Sweet Chances

Most retailers agree that novelty candies comprise a significant "candy opportunity" that must not be overlooked. Classic Pez candy dispensers, bubble-gum cigars, edible movie tie-ins, wacky and weird sweets such as Chocolate Band-Aids and Sour Gummi Tongues ? many of these are must-haves on a c-store's candy shelves.

Candy is the number-four category at Southwest Georgia Oil Co.'s 30 Sun Stop stores. The chain devotes prime in-store space to the category, which brings in 5 percent of in-store sales, according to Aaron Goodman, vice president of operations at the Bainbridge, Ga.-based chain. "We dedicate 12 feet of gondola space plus an endcap in every store," he said. "We give it the best real estate in the store, the first endcap the customer comes to."

Goodman considers novelty candy on a good endcap a great candy opportunity partially because of the often higher ring, and partially because of their typical margin in the low 40-percent range, compared to 36 to 38 percent for a regular candy bar. But he also cited the checkout counter, where Sun Spot stores are blowing mints, gums and breath fresheners out the door. "The industry as a whole is realizing a lot in this area," he said. "Another thing is to merchandise candy well," he added. "We regularly bring in a shipper of some sort and merchandise it close to the front counter, as well as another one close to the fountain."

Clearly Goodman is a keen student in the science of selling candy. His stores merchandise all king-size bars on the top two shelves because customers typically pick up and purchase the first thing they see, he said. With 180,000 customers walking through Sun Stop stores every week, that adds up to a lot of king-size candy sales.

Monty's Markets' four c-stores on the campus of San Diego State University also devote prime space to candy, and understandably so. Any c-store operator would want to take advantage of the 5,000 young, energetic customers walking through the doors of the campus' busiest store every day, ringing up average transactions of $2.66. Candy occupies both sides and both ends of a 6-foot gondola in each store, said Rick Barber, division manager, convenience stores.

The candy story is much the same at Monty's Markets as it is at Sun Spot stores, despite the remarkably different geographical locations and markets. Novelty candy is the name of the game at Monty's Markets too. Barber said a good example is strawberry-flavored Red Vines. They retail for $1.09 per 16-ounce package. A single Monty's Market sells about 11 per day.

"We sell a ton of these things," he said. In fact, the number-one item in the convenience stores in overall individual unit sales is novelty candy. In a recent week, Barber said the stores sold 8,118 individual novelty candy items such as Air Heads and Reese's Miniatures.

Like Goodman at Sun Spot stores, Barber emphasizes the checkout counter's role in keeping candy sales healthy. "At our six registers, we keep change makers and gum. And all around the base of the checkout are pegs, where we display bagged candy." But Monty's Markets do have an advantage over their non-college-campus peers: Students carry meal-plan cards that they can use in the stores. "We keep candy at the sales counter because students' meal cards have a certain amount for each day. If they have some money left over for the day, they can take it in candy," Barber said.

Barber agreed with Goodman that size matters in the world of candy retailing. "Students like large sizes because they get a lot for their money," he said. "It's such a large package, there's going to be some left over. But really, all candy sizes do well for us." For example, the top-performing store on campus sells 30 regular-size Snickers bars every day, he said.

Monty's Markets group snacks and candy together as a category, and it pulls in $14,000 per week in sales. The only category that comes close is beverages, according to Barber.

Barber said the primary strategy regarding product mix in the candy category is the push to be first. "Anything that's new that comes out, we want to be the first to offer it," he said. "For example, we saw in Convenience Store News Twizzler's Twist and Fill, two new flavors I had never seen before. I went to Core-Mark, our distributor, and said, 'This looks like a hot new item.' They worked with us and we got them."

Candy sales are up 18 percent this year at a 16-store chain west of the Mississippi that requested anonymity. The merchandise manager said the stores devote 8 to 12 feet of gondola space to candy, with a 4-foot section of bagged candy. A focus on non-chocolate sweets has helped the sales boost, and the chain allows two shelves in each store for manager's discretion. "This gives them an opportunity to market to their customers," the merchandise manager said.

Another strategy keeping sales moving up is based on the c-store truism that it's dollars you take to the bank, not percentages. "I don't look at gross percentages on candy, I just look at dollars," the merchandise manager said. "For example, we do well with two-for-99 cents or three-for-99 cents. We also focus on the speed of turning the product."

Several retailers mentioned large sizes, including "theater boxes," the jumbo-sized packages of sweets such as Jr. Mints often found flying off the shelves at cinemas, and for exorbitant prices. Fortunately for c-stores, movie theaters have given customers a taste for the oversized packages, and c-stores such as the western chain offer them for 99 cents, a drastic reduction of the cinema candy counter price and even less than suggested retail for c-stores. "We blew them out in three days," the western retailer said.

He offered other advice based on his success. "Never have a shipper on the floor for more than three weeks. If a shipper does not sell out within that time, the price is wrong, or the shipper is too big." Novelty candy is great as long as you don't overshoot certain price points. "If you stay between $1.19 and $1.99, you'll do fine," he said.

Hablamos Español

The next big thing in c-store retailing generally, and candy specifically, might be products appealing to the booming Hispanic market, according to several suppliers. But perhaps equally as important, just as salsa, hot sauce and burritos have made their way into the mainstream American diet, suppliers believe Mexican-made and other "Spanish" candy has tremendous crossover potential.

Consider these facts: Nationwide, the size of the Hispanic market is likely to double by 2525 from its current level of 33 million, and Latinos make up the largest single ethnic group in the United States. Interestingly, there are as many Hispanics in the United States as there are Canadians in Canada, according to Ray Kiely, president of Montes USA Inc., based in Kansas City, Mo. The company is a subsidiary of Montes y Cia S.A. de C. V., based in Guadalajara, Mexico.

Kiely said Montes USA is the largest marketer of Mexican candy in the United States. "Our brands are the Mexican equivalent of Hershey bars" in popularity and brand recognition, he said. The company makes brands such as Cajeta, Tomy, Ricos Besos, Cachitos and others. Damy, its most popular product in Mexico, is a hard candy with a soft peanut crunch center.

No longer are population groups with Spanish-speaking origins isolated or concentrated in a few areas. "The Hispanic consumer has assimilated into U.S. society to some degree," Kiely said. "Also, Hispanics have moved geographically. In Kansas City, 6 percent are Hispanic, and 4 percent of Nebraska is Hispanic. California, Texas and Illinois were the original places Mexicans migrated to. They remain very strong Hispanic markets." He continued, "It was a regional phenomenon, and now it is a national business. For retailers it used to be a certain part of the city, but now it can be in every store."

Kiely explained the appeal of Montes USA's products. "The way our products are presented, they are clearly Latin, with vibrant colors. But I feel there is a huge Anglo crossover for our product."

The retailer west of the Mississippi said his stores have seen satisfying success in appealing to Hispanic customers with non-chocolate candies, sour powders and fruit candies such as mango-flavored treats, guava rolls or salted plums. In fact, generally speaking, salty or sour flavors are favorites among Hispanic consumers, as opposed to chocolate.

Other retailers are beginning to see the sweet opportunities in marketing to Hispanic customers. For example, Southwest Georgia Oil Co.'s Goodman said, "There are a lot of Spanish-speaking agricultural workers in our area seasonally. A few mom-and-pops and grocery stores carry items for them. Offering merchandise appealing to them is something I would be interested in doing seasonally, while they are here. They do frequent my stores," he said.

Charles Huriega, president of CNR Sales Corp. in San Antonio, told a story about a supermarket chain that he believes could be applicable to c-stores. "Ten years ago, I walked into HEB's buyer's office. The buyer was open-minded. He was not Hispanic. I gave him some samples of Mexican products, and said, 'Give them a try. If they don't sell within three months, we'll pick up all the product.' The Mexican category kept growing. Now he has some stores with 12 feet of Mexican product."

CNR specializes in Hispanic and Mexican candies and food, dealing with the most popular sweets, some brands of which are 50 years old, Huriega said. He agreed with Montes USA's Kiely that a crossover trend is underway. "I really feel all Mexican and Hispanic products are going to boom," he said. "Candy has good crossover potential, especially novelty candies. I bet a lot more people than just Hispanics are buying them."

He said he would advise retailers to give Hispanic candies and other products a try.

"7-Eleven is just about to start testing stores with 2-foot sections of Mexican candies. The first test stores are in California. Ultramar Diamond Shamrock and Circle K also sell Mexican candies. If retailers are not trying this, they're missing the boat."





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PULLQUOTES

"We dedicate 12 feet of gondola space plus an endcap in every store to candy. We give it the best real estate in the store."

Aaron Goodman

Southwest Georgia Oil Co.



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