A Clear Value

As convenience angles play up in a variety of retail channels, this high value/highly impulsive candy category looks for growth beyond traditional convenience stores.

General line (or peg bag) was another candy category that didn’t experience much growth in 2003 — not until the fourth quarter when consumers regained some economic confidence and started to travel a bit more (and perhaps purchase more impulse candy on the go). For the year (2003) though, the industry reports overall flat sales. The good news: Fourth-quarter gains have extended into the new year, with non-traditional general line candy retailers (such as supermarkets and non-food specialty stores) expanding their presence in the category.
The Imperatives
Without a doubt, the strength of the general line segment is value. With price points as low as two bags for a dollar, general line offers the best value in candy weight out there. Last year, that was especially true with the price increase on chocolate and subsequently, all single-count candy items.  The value of regular-sized candy bars lessened as many retailers had to bump that segment up by a dime a piece. General line, however, stayed the same.
Of course, that means the profit margins on the lowest-priced bags stayed fixed — but experts say their true retail value is in the high volume they turn. As for the higher general line price points  — such as bags that go for three for $2, or $1.29 and higher on single bags  — margins can go up to 45 percent-plus. Especially in non-traditional, non-food outlets (such as linen specialty stores, etc.), clear bag candy can offer the highest profit margins in the business.  Generally speaking, profit margins in the category are still in the 32-40 percent range, which beats branded chocolate bars hands down, industry experts say.
The true consumer beauty of general line candy is that it’s a full life-span category.  From kids to tweens to teens to young adults to seniors — there’s some mix in those crystal clear bags that will appeal to everyone (generally speaking, it’s sours and novelties for the young — and starlite mints and gummies for the old).
There is no such thing as brand loyalty in general line candy because consumers are looking at the best value for the price. Therefore, the bag weight and price point are very critical factors. With these candy consumers, it’s more value perception than anything else.
General line candy companies support their distributors and retailers with the best pricing program for that particular retail experience — they work with their customers to develop an ideal assortment of price points, since there are an assortment of target customers. But the biggest thing they say they are doing to keep this category healthy is ship on time — many striving for 98 percent on time or better — and putting it in writing. With bankruptcy and consolidation hovering over the category from players that have gone, the ones that remain standing are promising retailers better service.
General line candy is a natural complement to soda and drinks; therefore, cross merchandising it near coolers or with a spinner rack right in in-store coffee shops (as is popular in grocery lately) would work well. There is one exception: C-stores who put it across from the refrigerated coolers have not found it to be successful. Apparently, customers walk up to the cooler, grab their drinks and head directly for the cashier. They never even turn around to see the rack.
Another idea grocery retailers might try: Putting general line candy in their video rental section and emulating the popular candy merchandising technique of video rental stores lately: Offering a special deal of rented movies and candy.
Coupling free sodas or drinks with an assortment of purchased pegged candy bags works very well too.
No doubt about it, grocery stores have a lot of potential for general line candy growth — especially as they all now offer some type of “convenience shopping” in their stores.  Many national food chains, such as Safeway, have already started testing their own private label lines of general line candy. And as other non-traditional candy retailers offer to-go consumables, the category will have an even better chance for growth. Many are predicting double-digit within the next year or two.

Merchandising Musts
Design a broad arrangement of branded and general-line bags in a "general line" program.
Continuity sells this category, and branded bag items are only giving the section more clout.
Price accordingly and mix
it up. Know what prices work best in your channel and region. It’s not uncommon for retailers to try a few general line price points (one less expensive and one offering more variety). Experts suggest that it will not cannibalize sales to carry the top 10 99-cent items as well as the top 15 two-for-$1 bags because of the wide variety of consumers who buy this type of candy — some for immediate consumption, some for future travel.
Very generally speaking, rural areas do well with two bags for $1; larger retail formats with high traffic do well with one bag for around $1; truck stops do well with two bags for $3. (It’s not uncommon for truckers to scoop up 20 ounces or so of orange slices to fuel themselves for a long day or night on the road.)
Grocery stores, now that they are more heavily in the game, are also having success with two bags for $3. Retailers who are looking to be unique, with a higher penny-profit ring than on the smaller bags, but not quite ready for two for $3, are testing three bags for $2.