Sweet News Newsletter (pg.4)
IN 2007, SEAL LOVE LETTERS WITH A KISS
CHICAGO, IL — Love and the sweet smell of chocolate filled the air today during an exclusive event at Hershey's Chicago. The U.S. Postal Service unveiled the 2007 With Love and Kisses stamp, to be released next January.
"Whether it’s a Valentine’s card, a love letter or just sweet thoughts to someone dear, America keeps love in the air and in the mail all year round,” said U.S. Postal Service Chief Marketing Officer Anita Bizzotto. “In 2007, those cards and letters will be all the sweeter with the addition of a colorful With Love and Kisses stamp featuring the image of a classic American confection, the Hershey’s Kiss.”
Joining Bizzotto in the unveiling was Michele Buck, Senior Vice President, Chief Marketing Officer, U.S. Commercial Group, The Hershey Company.
“Hershey’s Kisses are an enduring symbol of love, affection and sharing, recognized the world over for its distinct shape, classic silver foil and unmistakable plume,” said Buck. “The With Love and Kisses stamp reinforces the passion and emotional connection consumers have with the Hershey’s Kisses brand. What a great way to help celebrate the 100th anniversary of Hershey’s Kisses.”
Evoking images of sweet and ardent affection, the With Love and Kisses stamp features a Hershey’s Kisses chocolate and a red heart that form mirror images of one another. Written on the heart is “Love,” while “Kisses” appears on the plume that extends from the top of the chocolate treat.
The unmistakable shape of Hershey’s Kisses chocolates has not changed since The Hershey Company introduced this milk-chocolate candy to the nation in 1907. Wrapped by hand until the process was automated in 1921, Kisses chocolates have been available year round for 100 years with only one exception. Production ceased from 1942 to 1949, when silver foil was rationed as a result of the war effort. Kisses chocolates wrapped in red and silver foil were introduced in 1986 in honor of Valentine’s Day.
The Postal Service began issuing its popular Love stamps in 1973. Over the years these stamps have featured a delightful assortment of designs, including heart motifs, candy hearts, colorful flowers and the word “LOVE” itself. Award-winning illustrator José Ortega of New York City and Toronto, who designed the With Love and Kisses stamp, previously designed the Salsa stamp, one of four stamps that appeared as part of the 2005 Let’s Dance/Bailemos issue.
Since 1775, the United States Postal Service and its predecessor, the Post Office Department, have connected friends, families, neighbors and businesses by mail. An independent federal agency that visits more than 144 million homes and businesses every day, the Postal Service is the only service provider delivering to every address in the nation. It receives no taxpayer dollars for routine operations, but derives its operating revenues solely from the sale of postage, products and services. With annual revenues of $70 billion, it is the world’s leading provider of mailing and delivery services, offering some of the most affordable postage rates in the world. The U.S. Postal Service delivers more than 46 percent of the world’s mail volume — some 212 billion letters, advertisements, periodicals and packages a year — and serves ten million customers each day at its 37,000 retail locations nationwide.
Source: USPS.
Candy delivers a great revenue opportunity for nontraditional retailers.
Alternate channel retailers may not be candy destinations, but a growing number of national chains are finding that the category is capable of generating incremental revenues. Nontraditional retailers that have recently added candy to the assortment include Circuit City, FedEx Kinko’s, and perhaps most visibly, Home Depot. Candy sales in nontraditional, national chain retailers will approach $1 billion for 2006 and are growing at an estimated 10 percent annually, reports Jim Corcoran, vice president of trade relations for the National Confectioners Association. Many alternate channel retailers have large shopper bases, notes Todd Hale, senior vice president, consumer and shopper insights, ACNielsen. Statistics compiled for ACNielsen’s “Chanel Blurring and Consumer Trends” study show that in 2005, nearly eight out of 10 households shopped in the hardware/home improvement channel, for an average of eight times annually, for example. “Although shopping frequency is relatively low within alternate channels, levels are sufficient to support the distribution of products that have been historically stocked in traditional channels,” states Hale in a presentation based on the channel blurring report. “What we have clearly learned is that people buy candy where they shop,” says Ray Jones, a senior executive and frequent candy category analyst for consulting company Dechert-Hampe and the National Confectioners Association. In addition, for alternate retailers focused on categories such as books and music, hobbies and crafts, electronics or the like, the likelihood of purchase is increased by the fact that the shopper tends to be in the store for an extended period of time, says Jones. “We’ve learned from consumers…that the longer that people are in a store, the more likely it is that they’re going to pick up candy on the way out,” he states. “We’ve also heard people say that, ‘Candy is my reward. I’m running my errands, and as I’m leaving, I’m going to give myself a treat because I deserve it,’” Jones adds. “There is competition for the shopping occasion,” he reflects. “But once someone is in a store, once you’ve captured the shopping occasion, you’re not taking away from the purchase.” The infrastructure to support candy sales is in place. Leading candy makers have created special sales forces to service the channel and to get the word out about candy’s revenue generating potential.
Chocolate Bars Rebound
Chocolate bars continue to dominate the candy category despite growing competition and consumer interest in "healthful" alternatives. As bars rebound, aided by co-branding, licensing and reformations, savvy retailers should not underestimate the power of chocolate. The 1.5- to 3.5-ounce candy bar is still the 800-pound gorilla of the candy industry. Still, while all indications point to continuing strong performance in the category, suppliers are monkeying around with ways to keep candy bars uppermost in consumers' minds. Professional Candy Buyer sources agree there are four general trends in the candy bar world: increasing variety in product shapes and packaging; research into untapped sales venues; continuing consumer acceptance of reduced-fat items; and more promotional co-branding with partners from other industries.
In the chocolate category, bars are still the big product, says Susan Smith, senior vice-president of public relations for the National Confectioners Association. Sales in the category are up slightly overall, including snack size, with sales of reduced-fat bars steady at about four percent of total chocolate sales. Smith suggests the reduced-fat data is particularly interesting, since the segment might have been expected to dip slightly after initial rollout.
John Tuffin, trade development manager for M&M/Mars, Inc., concurs. Single candy bars represent slightly more than 50 percent of M&M/Mars' business, Tuffin says, noting that singles are always trending up.
Tuffin adds M&M/Mars' year-old, reduced-fat bar, Milk Way Lite, is a particular heavyweight when it comes to sales. "It's doing excellently," he tells Professional Candy Buyer. "All the growth in the [Milky Way] brand is in the Milky Way Lite product." The success of Milky Way Lite might presage the introduction of other reduced-fat versions of M&M/Mars brands, Tuffin says. The company's 3 Musketeers brand, for example, has always had a relatively low fat content and now carries a message on the wrapper trumpeting the fact. And, Tuffin says, the company is looking at fat-free versions of other items, although it would be tough for the Snickers brand. Confirming an overall trend, Tuffin says M&M/Mars is spending a good deal of time researching new distribution venues. He says the company has a separate department that looks at putting candy where it isn't. The results of this effort have led to tie-ins with entities such as FTD, where candy can be included in flower arrangements, and with the trendy New York-based F.A.O. Schwartz toy retailer, which operates F.A.O. Schweetz. M&M/Mars also has licensing agreements with Oscar Mayer Co., which includes Snickers in its Lunchables, a pre-made lunch product, and with Cap Toys, which manufactures candy dispensers. "The licensing concept is growing very fast -- we're looking at more of these kinds of deals," Tuffin tells Professional Candy Buyer. "These are new ways to sell candy." Tuffin adds M&M/Mars also is looking at a really new way to sell candy -- on the Internet. He says web sites already exist for M&M's, Snickers and Milky Way, but more to the point, Tuffin talks of co-ops through which Internet users can shop from home, logging on to place orders that will later be delivered to the cyber-shopper's door. These co-ops provide a shopping list to consumers, and potential savings, he says, and it's happening now. What isn't happening, and what Tuffin doesn't see happening in the near future, is a trend toward price increases.
Tuffin suggests that as long as inflation stays around three or four percent annually, there won't be a need for price increases. "We see prices remaining stable in the short term," he says.
Regarding new items, Tuffin tells Professional Candy Buyer, that while the company has launched VO2 Max, a vitamin-enriched energy bar (which could herald another trend), no other introductions are planned this year.
Meanwhile, Nestlé Chocolate & Confections is rolling out a good example of another trend in the category -- Nestlé Magic, a plastic ball coated with a one-ounce layer of Nestlé Milk Chocolate. Inside kids will find inside figures from Disney movies, such as Hercules, 101 Dalmatians, Aladdin and The Lion King. "We are so excited about this product," says Tricia Bowles, manager of public relations for Nestlé. "There are few products you can buy where you get candy and a premium." Retailing for between 99 cents and $1.09, Bowles says Nestlé Magic offers great value, because the items don't end with the chocolate. The new item is the latest marketing example, of whatBowles calls, the Nestlé/Disney worldwide alliance. That alliance has also seen Nestlé launch Nestlé Milk Chocolate candy bars molded into likenesses of various characters from The Lion King, Pocahontas, The Hunchback of Notre Dame, and Toy Story. In addition to Nestlé Magic, the company recently launched another product, teaming with Frito-Lay to roll out Nestlé Pretzel Flipz. These are Frito-Lay's Rold Gold pretzels covered in Nestlé milk chocolate or white fudge. Bowles explains Nestlé was initially looking at supplying Frito-Lay with the chocolate for a similar product Frito-Lay was planning on making. However, both parties decided that since each company was the expert within its own field, and the chocolate part of the process was the most involved, they would join forces to have Nestlé produce the item. Nestlé also is making adjustments to existing brands to help boost sales. Bowles says, for instance, Nestlé has updated the packaging for Raisinets. She adds the company wants to move Raisinets more into the mass market, capitalizing on the candy's 40 percent less fat aspect.
Hershey Chocolate USA, along with Nestlé, is building strong ties to Hollywood, launching its first movie-linked product tied to the blockbuster Jurassic Park sequel, The Lost World. Many of its mass market brands, including Reese's, Hershey's Milk Chocolate and Milk Chocolate with Almonds were decorated with dinosaurs and hit retailers' shelves as the movie opened at neighborhood theaters. The tried-and-true Hershey bar, which until now had undergone little change over the years, comes stamped in nine dinosaur shapes, and The Lost World's prehistoric beasts show up on wrappers. "This is definitely a departure for us," says Hershey spokesman Mike Kinney. "Other than when we celebrated Hershey's 100th anniversary, we've never altered the bar or varied from the traditional maroon-and-silver package."
Kinney says The Lost World promotion runs through the summer, which is traditionally slow when it comes to chocolate candy sales. He tells Professional Candy Buyer the launch was timed that way to help increase sales during the slow period. Kinney says it's really too early to gauge the overall success of the tie-in, but so far, the program has resulted in increased incremental sales across the board. Hershey is on a drive to garner consumer awareness in other ways, too. To celebrate the 90th anniversary of Hershey's Kisses, the company shifted into gear and trotted out the Kissmobile. The 25-foot-long, 11-foot-high vehicle, designed in the shape of three Kisses, will not only raise brand awareness, but money for Hershey's long-time charity partner, the Children's Miracle Network. The Kissmobile began a 35,000-mile cross-country tour this May, and plans call for it to pull into more than 25 cities by the end of the year. Kinney says Hershey candy bars are still the company's mainstay product, even in the face of the growing popularity of bite-sized candy items in this era of health-awareness and parents' concerns about the kind of candy (and how much of it) they're giving their kids. Because of this portion-control aspect, packaged candy does extremely well, but the bar is still most recognizable among consumers, Kinney says. But will our grandchildren grow up with the good ol' traditional candy bar? Maybe not, says Dr. Elizabeth Sloan, who heads Applied Biometrics, an information and trend-tracking firm. Sloan says a resurgent interest in calorie intake, coupled with concern about health problems connected with diet, could change things in the candy bar business. Clearly, most interest is in products in the low-fat area, where the products have done very well, she tells Professional Candy Buyer. "Sales of so-called diet candy jumped 20 percent, and we've been watching a resurgence in the concern over calories -- it's up 12 percent since 1995," she says. Sloan explains that growing interest in such items is not surprising since 68 percent of all adults are over their ideal weight range. Also, diabetes in the U.S. has doubled since 1958, now affecting 16 million people. There are even scarier statistics, she points to, that could have significant implications for the future in terms of what consumers will be looking for in candy. For instance, 22 percent of all adolescent girls and boys are obese, meaning they're 15 percent over their ideal weight, she says. Furthermore, one out of every four children has at least one risk factor for heart disease. As these kids grow up, Sloan adds, chances are they'll be looking for low-calorie candy. As a result, Sloan says the candy industry might be called to make substantial product adjustments. The industry is sensitive to being responsive to health concerns, she says, but it has always thought of health-conscious consumers as a small segment. This market, however, is growing. Illustrating how things are changing, Sloan says: "I know of lots of companies looking at bars that will knock down cholesterol content." Will such cholesterol-lowering products and other "healthful items" become the rule, rather than the trend, in the future? If you believe what the Baylor Medical School projects, that just might be the case, Sloan tells Professional Candy Buyer. Baylor researchers predict that by the year 2020, all Americans will be obese. If that projection turns out to be true, then it might just be that low-calorie, fat-reduced and fat-free candy might be the norm. However, oddly enough, suppliers of premium candy bars, who haven't taken part in the low-cal, low-fat movement, appear to have benefited, and likely will continue to benefit in the near future, from the increase in awareness about calories and related health concerns. This is because there is a backlash effect among some consumers who still want to treat themselves regardless of calorie or fat concerns being expressed by other consumers. Confirming this movement, Mark Sugden, marketing manager for Callard & Bowser-Suchard, says the launch of low-fat products on the domestic front has brought some people back to premium chocolate. "We think there are many people who won't buy healthy products if they don't taste great. Rather, people will restrict their frequency of consumption, saying: 'If I'm going to eat less chocolate, what I eat is going to be top-quality chocolate.'" With this in mind, Sugden says the future of premium chocolate bars probably doesn't hold the same low-calorie/healthful scenario Sloan sees for mass market brands. Reinforcing his view, Sugden says fat content is a non-issue in Europe, which means future European imports will not be low-fat. And that will be just fine with members of a focus group gathered by Cleveland-based Pat Henry Market Research for a study conducted for Professional Candy Buyer. According to the study, the group consensus was that something was missing in most low-fat chocolate products (Milky Way Lite being the sole exception) and that low-fat chocolate didn't satisfy their craving. More to the point, said the group, low-fat items will never replace real chocolate bars. Maybe consumers' grandchildren will grow up with good ol' chocolate bars after all.
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