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    Diet Candy Is Big

    Sales quadruple between 2000 and 2004.

    U.S. sales of candy low in sugar and fat quadrupled between 2000 and 2004 as consumers became more concerned with the growth of obesity and childhood diabetes and embraced a bevy of better-tasting products, according to an Associated Press report.

    Last year, consumers bought an estimated $495 million in diet candy, compared to $118 million four years earlier, according to a report by Packaged Facts, a division of Rockville, Md.-based MarketResearch.com.

    While the growth has slowed over the past year as the low-carbohydrate diet craze cooled off, researchers said they expect diet candy to remain a key piece of the $26 billion industry.

    "People, adults and kids, are getting heavier, and there are well-publicized efforts to crack down on junk food advertising and availability, particularly in schools," said Don Montuori, acquisitions editor for the study. "In this climate, as a marketer you can make a stronger case for a sweet that is 'low' in something better than a sweet that is full-bore caloric and fattening."

    Also, Montuori said, companies are developing better artificial sweeteners and sweetener blends that make diet products more palatable and open the door to providing diet versions of popular types of candy.

    "It's a very untapped market and as we see innovations in that market were going to see more interest as well," said Susan Fussell, a spokeswoman for the National Confectioners Association. She added that the overall candy market has grown only 1 percent to 2 percent per year.

    Among the companies that have done the best in the diet arena is Kansas City-based Russell Stover Candies Inc., which had $102.4 million in sales during the first four months of the year, or 37 percent of the overall market. Russell Stover has seen the biggest sales increase in diet candy -- $85.7 million -- since 2000.

    Hershey Foods came in second during that period at $39.9 million, or 14.4 percent of the market, overtaking Atkins Nutritionals, which has been hurt by the slumping popularity of its namesake diet, at $33.5 million, or 12.1 percent, the report said.

    Tom Ward, president and chief operating officer of Russell Stover, said the company has been successful because it came into the market when no other national brands were making candy aimed at diabetic and diet-conscious consumers.

    "When we got in there with our name, and with great taste and with chocolate, it expanded the sugar-free category," Ward said, adding that sugar-free and low-carb candy makes up around a quarter of sales.

    Looking ahead, Montuori said the industry will continue contracting as low-carb runs its course. But he expects $1.3 billion in sales by 2009, especially if companies like Hershey, Nestle and Mars can roll out diet versions of their key candy bar brands and can achieve the same level of popularity within their market as sugarless gum and diet soda have in theirs.

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