Candy & Gum have a sweet year: but despite outpacing the segment with double-digit gains, private label's share of market is still puny. (Candy).

It was a sweet year for private label candy and gum, if you didn't mind the bitter aftertaste of horrendously low market share.

Private label was up by 11.4% in dollars, to $150.7 million, for the 52 weeks ending Feb. 24 in supermarkets, drug stores and mass merchandisers (except WalMart),

Drug stores led the charge, with private label candy and gum sales up by 23.7%, enough to achieve a 3.2% share of the segment. Supermarkets were up by 9.0%, for a 1.5% share. Private label manufacturers say major national brands have a solid lock on shelf space, given the slotting and other fees they pay to insure facings and their dominance at checkstands. And while there is general optimism for another good year for private label, most strategies for new growth are being built around niches rather than Quixotic frontal assaults on the national brands.

In the Bag

Bright new packaging, product innovation, re-bagging and upscale products are behind private label's good showing over the past year. For example, store brand business has been exploding for Shari Candies Inc., a major re-bagger based in Mankato, Minn. (800-658-7059). Arlen Kitsis, president and owner, says 80% of his business is now private label, with demand growing rapidly.

His firm can make up a store brand bag to the retailer's specifications, including Tootsie Rolls and other major national brands. But he insists that he avoids working with low-end producers because "You end up with junk and we won't do that. With bigger accounts, they have to put everything through quality control anyway. We want to produce quality products so people keep coming back."

Kitsis sees a trend toward larger-size bags, which he says makes sense. Consumers get a better deal on the package, and retailers get a higher penny profit per bag. "You can sell only so many bags in so much space, so you are better off going for the higher ring," he says.

Also seeing a trend toward larger bags for private label candy is Bob O'Neill, director of sales, Palmer Candy Co., Sioux City, Iowa (800-831-0828). "It used to be that everybody wanted the 99-cent size, but now it's going to the mass-merchandiser size of two for $3," he says." For general line candy, retailers want a bigger ring, and two for $3 seems to be working."