Estimated U.S. Retail Market Size$94.5 million
*In food, drug and mass merchandisers, excluding Wal-Mart
Source: Information Resources, Inc.
Category ClimateDuring the height of the low-carb years in 2003 and 2004, sugar-free chocolate confectionery had a major following. That sub-segment growth has slowed, and the current sugar-free trend favors non-chocolate. According to a recent report from Mintel, sales of sugar-free non-chocolate candies are moving at a pace “considerably faster” than their chocolate counterparts. For 2007, Information Resources, Inc. recorded dollar sales gains for non-chocolate sugar-free candy at nearly 4 percent across food, drug and mass channels, excluding Wal-Mart. Sugar-free chocolate, on the other hand, experienced more than a 9 percent decrease in dollar sales.
Mintel points to rapid increases in the incidence of Type II diabetes as the major driver behind the sugar-free, non-chocolate growth, particularly in hard candy. Sugar-free non-chocolate candy (including gum) has also been a platform for delivering functional ingredients such as vitamins, antioxidants and calcium into the diet.
Product InnovationDevelopments in sugar-free candy continue to revolve around new sugar substitutes and combinations to come up with the “sweetest” and “healthiest” versions. Major candy manufacturers, as well as private label producers, have been rolling out sugar-free versions of their established brands.
Target AudienceDiabetics and overweight consumers are the logical target audience, and both conditions are prevalent among the general population.
According to the National Diabetes Information Clearinghouse, 20.8 million children and adults in the United States in 2005 had some form of diabetes. Preliminary figures from the “2006 National Health Interview Survey” suggest these numbers may be even higher. Additionally, the Centers for Disease Control (CDC) predicts that one in three Americans born in 2000 will develop diabetes. Mintel’s exclusive research shows diabetes influencing the purchase decisions of more than a third of respondents: 34% of those purchasing sugar-free products for themselves do so for a diabetes-related reason, as do 39% who purchase sugar-free items for another household member.
More Americans are overweight or obese than at any other time in the nation’s history. According to the 2003-2004 “National Health and Nutrition Examination Survey” undertaken by the CDC, 66.3% of U.S. adults ages 20 or older are overweight or obese. According to Mintel’s exclusive research, 29% of respondents are extremely or very interested in sugar-free or low-sugar products as a form of diet plan.
Retailing/MerchandisingResearch shows that best-practice retailers are establishing a sugar-free section within the regular candy department. More retailers are creating whimsical departments and boutique-within-a-store approaches. Drug stores have an opportunity to promote the category, in conjunction with health and wellness platforms.
OutlookSugar-free brands are expected to position themselves as tools for the diabetic community, especially as Baby Boomers age. The fusion of sugar-free confectionery and added benefits is likely to continue. Mintel expects diet blogs and Internet chats to help grow the industry. Meanwhile, sweetener innovations, including natural and organic options, will give rise to product advances.
Quick Bites• Non-chocolate has traded places with chocolate as the sugar-free favorite.
• Diabetics and overweight consumers will drive purchases.
• Choice will increase from major brands and private label alike.
• There’s more retail whimsy in carved-out category sections.