Consumer Insights. Chewy Candy. Empowering Manufacturers and Retailers for Category 1 Growth

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1 Consumer Insights Chewy Candy Empowering Manufacturers and Retailers for Category 1 Growth

2 NCA Sweet Insights Contributing Partners The NPD Group SymphonyIRI The Futures Group The Capre Group 2

3 Why NCA Sweet Insights? Insights uncover category opportunities Brands offers category solutions 3

4 Who is the consumer, why do we care? eating The Shopper = Buyer of product The Consumer = individual who eats product The consumer determines your success or failure 4

5 Benefits Allows us to better meet consumer needs? Helps us to identify opportunities 5

6 Objective Better understand the chewy candy consumer 6

7 7 THE CONSUMER

8 Snacking frequency has increased! Daily Snack Frequency 2009 vs Five-Six 3% Seven+ 0% None 3% Five-Six 6% Seven+ 2% None 0% Three-Four 24% Three-Four 43% More than 2 X per day Total 27% 2009 One-Two 69% More than 2 X per day Total 51% 2012 One-Two 49% Source: SymphonyIRI

9 And, snacking behavior is up for all day parts % of Consumers Snacking Almost Daily by Day part v 2012 Late Evening 16% 21% Evening 22% 34% Afternoon 26% 39% Morning 11% 21% Early Morning 4% 7% Source: SymphonyIRI

10 On-the-go eating is pervasive 54% of consumers seek snacks that can be eaten on the go Chewy candy is Ideal for meeting consumer s on the go snacking needs Source: SymphonyIRI

11 11 Chewy Candy

12 In an average day, 41% of the population consumes candy. Chewy candy is eaten once a week. Confections Consumption Daily Individual Penetration Average American Chewy Candy Consumption Annual Eatings per Capita 41% Confections None 47 Times per year 59% Approximately Once per Week 12 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 Data for 1 year ending March 2010 Source: The NPD Group, SnackTrack 2.0

13 Special occasions when children eat nonchocolate candy: Top 5 special occasions where children indicate their desire for candy: 1.Halloween 2.Christmas 3.Easter 4.Valentine s Day 5.Other It s important to make candy central to delivering in-store experience to accommodate seasonal surges in Candy consumption Halloween trick or treat, parties remain the leading occasion for candy consumption Candy is also a key part of children s Valentines Day family & school celebrations Source: NCA & The Futures Company, 2012

14 Adults account for 65% of chewy candy consumption, and their per capita eatings have increased since Chewy Candy Consumption by Age Total Adult Consumption Annual Eatings per Capita % of Eatings Children % Teens % Adults % Adults % Adults % All Adults Adult consumption has increased 22% over the last 5 years 14 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1 Data for 1 year ending March 2010 Source: The NPD Group, SnackTrack 2.0

15 Per Capita Consumption is Up Across All Age Groups, With Adults Showing the Most Growth Chewy Candy Annual Eatings per Capita by Age Annual Eatings per Capita Adults and have had the largest increases in consumption 15 Data for years ending March Source: The NPD Group, SnackTrack 2.0

16 Adults Are Primary Consumers of Gummy Candy and Licorice, Two Dominant Sub-Segments in Chewy Candy % of Gummy Candy Eatings % of Licorice Eatings Children % Adults % Children % Adults % Gummy candy represents 26% of all chewy candy eatings Licorice represents 8% of all chewy candy eatings 16 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

17 Gummy Candy & Licorice are Driving the Overall Growth in Chewy Candy Per Capita Consumption Chewy Candy Annual Eatings per Capita by Types Annual Eatings per Capita AO Chewy 5 Yr. Pt. Change = Gummy Candy 5 Yr. Pt. Change = Licorice 5 Yr. Pt. Change = Data for years ending March Source: The NPD Group, SnackTrack 2.0

18 Nutrition: For adult weight management Top 5 weight management practices of adult daily non-chocolate candy consumers: 1. Eat more fruits and vegetables 53% 2. Eat smaller portions 49% 3. Regular exercise 44% 4. Increase water consumption 39% 5. Eat less sugar/sweets 35% (NOTE: Among kids, eating less sweets is also ranked #5.) Candy is deemed part of consumer s lifestyle as they prioritize other ways to focus their attention on managing or loosing weight. Only about 1/3 rd choose to reduce sweets as a primary way to manage their weight. Source: NCA & The Futures Company, 2012

19 Percent of respondents Generally speaking, the more frequently adults eat candy, the better they perceive their weight % of adults who consider themselves at right weight or underweight: % Consumption 38% - Daily eaters 37% - Moderate eaters 30% - Infrequent eaters 35% - Never eat candy 45% 43% 41% 39% 37% 35% 33% 31% 29% 27% 25% 38% 37% 35% Trend Actual 30% Never Infrequent Moderate Daily Frequency of non-chocolate eating Despite perceptions to the contrary, moderate and frequent candy eaters report they are either about the right weight or are in fact underweight Source: NCA & The Futures Company, 2012

20 And for Managing Their Weight Among the 17% of surveyed adults who admitted being overweight or obese, adult moderate candy consumers are: Nearly 2/3 rds as likely as non candy eaters to be actively managing their weight condition Just as reliant upon changes in their lifestyle, such as exercise or diet, to manage their weight condition 64% 60% Less than 1/5 th report being overweight or obese Among them nearly 2/3 of overweight or obese candy consumers report they re actively managing their weight condition Source: NCA & The Futures Company, 2012

21 For Adults, Natural and Fortified are Characteristics They re Likely to Seek Prefer natural over organic non-chocolate candy by a factor of about 3:1. Are 84% more likely than adults in general to prefer nonchocolate candy fortified with some health benefits. Are 11% more likely than non-candy eaters to prefer candy fortified with some health benefit (30% vs. 19%). Natural is important among candy consumers and they ll seek foods that are fortified About 1/3 rd seek fortified candies to address their desire for healthier foods Source: NCA & The Futures Company, 2012

22 SO WHAT The Consumer What Does All This Mean? Candy has an important emotional role in the diet as an occasional treat In Chewy candy, there is an opportunity to target adults directly as primary consumers, to capitalize on the size of this segment The increasing consumption trends in chewy candy, across age groups, offer a distinct opportunity to capture the momentum and target each age group with unique propositions Younger age groups, especially Teens, are essential to establishing consumption habits and ensuring the long-term health of the segment Due to growth in frequency in consumption Gummies and licorice offer an opportunity to appeal to adult chewy candy consumers Natural is favored over organic for candy consumers 22

23 23 Consumption occasions

24 Consumption of Chewy Candy is Primarily at Home Chewy Candy Consumption by Location % Eatings Away 36% At Home 64% 24 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

25 Chewy Candy is Typically Eaten in the Evening Chewy Candy Consumption by Occasion % Eatings Late Night Snack Other Evening Occasion Total Confections Chewy 25 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

26 Families of Four or More Purchase More Than Average Share of Chewy Candy # in Family Index 100 = Average Eight 182 Seven Six Five Four Three Two One # in Family Index 100 = Average Source: SymphonyIRI Panel data 2010

27 Chewy Candy is Considered a Relaxing and Social Treat Activities During Consumption % of Eatings Watching TV 28 Watching DVD s / video tapes 3 Relaxing Activities Other Relaxing Activities 26 Plyng/plyng cmptr/vdeo/brd game 5 At a party or special occasion Talking on the phone 1 2 Social Activities Other Social Activities 3 All Relaxing and Social Activities Account for 68% of Chewy Candy Eatings Versus the Confections Average of 54% 27 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

28 SO WHAT Consumption Occasions What Does All This Mean? For Chewy candy, there is an opportunity to build associations with categories linked to relaxing activities and at-home consumption Chewy candy is eaten when relaxing and with social activities, thus there is an opportunity to connect with more sharing and group occasions There is an opportunity to drive increased consumption away from home by promoting the portability benefits of chewy candy 28

29 29 Purchase occasions

30 Non Chocolate trips are primarily special purpose trips Pantry Stock- Up Fill-In Quick Trip Special Purpose Chocolate Candy 27% 20% 37% 16% Special Purpose Trips are key Gum Non-Chocolate Candy Salty Snacks 31% 26% 44% 21% 19% 21% 32% 16% 24% 16% 39% 11% Snack/Granola Bars 47% 22% 20% 11% Yogurt 50% 22% 18% 10% Total CPG (1.5) (chg 2011 v 2008) Since shoppers are on a mission and have chosen store, retailers are advised to meet their candy needs to sustain, improve shopper loyalty +0.3 Source: SymphonyIRI

31 On average, shoppers purchase chocolate once every six weeks (45 days), and about 12 times per year Purchase Cycle times/year 8 times/year 5 times/year 5 times/year Chocolate Non Chocolate Chewy Candy Gum 31 Source: SymphonyIRI Panel data 2010

32 62% of Consumers Purchase Chewy Candy, While 43% Make Repeat Purchases Over a Years Period Purchase at least once Repeat Purchase Chocolate Non Chocolate Chewy Candy Gum 32 Source: SymphonyIRI Panel data 2010

33 Among Non Chocolate items Dollars per Buyer are Highest for Chewy Candy Dollars per Buyer $12.00 $11.41 $10.00 $8.00 $7.29 $7.06 $6.81 $6.50 $6.49 $6.42 $6.00 $4.57 $4.00 $2.00 $0.00 Chewy Licorice Novelty Sugar Free Hard Candy Mints Breath Fresheners Specialty nut 33 Source: SymphonyIRI Panel data 2010

34 26% of all Chewy Candy Purchases Offer Consumers Some Type of Savings Offer While 3% Involve Coupons Purchased with Coupon Purchased with Any Deal Leveraging manufacturer coupons and promotions drives attention to category and offer value to your shoppers Chocolate Non Chocolate Chewy Candy Gum Source: SymphonyIRI Panel data 2010

35 Not Surprisingly, Adults are the Gatekeepers of Chewy Candy for Children < 18 Consumed vs. Purchased % of Eatings Children Under % Eaten % Purchased Adults Children <18 Eat 35% of Chewy Candy But Only Purchase 6% 7% Don t know who purchased 35 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

36 Purchase Locations Change When Consumption is More Immediate Purchase Location Among Traditional/Non Traditional Outlets % of Eatings Purchase Location Among Traditional/Non Traditional Outlets Consumed within an hour % of Eatings Other 30% Supermarket 27% Other 24% Supermarket 18% Convenience 11% Drug Store 8% Discount/SC 24% Convenience 34% Discount/SC 17% Drug Store 6% All Consumption Immediate Consumption NOTE: Non traditional outlets include: Dollar, Military, Vending, theaters, on-line, etc. Convenience Becomes More Significant when consumption is imminent 36 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

37 Immediate Consumption Is More Significant for Gummy Candy Consumed vs. Purchased % of Eatings More than a day hour to 1 day Less than an hour Don't know Total Chewy Candy Gummy Candy Most chewy candy is consumed more than a day after purchasing 37 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

38 Most Candy Consumers Now Expect Foods with Health Benefits to be Available at Regular Prices. 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Price premium adult daily non-chocolate consumers might be willing to pay for foods with health benefits. 40% will pay a premium 60% will not pay a premium 10% Important, would pay 20% more 30% Important, would pay 10% more 43% Important, but won't pay more 18% Nice to have, but don't look for 9% Not important Though historically candy shoppers were willing to pay more for health benefits, retailers should now align prices with mainstream confectionery, snacks, and foods Source: NCA & The Futures Company, 2012

39 Purchase Occasions What Does All This Mean? SO WHAT Adults are both consumers and gatekeepers for chewy candy. They need to be considered regardless of the age segment being targeted In large format stores, chewy candy purchases are typically for future consumption indicating that pre-shopping trip marketing and reinforcing the message in store will be critical to driving sales The high percentage of eatings purchased from large formats provide an opportunity to drive stock-up. Immediate consumption is an opportunity in convenience channel and for gummy segment It s now important to align everyday prices for items with perceived health benefits with everyday mainstream confectionery, snack, and food items 39

40 40 Motivations

41 For adult daily non-chocolate consumers, candy is part of a healthy lifestyle. 50% Top reasons for eating non-chocolate candy in decreasing order of importance: Occasions: Holidays & Snacking 45% 40% Emotional: Happiness/indulgence/Reward/Sharing 35% 30% 25% 20% Holidays or celebration of a special occasion Curb hunger Make me feel happy Enjoy a moment of personal indulgence Reward myself for something I have done Share with my family Leading Reasons/Occasions for Candy Consumption Key holiday, snacking occasions and variety of emotional needs drive consumers desire to include candy as part of their overall diets Source: NCA & The Futures Company, 2012

42 Taste, sweetness, and fun are key motivations for eating chewy candy 15% of chewy candy consumers choose it because they like the taste 15% of chewy candy consumers wanted something sweet 8% of chewy candy consumers wanted Something fun to eat 42 Data for 1 year ending December 2010 Source: The NPD Group, SnackTrack 2.1

43 SO WHAT Motivations What Does All This Mean? Tapping into key consumer occasions and emotional needs is opportunity to drive growth in non chocolate category Given the unique motivations, leverage the unique sweetness and taste of chewy candy segments to reinforce consumption There is an opportunity to emphasize the fun nature of chewy candy to increase consumption 43

44 NOW WHAT Chewy Candy Consumers What Do You Do Now? Age: Address the taste preferences across ages groups. Target young consumers, who prefer gummy candy, with fun to eat messages. Target adults and their consumption of licorice with messages both specific to that segment and involving complementary categories Address consumers age by specifically targeting all segments of the adult population evaluate packaging, messaging to ensure it is speaking to adults, not just leveraging nostalgia Address mom s concern of over-indulgence of chewy candy by kids by focusing on moderation as well as chewy candy s role as a treat or reward Relaxing Moments: Connect with consumers via the relaxation associated with chewy candy - movies/tv at home, on the internet, dinner, etc. Leverage the social aspects of chewy candy consumption entertaining, shared snaking occasions Promote shared family consumption at home with sharable family packs and family directed messaging 44

45 Chewy Candy Consumers What Do You Do Now? NOW WHAT Path to Purchase: Influence shopper pre-trip with ads, social media and apps to get on the list and instore through reminders to capture the future consumption of chewy candy. Drive in-store presence with seasonal and snacking display points of interruption beyond the aisle. Using point of sale signage that taps into emotional needs including happiness, indulgence, reward, and sharing. Snacks: Leverage the fun to eat aspect of the chewy candy to drive at home snacking occasions (after dinner dessert and late night) by evolving messaging and promoting with appropriate categories associated with those times of day ice cream, shakes, floats; and developing unique desserts and snacks - gummy cakes, frozen gummies, licorice/gummy bracelets Drive away-from-home snacking occasions at work, at school, while in transit and while socializing by increasing the portability and share-ability of chewy candy 45