The IRI numbers don’t quite reflect the sunny climate of caramel lately. Perhaps that’s because the research company defines the category as caramels/taffy apples/kits/dips — when in fact, it has expanded to so much more now. According to IRI figures, though, the category experienced single-digit dollar sales growth for three years in a row, and then last year (2003) saw a four-percent drop. That certainly doesn’t paint the hot picture that has fired up the industry, particularly in 2004.

The most important thing for retailers to know — caramel has quickly cropped up as one of the hot new flavors in both mass market and premium candy — coupled with nuts, with chocolate, with marshmallow — and that trend has now carried over into snacks — as it debuts as the hot new filling (along with the standard crème) in chocolate snack cakes.

The American consumer preference for caramels is of the soft and chewy variety; it seems U.S. caramel cravers don’t favor anything hard that sticks to the teeth nor something that is too liquid. The flavor itself is preferred as more of a butter caramel, with minimal vanilla flavor, according to the category experts.

The major mainstream chocolate companies all have caramel varieties now; most of the popular brands have expanded to include a new SKU with caramel filling. In doing so, they are flagging their new labels with “extra caramel” and new “softer caramel.” It seems caramel-filled chocolate items are this year in the pioneering process — in other words, early on in the life cycle. In premium candy, caramels are particularly thriving in caramel/nut cluster type products — sometimes mixed with high-quality toffee, too.

For baking purposes, marshmallows make a good adjacency item for plain caramel candy. Take note: Consumers who purchase caramels for baking purposes tend to purchase premium quality caramels (studies show that most at-home bakers know the difference).

Coffee and hot chocolate aisles are the up-and-coming caramel adjacencies. With both liquid drinks getting a more premium status even at home, consumers are plopping candies that melt well, such as caramels, into their mugs, just the way they do sugar cubes or marshmallows.

Flavored caramels are expected to grow in popularity, particularly on the mainstream level. Chocolate-caramel and caramel-mint will probably be the first two varieties to really take hold.

Play up traditional caramels in the produce section, along with caramel dips and sauces, in the fall.
Many caramel products are used for baking only, and about 80 percent of their annual sales volume occurs in October and November. Don’t be caught short during these months.