Sugar-free candy isn’t just for diabetics and dieters any more. These two subsets of the population represent the core target market, of course, given that more than half of American adults are overweight.

But market research suggests that there’s also significant market development potential among that growing body of consumers who have started thinking more about what they are putting into their bodies — not because they’re ailing or on a diet, but just because they’re generally health-conscious. Such consumers span all age groups, but are concentrated in the 18- to 34-year-old segment of the population, according to a research report titled “Sugar-Free Food and Beverages” from Mintel International Group Limited.

Mintel concludes that there also is potential for growth in sugar-free product consumption among teens, since not only are they concerned about their appearance, but they also have substantial discretionary income. Some vendors have even speculated that the market is ripe for sugar-free novelty items for kids.

And, finally, many carb-counting consumers no doubt will be drawn to these products because of their lower carbohydrate absorption attributes. To woo this audience, marketers of sugar-free candy must highlight carb content on product packaging.  

According to Mintel’s research, slightly more than one-third (34 percent) of consumers surveyed say they already are regularly purchasing sugar-free foods. Clearly then, marketers of sugar-free candy — both retailers and vendors — should ensure that these products have a general “fits-into-a-healthy-lifestyle” positioning and are marketed not just as something people are buying because they have no other choice!

Managing this category is about to get more challenging, however, since the sugar-free sales surge has triggered a spate of new product introductions, which now are vying for a finite amount of retail shelf space.

Some recommendations: Don’t duplicate sugar-free product types or plan-o-gram double facings of any one SKU. Provide a good assortment of sugar-free chocolates, hard candies and chewy products.

When selecting vendors, assess the company’s commitment to the category for the long haul. Also, be sure to choose the best-tasting products in order to improve the odds of long-term success.

Now may be the time to scrutinize price points as well. Historically, margins have been higher than average for sugar-free candy because turns were lower than average. But now sugar-free candy movement has dramatically accelerated, which may provide the opportunity to trim margins a bit, thus making the products even more appealing to shoppers.

In formulating sugar-free products, polyols or sugar replacers including erythritol, isomalt, lactitol, maltitol, mannitol, sorbitol and xylitol frequently are teamed with high-intensity sweeteners such as acesulfame potassium, aspartame and sucralose. Sugar replacers are used to add bulk to formulations, while high-intensity sweeteners, as their name suggests, dial up the sweetness level.

The taste of sugar-free candy has improved dramatically in recent years thanks to regulatory approval of new sweetener options and formulators’ ability to perfect taste profiles by blending various polyols and high-intensity sweeteners.

Perhaps the biggest issue in terms of formulation is the fact that excessive consumption of some polyols can lead to unpleasant gastrointestinal side effects, and vendors can be vague as to what exactly constitutes “excessive consumption.” The good news for fans of sugar-free foods is that most people adapt after a few days, in the same way they do to high fiber foods.

But do expect that consumers of sugar-free foods will be astute label readers. They may well seek out particular sweetener options that they find the most palatable.

Because sugar-free sweets appeal to multiple consumer segments, secondary displays can be a major sales boon. That’s particularly true for retailers with in-store pharmacies. Position a secondary display of sugar-free candy in locations adjacent to the pharmacy department and the candy is likely to catch the attention of diabetics and/or older shoppers, who tend to purchase prescriptions more frequently.

John Arundell, candy category manager for May’s Drug Stores based in Tulsa, Okla., has a sugar-free candy display adjacent to the pharmacy in his chain’s Drug Warehouse stores, as well as in the main candy aisle, and he estimates that the two locations contribute about equally to total sales.

Recognizing that a regular consumer of sugar-free confections probably won’t want to revert to the full-sugar versions simply because the calendar says it’s a holiday, major players have introduced sugar-free gift items. After all, for those truly concerned about the well being of the recipient and close enough to know his or her preferences, it just makes sense to provide a sugar-free option.

Many factors combine to bode well for strong growth in the sugar-free confections market. Not the least of these is the fact that sugar-free products taste better than ever thanks to product formulation improvements.

There’s also the fact that the U.S. population is aging. According to Mintel’s report, the population segment composed of 55- to 64-year-olds will be the fastest growing from 2003 out. Older consumers are more likely to be diabetics, and aging baby boomers are expected to be even more proactive about staying healthy and active than today’s seniors.

From 2002 to 2007, Mintel forecasts 58 percent growth in sugar-free candy sales at current price. So watch out: The sugar-free rush is on.

Merchandising Musts

Designating two feet, four feet or even more space within the inline candy department makes it easy for consumers to find their sugar-free favorites — or to experiment with something new. If a brand is available in both a regular and a sugar-free formulation, don’t confuse shoppers by positioning them side-by-side in the plan-o-gram.
It’s too easy for the shopper to inadvertently pick up the wrong product.

Give them a sign.
Once the sugar-free section is in place, incorporate signage above it in order to further highlight the category.

Offer shoppers a taste.
Sugar-free candy is a product category that cries out for in-store sampling because the uninitiated will most likely be pleasantly surprised at how good it tastes!

Changemaker checkout counter displays are also a good idea. They offer shoppers a low-risk, low-cost opportunity to check it out.

2003 Dietetic Candy Sales and Promotional Activity*
Category	$ Volume (in millions)	% Change vs. Year Ago	Display $ volume (in millions)	% Change vs. Year Ago
Dietetic Chocolate	$166.9	127.4%	$23.3	205.2%
Dietetic Non-Chocolate	$68.3	19.3%	$3.1	77.1%
Total Dietetic	$235.2	+80.1%	$26.4	181.5%
*In food, drug and mass merchandisers, excluding Wal-Mart. Source: ACNielsen Strategic Planner