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Candy Expo shows sweet persistence in a tough economy

by David Dennis
May 20, 2009

Penny-pinching consumers may forgo vacations, new cars and expensive apparel in tough economic times, but they apparently won’t give up candy.

While some companies have been hit hard during the recession, the confectionary industry posted a 3.7 percent sales gain for the 52-week period ended April 19, according to the National Confectioners Association, which opened its three-day All Candy Expo Tuesday at McCormick Place.

“The candy industry has been a little bit isolated from the difficult economy in some ways,” Susan Whiteside, an association spokeswoman said during an interview. “From this time last year, we've grown over 3.5 percent.”

Consumers are indulging in small pleasures, like a bag of candy at the checkout counter, instead of more expensive options, such as an extravagant dinner, said Jason English, research associate for JP Morgan Chase and Co. However, the desire to spend less is affecting the confection industry, he said.

“The confectionery industry isn’t immune,” English said during a seminar Tuesday. “People are trading down to cheaper products and off brands.”

The most effective way for candy makers to sway consumers toward a higher-priced name brand is to focus on core products, English said. That plays into the needs of consumers who want comfort food during stressful times, he added.

Byard T. Ebling, marketing manager for Tootsie Roll Industries Inc., said the company understands the need to focus on the staples.

“We know people take comfort in the favorites so we are focused on pushing those brands,” Ebling said. “We are more geared to putting new twists on familiars.”

While pushing the classics is important, one major goal of candy makers attending the expo is to promote their new products, and more than 2,000 new sweets debuted during the event. Businesses must balance their familiar, top-selling brands with the need to move forward with new innovations, said Jim Corcoran, vice president of trade relations for the association. Indeed, an association study conducted in 2005 found that 20 percent to 30 percent of sales were driven by items introduced after 2003.

“While the core products are pushing the market now, the new products are important for long-term success,” Corcoran said. “[The study] showed the importance of line-extensions and new items pushed for the holiday seasons.”

Mars Inc., which has seen a sales increase of 6.6 percent during the past year, rolled out several new products during the expo, including Coconut M&M’s and Fudge Snickers.

“Consumers continue to look for new products,” Bob Bandel, vice president of trade development, said during an interview. “We've been in this economic downturn for a while now, still the products we introduced last year did extremely well.”

While the big companies with familiar brands are able to thrive in tough times, smaller companies such as Chicago-based MSRF Inc. are finding the environment more challenging.

 “You have to find a niche and try to go where the big boys aren’t,” said Scott Nejman, national sales manager for MSRF.

The company’s niche – seasonal and holiday gourmet gifts – was hit hard by lower holiday sales.

“We have to sell more volumes because retailers have lowered their price points to sell certain products,” Nejman said. “I can’t tell you where we’ll end up, but I’m still hopeful we will be able to reach our goals this year.”