Exploring New Retail Channels for Confectionery Sales

Consumers continue to embrace confectionery products. The category's resilience is driven by its affordability, role in celebrations, and the enduring appeal of sweet indulgence.

FREMONT, CA: Despite significant price increases and inflation challenges in the last two years, US consumers love confectionery products, showing resilience and continuous growth. Several factors contribute to this robust performance. The high rate of food inflation, reaching its highest level in 40 years, has led to price increases in various food categories, including confectionery. These increases have kept consumers from indulging in their favorite sweets. Confectionery products are often considered affordable indulgences, making them attractive even during inflation.

In addition to inflation, other factors drive the enduring appeal of confectionery. The return to celebrations and gift-giving has boosted demand for these sweet treats. Confectionery has become a go-to choice for gifts and festivals, and this trend has further fueled its popularity—the sweet category benefits from its affordability and status as a mood-lifter during good and bad times. While there has been a slight drop in chocolate and non-chocolate unit sales, this hasn't dampened the enthusiasm among brands in the confectionery sector. The challenge has ignited a wave of new initiatives and activities, particularly among major packaged goods companies operating in the US confectionery market. Retailers also try to enhance sales through secondary merchandising, utilizing off-shelf displays to boost impulse purchases. Confectionery products are often among the top choices for these displays, contributing to overall sales growth.

As food inflation has begun to slow in the last few months, the ability to increase prices in the confectionery category is also likely to decrease. The growth of this category will have to come primarily from traditional methods such as marketing, sales promotion, and new product development. Innovation and new product development have historically been central to the growth of the confectionery market. However, in recent years, larger companies have tended to outsource most of their innovation through acquisitions rather than innovating in-house. This shift leaves ample room for innovation, especially for emerging brands and startups in the confectionery sector.

Supercentres and supermarkets are the primary channels for confectionery sales. While these channels are essential, alternative retail channels have room for growth, including value stores, drug outlets, club locations, convenience stores, and online sales. Manufacturers and retailers can increase confectionery category sales in these alternative channels by investing in category space, product selection, and targeted promotions tailored to each retail channel. Marketing support is crucial in making these strategies effective. Advertising plays a significant role in influencing confectionery purchases but doesn't replace brand marketing. Consumer mood while shopping and brand considerations and pricing are critical factors affecting their confectionery choices.

The US confectionery category is one of the few that tends to thrive in favorable and challenging economic times, including recessions. Its affordability and the ability to provide a small indulgence make it an attractive choice for consumers. While the category's growth may slow as the period of significant and frequent price increases nears its end, it will continue to expand. This growth will primarily rely on fundamental strategies for sales growth, emphasizing the enduring appeal of confectionery among US consumers.