Creamy and delicious, this stalwart of the candy category is here to stay.
Traditional Caramels Estimated U.S. Retail Market Size
$72 million
Source: Confectioner estimate based on input from industry players

Caramels are a candy category basic. No candy set is complete without them. And thanks to their calcium content and relatively low-fat profile, caramels enjoy the benefit of a healthful product positioning.
Also on the good news front, consumers have been warming to the presence of caramel as an ingredient in everything from limited edition candy bars to Ho Ho’s snack cakes and specialty lattes. You can even buy prepared apple slices packed with caramel dips for lunchbox treats. And Kraft’s Food & Family magazine named caramel one of its top five flavors for 2006, touting its versatility and the fact that it partners nicely with both sweet, creamy treats and salty snacks. Caramel ingredient suppliers report double-digit sales growth.
Of course, caramel’s starring role as an ingredient hasn’t translated all that well to the caramel candy category. In fact, sales of caramel candy + taffy apples/kits/dips declined 5.8% in food/drug/mass excluding Wal-Mart for the 52 weeks ending Oct. 30, 2005. Clearly, even more product development and marketing creativity is required to generate consumer enthusiasm.
Caramel makers have done their bit to add excitement to caramels — inside and out, i.e. via fillings and coatings. Fillings are especially varied and have included guava, strawberry, coconut, vanilla, chocolate and even peanut butter. Of course, caramels themselves have been flavored and paired with creams to deliver new taste and texture experiences to consumers. Caramels are considered by many candy lovers as something of a comfort food with strong nostalgia appeal. While that’s certainly a viable positioning, caramel makers also are doing their best to introduce new forms and flavor combinations to keep the category contemporary.
Because caramels share the buttery flavor notes of toffees, positioning these products side by side in the candy aisle makes sense. Large laydown bags are the No. 1 seller in the packaged caramel segment, although smaller peg bags and even theater boxes play a role. Caramels should not be ignored within any bulk retail display; bulk candy vendors report that they are strong performers.
Seasonal Opportunities
Almost 80 percent of caramel sales occur in the fall. More and more, traditional caramels are competing with convenience products like wraps and dips, so they need to be merchandised just as creatively in the store with high-impact placement in the produce section near the apples.  
And how about extending the applications with creative seasonal recipes presented at point-of-purchase and on packaging. Caramel apple pie, anyone?
Watch for more gourmet caramel offerings, as well as some sugar-free versions targeted to the category’s aging core boomer consumer.
Innovative packaging — say a squeezable tube that allows the user to dribble caramel into an opened mouth or onto another food or snack item — might also provide a boost to the category.