January 1, 2006
Kids — and many adults as well — go gaga over gummies, but the category is confronted with a competitive climate and steep increases in ingredient costs.
Gummies Estimated U.S. Retail Market Size*
* For branded gummies in food, drug and mass merchandisers
Source: Confectioner estimate based on input from industry players
The gummy candy category is going great guns, with recent sales in the mainstream marketplace (i.e. food/drug/mass) trending up. But price increases of critical raw ingredients may take a toll on this popular segment of the non-chocolate market in the months ahead.
The peg bag business drives the category, and gummies are typically a top seller in general line candy. Price points of 99 cents and 2/$3 are great for gummies, with the former working especially well in dollar stores and dollar departments in other classes of trade.
Gummy worms are a perennial kids’ favorite, while adult consumers tend to favor gummy bears, according to unscientific industry observations. Sour is still a big factor in this market, especially with kids, and sugar-free gummies targeted to adults are growing strongly.
For kid consumers, play value is a major selling point, a fact that has not been lost on gummy makers. More novelty products are arriving on the scene, and that means higher price points in this market niche. Certainly vendors have given kids plenty of license to play with their food by creating gummy versions of pizza, hot dogs, hamburgers and more.
Of course, one of the keys to successfully marketing novelty gummies is to avoid getting carried away and creating products that are so gross, silly (or even politically incorrect!) that they won’t get by parental gatekeepers. Vendors have also enhanced mom-appeal with the addition of fruit juice and vitamin fortifications to their formulations.
Gummies tend to belong in the mid- to lower-levels of a peg bag set so that they are at eye level for the core target consumer.
With production capacity increasing and the cost of key ingredients, corn syrup and sugar, both up dramatically (an estimated 30 percent and 50 percent, respectively, vs. a year ago), it’s hard to predict where this market is headed. In this competitive environment, vendors may find it difficult to implement price hikes to cover higher ingredient costs.
Make it fun. Playful, clever, high-impact graphics will bolster impulse sales of gummy products. The emergence of new theater box packaging in the gummy category creates new countertop and floor-stand display options.
Leverage licenses. Licensed gummies — a growing segment of the market — allow for cross-promotion possibilities with kids’ toys, movies and DVDs.