Industry Trends / Novelty Candies

Doubling down on ‘novel’ data

Consumer buying patterns, seasonal offerings drive novelty candy sector.

October 1, 2012
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CandyRific was being downright feminist last year when it introduced its latest novelty toy. The light-up airplane — filled with candy, of course — was originally marketed to both boys and girls.

“We said to ourselves, ‘That’s sort of gender neutral,’” recalls Rob Auerbach, the company’s president.

They created the airplanes in big bold colors, like red and blue mainly for the boys, and then orange and yellow to target the girls.

Alas, the sales at the end of the day did not show any advancement for feminist ideals of gender neutrality — it was almost exclusively little boys buying the airplanes. In fact, yellow airplanes only sold if they were the very last color left on the shelf.

“So we took out the yellow, and created a light-up flower to address the girl market,” Auerbach says. “That was driven by real figures and real data when our intuition was wrong.”

Thus, the next big thing in novelty candy isn’t candy at all, but rather data.

Lower costs and better technology have made it easier and easier to track sales figures. So now, when, a candy manufacturer tells a retail buyer that stocking bags of M&M’s next to a novelty M&M’s dispenser will increase sales of both dramatically, they’re no longer just relying on a hunch.

“What’s coming for the industry is everybody is getting access to more sophisticated data at a price point that only five or ten years ago only billion-dollar companies could have access to the data,” Auerbach explains. “We can drill down and tell you how many pieces a store in Kansas sold last week.”

While that kind of information can help everyone in the industry, it’s especially great news for the novelty candy sector — where even the big players like CandyRific have to constantly push new, innovative products into the marketplace.

Auerbach points out that while 80% of the candy aisle at a typical retailer is already set, there’s another 20% that’s flexible. Buyers are constantly trying to discern who earns that retail space and novelty candy, which usually has a high margin, can be a great fit.

According to the data, the push to fill that extra shelf space seems to be working. Sales of novelty chocolate are up about 60% compared to last year, approaching $9.5 million as reported by Symphony IRI, a Chicago-based research firm. Sales of non-chocolate novelty candy are also up about 3% at $462 million.

The figures suggest what Auerbach knew instinctively about his category — the recession was basically a non-event. 

That’s at least partly because many novelty candies sell based on something worth more than the sugar and chocolate inside them: a feeling.

“You may not buy yourself a new Lexus or a house, but novelty candy is a luxury people can afford, and it has an emotional connection and a lift,” Auerbach says. “If a mother’s shopping and they know that their children really love Star Wars and they see something withStar Wars on their own, they’ll pick it up.”

That means trimming costs doesn’t come into play, Auerbach says. 

“In general, anytime you’re below $5 retail, it doesn’t become a price issue,” he says. “It becomes, do you like it?”

So, if a company already is selling a dispenser at $4, knocking the price down to $3 isn’t going to impact how many they sell.

“The consumer, at the end of the day, is king,” Auerbach says. “They don’t care anything about you. All they care about is they’ve got $3 in their pocket and where are they going to spend it, and how they are going to spend it. If you start there, and work back up the ladder, then you’re going to have success.”

 

Beyond the candy

Perhaps unique to the novelty candy segment is that idea that even the best tasting candy in the universe won’t sell if there’s not another draw to the product.

Auerbach says that’s one of the reasons so many of his products have a “Try Me” feature.

“We put out a watch, and you say, ‘Well, a watch. Do you really have to have a try-me feature on a watch?’ But our consumers are 5 to 8 years old. They want to pick it up and then instinctively want to know what it does just by picking it up,” he explains.

For example, one of their top sellers in the last year has been the M&M’s Star Wars Lightsaber.

“You push it, and it lights up either green or blue,” Auerbach explains. “It’s exactly what the kids see.”

Having a great license is another key ingredient for many novelty products — but Auerbach cautions that it’s not the main ingredient.

“A bad product with a good license is still a bad product,” Auerbach says. “You can’t do what we refer to as ‘label slapping.’ We start with the product and see what license makes sense, as opposed to, ‘I’ve got license, what am I going to throw it on?’”

His company has found a lot of success with Star Wars, Disney Princesses, Scobby Doo, and M&M’s licenses in particular. Auerbach explains that the goal is to make sure you’re offering products that appeal to boys, girls and both.

“Of course, gender neutral is fabulous, because then you’re not selling to half the population,” he says.

In particular, CandyRific has had a lot of success with talkers, which plays a recording of a particular character’s voice.

“So you have Darth Vader doing his thing,” Auerbach says.

But finding the right license, for the right price can sometimes be a struggle. Which is why Todd Elliott, president of the Portland, Ore.-based, Radz decided to launch a novelty product that’s not licensed at all.

He describes it as a fully interactive dispenser filled with hard candies that then leads consumers to a whole online world of games and activities. The toys encourage collection, and the online experience is meant to foster an emotional connection.

“It’s not just a candy dispenser, like in the olden days,” he says. “We get a lot of people saying it’s like a modern age Pez meets Mr. Potato Head meets Webkinz.”

The large Radz is about $4.99, while smaller ones sell for anywhere between $2.99 and $3.99, and the stand-alone candy sells for 99 cents.

Elliott says they made a conscious decision not to use a license for the product.

“We’re not really looking for a flash in the pan sort of thing,” he explains. “Having our own character set was very important for that.”

 

Seasonal Selections

Innovation doesn’t stop with product creation though, and one of the other major big breakthroughs for the novelty candy sector has been a shift in attitudes toward seasonal offering. 

In the past, buyers for the stores assumed that seasonal candy meant a big bag of treats for $4, Auerbach says. Now though, they’re seeing that higher priced novelty confections can fly off the shelves during the Christmas shopping season.

In fact, at Candyrific, seasonal business has doubled and tripled for many products over the last couple years.

“We have a $10 dispenser. At a $10 price point, at Christmas, that makes sense,” he explains. “From a buyer’s point of view, they don’t have to make a commitment. The realization that novelty candy can have an overall lift on a retailer’s sales during seasonal events has certainly increased in the last three to five years.”

 Assuming sales stay on the track they’ve been on during the last year, it will likely be a verymerry Christmas for the novelty candy sector indeed.    

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