Time to Take Stock— and Smile!
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Good news is always welcome. And the numbers reported in Confectioner’s State-of-the-Industry report in this issue offer a definite positive picture.
Premium chocolate was the not-surprising winner in the growth game. Innovation in products and packaging brought excitement for the consumer, and retailers are not missing a beat in making sure they’re part of the upscale boom. Success is not automatic, however; retailers will need to continue to be sensitive to the demographics of their customers and not get carried away by the higher ring and margins premium products can offer.
And, at the same time, manufacturers must deliver on the promise that the newest offerings in the category — with their higher price points — are special and even more delicious than the products that have gone before them. Consumer expectations in this segment of the confections market are high. Of course, I have no doubt these expectations will continue to be met by the manufacturing community.
Take the time to check out all the premium chocolate offerings on the Web. There are some outrageous, very creative and fun presentations available. It’s true that many of them wouldn’t work in the mainstream market because of price point or shelf life, but it’s certainly an excellent way to look at the bigger picture of the confectionery industry.
More good news
Seasonal sales were a particular bright spot in 2006, with increases in all four major holidays for the first time in five years. And 2007 is off to a positive start with Valentine’s sales showing an estimated increase of 6-8 percent, according to the National Confectioners Association. What is more, consumers evidently liked the Easter selections this year because first reports of the Easter season sales are looking good!
Good news for confectionery and snacks in convenience stores, too. The National Association of Convenience Stores has released its State-of-the-Industry Report, and confectionery and snacks are still in the top 10 merchandise categories and continue to offer excellent gross margins — 16 percent and 18.8 percent, respectively, according to the report. Premium chocolate may not be the right product for all convenience stores, but clearly confectionery, gum and snacks continue to be a major contributor to merchandise sales.
Mars and Hershey both announced wholesale price increases recently, and there was a collective sigh of relief from small and mid-sized companies in the confectionery industries, which had also been struggling to deal with increased raw material costs and other challenges, but were hardly in a position to take the lead on a price increase. It was definitely a necessary and good move for everyone.