A sweet opportunity.

Candy, one of the least-developed private label food and beverage categories, could be on the verge of blossoming for those retailers and manufacturers willing to give some attention to the premium store brand segment. That's the prediction of Todd Hale, senior vice president of consumer and

"Private label penetration in the candy category is just under 4 percent, compared to an average of 16 percent for all categories," he says. "This underdevelopment, coupled with a private label sales growth rate of 7.6 percent vs. a 2.1 percent growth for branded candy, indicates that an opportunity exists, especially for the retailer with a well-developed private label program."

Confectionery products led all food and beverage categories in terms of new product introductions, according to ProductScan data from Chicago-based Information Resources Inc. (IRI) and released by the National Confectioners Association (NCA). The IRI figures also highlighted the fact that candy shoppers are receptive to new treats; nearly one-quarter of candy sales are attributed to new products that have been introduced in the past twelve months.

In a forecast distributed at its 2006 All Candy Expo, the NCA said that 2006-2007 will include more indulgent delights as "consumers continue to demand high-end chocolates and other sophisticated sweets." Nutrient-fortified sweets, candy infused with natural fruit juices and dark chocolates made with the finest ingredients and high cocoa content will be a growing presence at retailer outlets nationwide.

While acknowledging that private label is growing, particularly in the non-chocolate segment, Jim Corcoran, vice president of trade relations for the NCA, expects that private label candy has a limited upside. "With most candy purchases representing a treat or a gift, consumers want a known quantity, a brand they recognize," he notes. "In the candy category, the brand is the product and items are not generally substitutable. What is the substitute for a Snickers bar?"

ACNielsen's Hale doesn't dispute the power of candy brands, but points to some other research from his company that has positive private label implications. Even though upper-income households purchase fewer private label products, this demographic group has a higher-than-average category development index for candy of 111. "Consumers who spend the most in the category have the weakest commitment to private label," he says. "Add to this the fact that the fastest-growing part of the private label industry is the premium segment, and that could suggest an opening for a premium private label candy offering."

Will brand-loyal candy shoppers flock to a high-end store brand? Not necessarily, but as the NCA/IRI report makes clear, new product introductions are commonplace in the confections category, and consumers are willing to give these new items a try.

Hale believes that the convergence of these factors presents an opportunity for smaller, specialty candy manufacturers, both domestically and overseas, to work with higher-end retailers to enhance an already-strong private label program.

Got a tip? Call Jill Rivkin 847-405-4000