willingness [for candy] is higher among Gen-Z and Millennials,” said Siwak.
“We are seeing a desire in Millennials for cherry gummie candy, especially with sour, sweet and intense flavors, he added.
Ethnic minority population growth is another driving force behind the varying chocolate, candy growth rates, said Siwak. Hispanics account for 17.4% of the US population, according to the US Census Bureau, but numbers are projected to rise 53% from 2013 levels to 2020 while the majority white population will grow just 10%.
#4 US Candy Maker
Lemonhead maker Ferrara Candy is the fourth largest sugar confectionery firm in the US by retail value sales with a 5.7%. The US sugar confectionery segment is led by Jolly Rancher maker Hershey on 14.8% followed by Mars (Wrigley)and Mondelēz.
Source: Euromonitor International
Adapt through Innovation
Ferrara Candy is primed to capitalize on the changing demographics. This summer it tripled the size of its R&D facility in Chicago, adding a pilot plant for starch moguls and panned confectionery that will test new SKUs for Trolli and Lemonhead, brands Siwak says resonate with Millennial consumers.
“We’re focused on innovation,” said the CEO. Ferrara plans to explore flavor innovations such as “heat meets sweet”, sours, liquid-filled products, novel shapes and new finishes and textures.
Will sugar confectionery continue to outshine chocolate?
Euromonitor International predicts US chocolate confectionery value sales will grow 3.5% to $18.3bn in 2015, while sugar confectionery while rise 2.6% to $10.7bn. Its predictions are based on year-to-date statistics and projections. However, at global level the overall confectionery market is expected to decline 6.2% with chocolate sales falling 7.6% to $100.9bn and sugar confectionery dropping 3.7% to $59.5bn.
Rise of better-for-you
It plans to offer sugar confections across the spectrum, but is excited by the better-for-you segment following a tie-up to produce vitamin gummies for healthcare firm Perrigo, announced in January this year. “We believe we’re leading the sector,” said Siwak. “That business for us is developing quite rapidly.”
Ferrara launched gummie bear brand Black Forest two and half years ago, which uses real fruit juice and it also sells organic fruit snacks brand Stonyfield.
“We are moving towards the better-for-you segment, but will never sacrifice taste,” said Siwak. He said the company aimed to preserve taste, keep pricing premium nominal and use ingredients that are proven to be better to health than conventional formulas.
Geo-insights
Ferrera has also heavily invested in its category insights time to identify to identify trends across geographies.
“Better-for-you consumption is more developed in the North East and Souut West [of the US] – it’s obvious but the data reinforces that in spades,” said Siwak.
By following data insights, Ferrara repositioned its Red Hot brand after discovering the main consumer base was in the South and SouthWest US.
International prospects
Less than 10% of Ferrara’s sales come in international markets, and it has pinpointed growth opportunities, particularly in China, Singapore, South Korea and Taiwan.
The company began selling in China around two years ago and is enjoying strong interest in its Black Forest brand.