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    Higher Prices Drive Increase in Candy Sales

    Sales growth in the candy/gum category was stronger than any other major product category (except tobacco) inside the store last year, although the revenue gain was mostly driven by higher prices — proving that small indulgences like candy are somewhat resistant to even the worst recessions.

    Sales growth in the candy/gum category was stronger than any other major product category (except tobacco) inside the store last year, although the revenue gain was mostly driven by higher prices — proving that small indulgences like candy are somewhat resistant to even the worst recessions.

    The entire candy/gum category was up 4.1 percent last year to $5.4 billion in total industry sales. On a per-store basis, sales were up 4.3 percent to $38,253. For the second year in a row, retailers took advantage of the opportunity to harvest more margin along with the manufacturer price increases. Candy/gum as a percentage of in-store sales was flat at 3.13 percent of sales, but the category's share of in-store gross margin rose from 4.56 percent in 2008 to 4.8 percent last year. Total unit volume in the category was down roughly 3.5 percent.

    Within the candy/gum category, the best sales gains were generated by chocolate and non-chocolate bars and packs. Chocolate bars/packs sales were up 5.2 percent to $2.3 billion last year, or $16,495 per store. Chocolate bars/packs also made up the largest share of the candy/ gum category, comprising 43.1 percent of revenue (almost a half-point increase from 2008) and 39.3 percent of the unit volume (slightly less than a half-point decrease from 2008). Unit volume in chocolate bars/packs was down approximately 5 percent, but larger-sized bars sold better than smaller sizes, according to retailers.

    Non-chocolate bars/packs were up 7 percent to almost $1.3 billion or $9,075 per store, and comprised nearly 24 percent of sales in the candy/gum category last year, a 0.6-point increase. They also generated an even larger share of the unit volume in the category: 31.8 percent, up from 30.9 percent in 2008. Overall unit volume for non-chocolate bars and packs was up about 2 percent over the previous year.

    Gum sales were flat last year, up only 0.7 percent to $1.4 billion or $10,191 per store, and comprised 26.7 percent of sales in the candy/gum category last year, with a 0.9-percent decline in per-store sales. Gum also generated 22.5 percent of unit volume in the category, down a half-point from the previous year. Overall unit volume for gum was down about 7 percent from 2008.

    The only candy subcategory to show a sales decline last year was rolls, mints and drops, which fell 2.4 percent to $226 million or $1,598 per store. Meanwhile, bagged peg candy and novelties/seasonal both registered strong sales gains of 9.1 percent and 7.2 percent, respectively, albeit on small bases. Together, those two subcategories represent less than 3 percent of sales in the candy category.

    On a market share basis, convenience stores saw their share of total candy sales slip slightly, from 37.3 percent to 37.06 percent last year. Supermarkets gained a half-point of market share, to 41.02 percent, while drug stores lost a third of a point to 21.92 percent of sales. On a unit basis, convenience stores continued to demand the largest share at 45.75 percent vs. 35.07 percent for supermarkets and 19.1 percent for drug stores.

    Bottom Line:

    Candy proved to be recession resistant as category sales were up a solid 4.1 percent.

    Bars and packs sold well, particularly in the larger sizes.

    Gum sales fell flat last year — up only 0.7 percent in industry sales and down slightly in unit volume.

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