Candy trends from Europe: Why they matter to U.S. retail candy buyers. (Trade Talk).

Harry Potter is now drawing Star Wars-size crowds in American movie theaters, but the boy sorcerer conquered Europe months ago with a host of chocolate and confectionery products. Nothing is hotter right now on the continent than Harry Potter Chocolate Frogs and Bertie Botts Every Flavour Beans

Why should what's happening in Europe interest U.S. candy buyers? Beyond the fact that markets are globalizing faster than ever, the truth is that trends abroad often influence the American market in the long run. The hottest trendsetters have the ability to jump the "pond" and conquer America, like the Beatles leading the British invasion in pop music in 1964. Others generate ideas that are copied and cloned for domestic consumption by U.S. candymakers.

"We do need to be concerned because consumers are always intrigued by things that are imported such as chocolate," says Suzanna Eygabroat, manager of Information Services with Marketing Intelligence Service of Naples, N.Y.

The confectionery market is also growing faster in Europe than elsewhere. One of the best examples is the United Kingdom, where candy and sweets rank second only to soft drinks at retail. While many other industries in the UK have shown considerable slippage in the past 20 years, confectionery has remained remarkably stable, with both retail value and volume steadily increasing. That strength reflects the level of product innovation and the emphasis on branding, advertising and promotion.

Growth market

In general, production and consumption continue to grow in Europe while many other world markets have slipped, indicating the continent's collective sweet tooth. It's also an indicator of the EU's trade strength, which rose more than 12 percent compared to the rest of the world in 2000.

From a bird's eye view, it would be a mistake to think of the European market as a single entity, despite its recent political and economic attempts at unity. "Trends may be present but they may not be universal across Europe," says Mike Feinson of Mulberry House Consultancy Services in Bury St. Edmunds in the UK, one of the industry's leading analysts.

Rather than looking at Europe in its totality, Feinson says, market watchers have to slice and dice. "Europe is still made of a large number of countries which have different institutions, speak different languages, have different eating preferences, and different choices of popular foods.

"Tastes vary considerably from country to country, and between neighboring countries ... Mints are popular in the UK, but this popularity is not matched by demand in Germany or France. Bear in mind that licorice varies in nature from one region to another. For instance, in Scandinavia, demand is for salty licorice -- the further north you go, the saltier the licorice. In France and the UK, demand is for a sweet licorice."

Still, though, there are some products that have gained mass appeal. "In novelty candy and gum, the hot products are sours and candy in funny shapes and colors," says Arthur Arriens, candy buyer with supermarket conglomerate Ahold, which is based in The Netherlands. "There's also a small but growing market for healthful confectionery products, such as those with added vitamins. Sugar-free candy and gum is also growing strong over the last five years throughout the continent."

While regional markets do dictate the product offerings that appear on store shelves, the world is getting smaller, including Europe. "More and more often we see the same products introduced from market to market," says Sherie Meeker-Barton, senior editor with International Product Alert. "Likewise the same trends appear to be similar from country to country, with the most notable being convenience, organic, functional, and sour, sour, sour.

Sour sensations

"Sours remain the name of the game among the younger demographic as evidenced by such offerings as X-treme Chewits, a chewy candy in a Sooper Sour Tutti Fruitti flavor in the UK, and Rowntrees Megabeans Fruity Gum-Beans 'with bite."' Sours are so hot, Meeker-Barton says, that they're leaping traditional boundaries between confectionery segments. Take Trolli's new AppleMallow and PeachMallow, which transfer the sour taste to the marshmallow segment. Trolli's line of Spaghettini string gummi candy also extends sour flavors into new varieties such as cola, strawberry and grapefruit.

"Manufacturers continue in their efforts to impress with their ability to provide sweets with a little less guilt factor weighing on the consumer," Meeker-Barton says. "For example, Viba Sweets GmbH in Germany introduced the A-C-E Vitamin Bar which includes anti-oxidizing vitamins A, C and E; it doubles as a healthful alternative to chocolate bars and it's presented as an individually wrapped bite-size bar, adding convenience to its appeal.

"The healthful trend is also addressed by Candymex, a German company that introduced multi-vitamin bonbons," Meeker-Barton continues. "Vivil A.

Muller also launched a bonbon candy that provides the recommended daily requirement of vitamin C in each piece. In Slovatia, Verbena introduced a number of functional herbal candies in 2001. In addition to vitamin C-enriched candies for treating respiratory discomfort and throat irritation, it also launched Verbena Pomarancove Fure Multipo, an herbal candy with 11 vitamins that is ideal for the health-conscious sweet lover. Sadex Energy Chips are another example of a vitamin C-fortified candy that comes in orange and lemon flavors."

It's not just vitamin or herb-enriched candy that's in the spotlight in Europe, Meeker-Barton points out. "A look at the past few months also reveals a continuing interest in organic offerings. Halva Ltd. in Finland recently introduced Halva Luomulakritsi organic licorice. It's organically formulated and is tagged as containing twice the amount of iron than in most licorice products and more calcium than milk. In the UK, the Panda organic licorice bar made its debut during the summer, while Tufty organic licorice was introduced in Italy in the spring. Seitenbacher Bio-Apple fruit gum made with organic apple juice concentrate is now available in Germany."

Candies with a hint or more of liquor also are generating interest. "Elizabeth Shaw introduced Stolichnaya Vodka Shots Milk Chocolates in the UK, describing them as featuring smooth chocolate centers blended with either straight or flavored vodka," Meeker-Barton says. "Also in the UK, Walkers introduced a variety of alcohol "enhanced" chocolates with whisky, Irish Cream, coffee and cherry Marnier liqueurs."

Coming confections

What can we look forward to in 2002? According to Wolfgang Kranz, member of the executive board of KolnMesse GmbH, the organizers of the annual International Sweets and Biscuits Fair (ISM) in Cologne, keeping candy fun will command extensive energy and budgeting. For example, Chupa Chups is set to introduce a host of new products with toys accompanying candy such as a Simpsons lollipop and jeans patch, a Barbie lollipop and hair clips, along with jeweled rings, 4x4 toy trucks, sunglasses and "funky tattoos."

It's clear that trade goes in both directions as well. Besides interactive candy, traditional American seasonal events will continue to make new inroads into European markets. "At the last ISM, Halloween finally established itself as a new season in the European confectionery sector," Kranz says. "We expect it to play an important role in the coming years."

"Licensing will continue to be big among confectionery manufacturers," he predicts, pointing to another U.S. spin-off. "If older standbys such as Barbie don't interest the manufacturer, there are always current movie offerings up for tie-in deals, such as we've seen with Harry Potter or Bon Buddies offering Fizzy Wafers under the Rugrats moniker."

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In 2000 approximately 2.6 million tons of chocolate candy and baked goods with a value of almost $10 billion was imported into the EU, representing a staggering increase of nearly 30 percent since 1995. "The importance of sweets and biscuit specialties from other countries and cultures has increased significantly over the past five years," says Uwe Lebens, vice chairman of the working group for the International Sweets and Biscuits Fair (ISM). "One of the reasons is the excellent work of importing,. distribution and marketing companies in the individual countries. This flow of goods will continue to increase over the corning years."

Imports into other EU countries have continued to surge in the first half of 2001. Confectionery manufacturers benefited from the higher prices on the market and swifter turnover rates. Most of these imports came from the United States, Turkey, Switzerland, Poland and Hungary.

The economic terrain will change even more radically on Jan. 1, 2002, with the launch of the Euro. While the changeover to the Euro will prove challenging for banks, retailers and consumers in those countries, the official introduction of the single currency began on Jan. 1, 1999, and should simplify the flow of trade and goods within the EU, Lebens says.

The low Euro exchange rate has been both a blessing and a curse. It has benefited exporting companies in the European confectionery industry by facilitating the exportation of goods to the UK and United States but has been a thorn in the side of importers. That means that certain American cult products or ethnic foods that were already established on the market are now suffering from the strong dollar and sterling exchange rates. The reason: Price increases can't be fully passed on to trading partners because of the strong position held by the trade groups and the aggressive price policies of the competition on almost all European markets.