The Sweet Holiday Season

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Everyone dreams of holiday sweets. And according to industry insiders and retailers, dark and decadent chocolates, exotic flavor trends in chocolates, and traditional and wholesome baked goods should fill those dreams. We'll let you in on simple ways to serve them up to make this holiday season a festive, profitable one.

Selling the confectionery category during the all-important fourth-quarter is ultimately about hitting the sweet spot that prompts customers to make impulse purchases. As a whole, the chocolate and non-chocolate candy category is booming — it generates sales of nearly $27 billion. Of that, chocolate accounts for roughly $17 billion, with sales of gift chocolates during November and December estimated to be $2.5 billion. Since 65 percent of all gift chocolates are sold during those two crucial months, it’s extremely important for retailers to distinguish themselves by offering unique products that will attract customers into the store.

The Darker, the Better
It’s no big secret that Americans love sweets. According to a recent study on chocolates published by Packaged Facts, a division of MarketResearch.com, over 78 percent of adults are candy consumers, with about two-thirds eating chocolate candy and one-fourth eating non-chocolate candy. What’s changed in recent years isn’t so much the number of consumers eating candy, it’s the type of candy they’re reaching for. After what seemed like an eternity of confinement to the gift-box market, sales of premium chocolates, especially dark chocolates, have exploded. Packaged Facts reports that sales of premium chocolate in the U.S. hit the $1.5-billion mark in 2004.
“High-end chocolates and dark chocolates are doing very well,” notes Jim Corcoran, National Confectioners Association vice president of trade relations. “Across the board — from mass merchandisers to specialty and gourmet stores, dark chocolate sales were up 17 percent from the previous year.”
So why the shift towards darker and more decadent? In the past five years, consumers heightened their interest in dark chocolate and the percentage of cocoa content in candy bars, and, as in the case of wine and gourmet coffee, to varietals and origins. Plus, industry efforts touting the health benefits of dark chocolate are taking root. Health-conscious consumers are thinking about dark chocolate as something that can be consumed more regularly and not just as an occasional splurge.
Everyone we talked to agreed that single-origin chocolate bars — those made from cacao beans grown in places like the Ivory Coast, Venezuela, or Indonesia — are poised to become the next big trend. According to Packaged Facts, manufacturers are introducing many dark chocolate products with cocoa content of 50 percent or more, and with less sugar content and minimal, if any fillings and inclusions. One high-end chocolate manufacturer said that Americans are no longer enamored with other types of fillings, but did point out that a market still exists for them though it’s not as extensive as the demand for dark chocolate. Package Facts reports a trend extension that seems to also have best-seller potential — the trickle-down of the cocoa content craze to milk chocolates, with creamy but less sweet product offerings.
“There’s a real market for single-origin chocolates, particularly during the fourth quarter,” notes Corcoran. “What we’re seeing in these chocolates is a single-consumption bar that may be selling for a $1.99 to $4.99, as compared to buying a one-pound box of assorted chocolates.”

The Exotic Flavor Envelope
This year’s hot flavor trends seem to reflect consumers’ desire for a fuller, more indulgent chocolate. They are experimenting more with exotic flavors and spices. High-end artisanal chocolate makers are titillating taste buds with new adventures in flavor. Look for wider use of herbs, worldly spices, and cheeses that have become the signature of many high-end chocolatiers. Among them are chili pepper, cumin, thyme, black pepper, pine nuts, allspice, fennel, cardamom, cinnamon, curry, ginger, nutmeg, paprika, green tea, and Taleggio cheese. One artesian manufacturer even mixes Kalamata olives and aged balsamic vinegar into its high-end truffles.
Adventurous chocolate trends aren’t just limited to the eating kind either. Many manufacturers have introduced sophisticated drinking chocolates that contain real pieces of chocolate instead of the usual powdered cocoa mixes. Joyce Fowler, confections buyer for Chapel Hill, N.C.-based A Southern Season, predicts high-end cocoa items will be a strong category this season.
“Customers are looking to indulge in high quality hot chocolate drinks and are eager to try exotic flavors,” she noted.
Mark Estes, specialty foods director for Central Market North Lamar of Austin, Texas, says chocolate fondue kits, German chocolates, and the Asbach line of liqueur chocolates are the biggest chocolate category sellers for them, adding that “advent calendars that have chocolates in them are hugely popular with our shoppers during the season.”

Marshmallow Madness
Recent confectionery numbers show that chocolate isn’t the only seasonal candy in the spotlight these days. While jellybeans are still the most notable non-chocolate gift-giving item during the holidays, Fowler also predicts that peppermint items will become strong category sellers.
“Novelties and stocking stuffers will also get a big boost from Harry Potter and Willy Wonka,” noted Fowler, “and marshmallow novelties are replacing gels as the latest thing.”
Estes also sees a great deal of interest in peppermint, “especially American-style treats like peppermint ice cream,” as well as specialty German candies.
Nostalgic flavors and images of retro products appealing to the Baby Boomers will be big hits this season. Nostalgic packaging of products in tins and other old-fashioned boxes and twist bags is also part of the trend. Expect manufacturers to revamp the packaging of candies to offer “blasts from the past.” Limited editions, be they dark chocolate, white chocolate, “inside-out” candies, and even crazy colors, are becoming increasingly popular items with consumers. Limiting availability helps make these products more marketable and profitable.

Sugar-Free Options
Though small in comparison to other sub-segments, sugar-free candies are the fastest growing of all non-chocolate categories and are gaining favor among consumers.
“Today, there are more options in the sugar-free category than there were five years ago. There’s tremendous opportunities with both the chocolate and non-chocolate arenas,” notes Corcoran. “Belgian chocolatiers, for example, are making great sugar-free chocolates.”
Corcoran points out that sugar-free candies appeal to consumers who are diabetic, for example, and who perhaps were locked out of the candy category before.
“You definitely want to have something in the sugar-free product mix in your giftable category, particularly because it is geared directly toward adults,” Corcoran explained, “but you don’t want it to be the dominant piece in your confectionary product mix.”

Tradition Reigns Supreme
When it comes to holiday baked goods, it seems this category doesn’t stray too far from the good old-fashioned indulgences we’ve grown up with. Estes told us that a majority of his customers usually go for more traditional items at this time of the year.
“People usually choose pies for Thanksgiving and more chocolate for the Christmas holidays. We see lots of fruitcakes, chocolate fondues, traditional English sweets like mince and lemon curd tarts — finger foods that are perfect for parties,” he said. “The traditional German gingerbread cookies are well loved, as well as the gingerbread house kits.”
Aside from an occasional birthday cake, the holidays are generally the only time of year consumers bake from “scratch” at home. Pre-made gourmet mixes are poised to be popular during the season since they provide the convenience factor.
“We sell lots of gingerbread and brownie mixes,” Estes commented, “and we’re eager to see how the gourmet layered cookie mixes from Sisters’ Gourmet will do.”
Thaw-and-serve goodies also tend to do well for retailers at holiday times. John Pokriots, store manager for Roger Wilco Market in Rohnert Park, Calif., says among his best holiday sellers are the Cinnamon, Apple Cinnamon, and Chocolate Crumb Cakes from Wholly Healthy/Wholesome.
“These are great for setting up a huge table display during the holidays,” he said. “An assortment of different cheesecakes gathered together is a winner for your frozen or refrigerated case. It makes it easy for someone trying to make everyone happy.”
He also says chocolate-on-chocolate items are very popular in all categories, including frozen, fresh, and thaw-and-serve items.
While the holidays are synonymous with feasting and overindulgence, consumers appear to be shifting their consumption patterns towards healthier, more wholesome products. Bakers are substituting ingredients like whole-grain flours, unrefined sugars, organic eggs and butter, and all-natural dried fruits and nuts for the traditional highly processed white flour and refined sugar without sacrificing on taste. Consumers are more educated about health and nutrition and in one manufacturer’s words, “do not want names on the ingredients list they can’t pronounce.”

Gearing Up
According to Corcoran, retailers can expect a higher-than-average fourth-quarter season this year partly because Christmas falls on Sunday, a more favorable day of the week.
“Retailers can take advantage of that extra weekend right before Christmas to maximize their profits,” he said.
When it comes to selling the sweet goods category, a retailer can do many things to generate greater sales numbers. First and foremost, you need to stock unique and diverse products that will attract customers to your store.
“Novelty gourmet chocolates might appeal to the younger consumer, for example, and imported chocolates from France or Belgium will typically appeal to an adult that you can use to set yourself apart,” said Corcoran.
Secondly, the timing of your merchandising is also key. Starting around late October, you should begin setting out your holiday products.
“Early in the season, retailers should concentrate on displaying products that are decorative for the home, whether it be candy canes or dish candy,” Corcoran said.
It’s also important to be well stocked with popular items that have been big sellers in the past, and according to Fowler, “Never, never run out of the basics.”
As far as giftables go, they sell much better in the month of December than early on. Though some retailers prefer to be out of most of their holiday stock right at Christmas, Corcoran stresses just the opposite. “You shouldn’t be completely out of your candy merchandise, which can be used as hostess gifts. The whole Christmas and fourth-quarter holiday celebration is one that certainly goes through the weekend following the New Year’s celebration, so you want to make sure you have the hostess-type gifts for people to purchase up until that time,” he noted.
Since most confectionary products are purchased on impulse, it’s important to maximize the benefits of merchandising by creating a high visibility area for your particular category. Present these items effectively. If a product is at eye level or just slightly below eye level, then the likelihood of a customer seeing that product and ultimately buying it is greatly increased. One manufacturer we spoke with said that a fun and festive seasonal display is key for increasing sales, explaining that when customers walk into a store, they should literally feel the holidays around them.
“A refrigerated or non-refrigerated glass counter in your store is another way to increase visibility by displaying your confections,” said Corcoran. “It gives the perception of freshness, and every customer wants to know they’re buying a fresh product.”
In addition, a glass case also creates a more premium ambience, especially with proper lighting techniques.
“This is an extremely expandable category for retailers,” Corcoran commented, “meaning that a commitment to merchandising the product category will definitely result in higher sales and thus, higher profits.”
And that sound of the cash register ringing this holiday season will be sweet music to your ears!