Sales were off a bit last year, but caramels remain a candy category staple. And they’re red hot as an ingredient in other confectionery concoctions, beverages and baked goods.

Caramel category sales declined a bit in food, drug and mass merchandisers (excluding Wal-Mart) last year. For 2004, sales of caramels/taffy apples/kits/dips were down by 5.3 percent, as tracked by Information Resources Inc.

Of course, the decline detailed by IRI does not factor in the rising popularity of caramel as an ingredient in products ranging from candy bars to brownies to Starbucks’ Frappuccinos.

And it hasn’t stopped caramel vendors from continuing to get creative with new product forms and flavors, all designed to help keep the category contemporary.

Marketers of caramels maintain that this much-loved candy category staple has a more nutritious profile than many other confectionery treats. Some companies have been touting the calcium content of caramels, which is a savvy move.

U.S. consumers tend to favor butter caramels, especially those soft enough to be chewed easily.

Caramels belong in the regular candy set, of course. They also work well in the bulk candy assortment. Placing them adjacent to marshmallows and other baking ingredients also makes sense. In addition, the taste and flavor profile of caramels makes them a natural for placement near coffee and baked goods.  

Capitalizing on the nostalgia appeal of caramels is one legitimate approach. For many consumers, caramels are a favorite from childhood.

The category is staying fresh, however, by combining new flavors and fillings. Product developers have experimented with chocolate, vanilla, peanut butter, strawberry and other fruit flavors. A number of companies have unveiled caramels targeted to Hispanic consumers, thanks to the addition of a guava or coconut filling or a dulce de leche flavoring.

Caramel makers also have addressed the diet and health issue with the rollout of new sugar-free varieties.

Near apples and fruit is the logical cross-merchandising opportunity for caramels. Couple it with a sign about “healthy snacking” and you may have a new twist on an old theme. Near nuts in the produce section is another good one to try. But for retailers who want something really unique: how about a “make your own Twix” display in the bakery section with plain wafer or shortbread cookies, some chocolate sauce, and, of course, caramels.

There are plenty of options for caramel category creativity, including introducing confectionery treats that combine caramel with nuts and nontraditional fruit flavors. The rollout of sugar-free caramels also opens the door for more category growth.