There is strong demand for better-for-you items. However, treats still bring in profits. The candy, snack and general indulgence segment has continued to provide revenue growth for vending and micro market operators. The indulgent category has been the largest segment for many manufacturers and continues to see strong sales year over year. While familiar brands are important to consumers seeking indulgent items, dayparts also impact different product sales. Additionally, the popularity of different indulgent items can vary regionally and generationally.
Indulgent continues to sell
“Indulgent has seen growth for at least the last five to six years,” said John Sommer, consumer insights & strategy, foodservice for Mondelēz International. “There has been steady year on year gains in both indulgent and ‘better-for-you’,” he continued. While there is a need for healthy options, Sommer explains, indulgent continues to keep pace, and in some cases fares even better.
Strong growth in vended candy/snacks/confections is also evident from this year’s State of the Industry report, which projected vended sales for 2017 at $7.0 billion. Although not as big of an industry yet, candy/snacks/confections in micro markets is projected to total $1.1 billion in sales. The candy/snacks/confections segment has the largest projected sales of 2017. This shouldn’t be surprising, because consumers want to have that sweet treat, whether it’s a morning confection, an afternoon favorite standby, or a healthy indulgent mashup — such as trail mixes and premium products.
“There has been an equal amount of growth for both indulgent and ‘better-for-you’, but the bigger segment is indulgent,” shared Malcolm McAlpine, business manager branded snacks, foodservice and vending, Mondelēz International. While healthy options are still important, and gaining traction, indulgent is still coming out on top.
Health-minded consumers still like indulgent
Consumers are looking at products for more than just the numbers on the nutrition label. What’s really been important to consumers has been what’s in the product.
“Cleaner labels are important,” said Paul Klutes, vice president of sales, national accounts, The Promotion in Motion Companies, Inc. It’s also important to adapt to changing regulations. “For example, we offer a USDA-compliant version of Welch’s Fruit Snacks in schools which has been a win for us,” he said.
“Indulgent will continue, but it’s always a constant re-evaluation,” explained Sommer. Consumers and manufacturers will both be evaluating the ingredients in products, as consumers demand options that fit their palate and meet their needs.
“People still like indulgent,” said Rebecca Muller, marketing director, growth & emerging channels, Hostess. At the same time, consumers want better-for-you options. For example, having no artificial colors is one of the ways some indulgent products have encouraged repeat sales for health-conscious consumers. One of the ways this can be done is through innovative products.
“Consumers are driven by variety,” said Muller. “People are aware of healthy, but they still also like indulgent.” Having a mix of both indulgent and healthy items is essential to keeping up with consumer demands.
“There is a shift in focus from calories to products which revolve around the key attributes of organic, fewer artificial additives, sustainable or simple and natural,” said McAlpine. The way consumers perceive a product is changing. Having inherent sweet ingredients, such as maple syrup instead of refined sugar, can be a sticking point with consumers.
When consumers choose what to snack on, it all comes down to taste. “Taste is the driver,” said McAlpine. “This is followed by portability and convenience, which is where convenience services come in.”
Having better-for-you options is important to consumers, but sweets are still popular. In this category, consumers are focused more on what’s inside the product and less on factors such as calories. Consumers want real, quality ingredients that taste good and are from familiar brands.
Indulgent items have long been equated with brands that have proven to be trust-worthy. “Consumers will continue to buy brands that they know,” said Muller. This means having brands that consumers are familiar with is important.
“We are continuing to see growth in core brands,” said Todd Kahn, customer sales executive — national accounts, Hershey. Having core brands available in all segments, vending and micro markets, is important to keeping consumers happy.
“Quality, flavor, value, branding and graphics always resonate!” said Klutes. Create buzz among consumers by offering products they know and want.
Well-known and loved brands prosper in every sector. However, there will still be some products that have a stronger penetration in specific regions.
Interest in both healthy and indulgent products varies regionally and generationally. Some products see equal amounts of consumption across all regions. There are other brands that do better in some regions of the U.S. For example, Muller has found that the Northeastern part of the U.S. prefers coffee cakes, while the Southeast is more likely to eat honey buns. There are also trends culturally, based on what consumers have grown up eating and which brands they are familiar with.
McAlpine explained that “consumers across the country seek varied flavors due to diverse cultural makeups.” Popular and well-known brands have a national appeal. “For instance, the demand for NILLA Wafers is much stronger in the South and the Midwest than other regions,” he said.
While consumers in a specific region are influenced by culture, taste and preferences can also vary depending on age and younger generations are entering the workforce daily.
Younger generations lead the way
Most manufacturers are finding that Millennials and the slightly younger Gen Z or iGen, are changing the way food is being consumed.
“Millennials want to know what they’re eating,” said Sommer, “and because of this, manufacturers are putting more information on labels.”
Kahn says that it’s important for operators to meet as many demands as possible. “This varies by demographics; what products and trends appeal to college consumers differs from their parents’ preferences,” he said. These generational differences are expanding, especially as Millennials make up the largest part of the workforce, with iGen coming right up behind them.
Dayparts play a role
Consumers snacking throughout the day propel different food items. Daypart snacking is driving the initiative for meal replacement, bringing the consumer back into the breakroom.
“There’s a multitude of dayparts with different products for each,” said Kahn. This requires a diverse portfolio to meet consumer demands from vending machines and micro markets.
Dayparts can also vary depending on products. For example, one daypart that receives a lot of attention is from the confection segment. “In the morning, there are more coffee cake sales and certain indulgent items versus other dayparts,” said Muller. Dayparts help to drive on-the-go purchases, which has a lot to do with sales, she explained.
Daypart snacking contributes to meal replacement, which will continue to increase as consumers become busier and look for convenient options.
The future outlook will continue to see expanded consumption, Kahn explained. “Consumers’ eating habits continue to change,” he said. “They are eating more snacks and less meals. This creates more opportunities for operators.” Operators need to be able to meet as many demands as possible by offering a variety of products.
“The future will see more clean label,” said Muller. There will continue to be a balance between trends and original flavor profiles.
“We have a lot of runway ahead to build these businesses for the foreseeable future,” said Klutes. Keeping up with consumers is about meeting their demands in products, accessibility and portability.
The candy/snack/confections segment continues to remain strong. Both healthy and indulgent sales will continue to increase as consumers demand more variety. Manufacturers have found that different products resonate with different consumers dependent on regionality and generationally.
Dayparts also drive the segment, offering portion-sized packs and consumables positioned for all times of the day. The outlook for candy, snacks and confections is very bright.