Candy was a $33.6-billion business in the United States in 2013, an annual figure that’s projected to grow 17 percent by 2018 according to the National Confectioners Association.
But as confectionery sales continue to grow, individual candy brands face a different set of challenges and opportunities in the fast growing online channel.
The opportunity to interrupt a shopping trip with impulse purchases doesn’t exist in the same way online as it does in physical stores, where candy displays and a strong check-out lane presence come into play. As a result, companies with candy brands, together with their retail partners, need to pave a smooth purchase path for those seeking treats while creating new opportunities for impulse adds to basket.
Although only 1 percent of grocery sales were online in 2014, reports the Boston Consulting Group, that figure is slated to increase to 5 percent by 2018 and 10 percent soon after — providing challenges and opportunities for candy manufacturers in the years to come.
In anticipation of this dramatic online growth, Clavis Insight, the leading provider of online retail store analytics for consumer packaged goods (CPG) brands, analyzed the U.S. chocolate and non-chocolate categories in a number of leading online stores in the United States.
The study assesses which brands have optimized their online presence and thus are primed to win in the digital channel.
Leading brands within the candy category were ranked based on The Clavis Insight Index, CI2, a proprietary benchmark of online retail store presence and performance for CPG brands. The score is calculated based on key performance indicators (KPIs) that are critical drivers in the online path-to-purchase, such as:
Availability: Is the product in-stock and available for sale?
Image Presence: Does the online product listing include a key brand image?
Content Integrity: Is key product information present on product landing pages?
Search Rank: Can shoppers find your products based on category keywords?
Just as in physical stores, confectionery companies need to ensure their brand’s representation is fully optimized in online retail stores in order to drive sales. In the offline world, brands focus on metrics such as distribution, assortment, packaging, and shelf placement.
Online — where there is no shelf layout to draw the eye, no physical product to hold and no packs to touch, feel and read — success is determined by different KPIs, such as those above, more appropriate to the eCommerce environment.
For the purpose of this study Clavis Insight analyzed two candy categories to establish which brands are optimizing their online presence and are best positioned to win the sales battle online. The analysis included more than 120 of the leading U.S. candy brands in the chocolate and non-chocolate categories, across three major online retailers in the United States with a strong portfolio of confectionery items ready for online purchase and shipping: Amazon.com, Drugstore.com and Walmart.com. The data for the research was collected in mid-February.
The Chocolate Candy CI2 Index was very tight, which means plenty of chocolate brands are getting the basics right.
Hershey leads chocolate companies online
The Hershey Co.’s brand proved to be the leader of the Clavis Insight CI2 Index in the chocolate category, with strong performance on both search (meaning consumers can locate these products quickly against key category search terms), and availability (meaning items were in stock and available for online purchase, across the three retailers).
Hershey’s performed under-index on content integrity, meaning content such as description, warning and allergy as well as product and nutrition information is incomplete.
In Hershey’s case, some products were missing UPC and brand data and others didn’t include Hershey’s in the product description, all of which can impact search , conversion and ultimately sales.
While the online channel is typically the great leveller that enables smaller brands to compete amongst larger established brands, we only saw a couple of niche brands break into the Chocolate Candy CI2 Top 20. Scharffen Berger and Green & Blacks, smaller brands playing in the gourmet and organic/natural spaces, rose to the Top 20 with a strong online presence and consistent availability.
Search scores and availability vital
All chocolate brands assessed have an image on their retailer product pages, so image isn’t a differentiator for the top of the CI2 ranking among chocolate brands.
Strong search scores and good availability, however, help winning brands rise to the top.
Most of the Top 5 brands’ products return on the first page of search results for key search terms, with number two chocolate brand Ferrero indexing well above the category average on search. And all of the Top 5 over-indexed on availability, meaning the products are in stock and available for online purchase.
Sweedish Fish lead non-chocolate candies online
The Swedish Fish brand tops the CI2 ranking in the non-chocolate category by consistently returning in the first page on search across retailers and over-indexing on availability and content integrity.
Unlike the Top 20 chocolate brands, which are primarily established brands, a number of small and niche brands earned their place in the Top 20 non-chocolate category by getting the online basics right.
Black Forest Gummy Candy may not have the strongest market share, but it’s among the best poised to win the online basket with strong returns on key non-chocolate indicators such as search terms, good content integrity and availability across the three retailers.
How non-chocolate companies can stand out
Similar to chocolate, non-chocolate brands all have an image on their product pages.
What set top brands apart was winning on search, strong content Integrity and consistent product availability – all of the Top 5 over-index on all three measures, while those on the bottom are generally below category average across these metrics.
Experience from other grocery categories shows that the brands that focus on optimizing their online offerings and presentation are the ones most likely to catch the consumers’ eye and get into their consideration set.
As online sales grow as a proportion of overall sales, this segment will become more and more important for manufacturers and retailers to focus on so that they can determine how best they can engage the digital consumer.