Editor’s note: This article serves as the introduction to our new series on the State of the Confectionery Industry in 2020. Over the next few weeks we will post category breakdowns to look deeper at various segments. We hope to offer you the information and insight you need to navigate these unprecedented times.
Links to the various category articles will be updated here as they become available:
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There’s no way to write about the State of the Confectionery industry without leading with COVID-19.
The global pandemic hit the U.S. in early 2020, and it’s had a massive impact on the country and the global economy.
As Nieslen put it recently, “with many countries re-opening into what appears to be a long-term recessionary environment, companies are naturally looking to make comparisons to past times of economic challenge. But the lessons of the past may not be a perfect fit for today.”
In other words, these are unprecedented times.
Nielsen reports that a number of things make this situation unique:
The impact to the economy was sudden and severe:
- During the Great Recession 2008-2010, 37.1 million people filed for unemployment over two years.
- During COVID-19, 26.5 million filed for unemployment in five weeks.
Our everyday lifestyle has been drastically disrupted:
- In 2008 and 2009, during the great recession, U.S. passenger airlines reported a net loss of $14 billion and travel demand fell 6 percent.
- During COVID-19, the airline industry expects to surrender $314 billion in ticket sales and air travel dropped by 95 percent.
Technology has altered the retail landscape:
- In 2008 we spent $3.75 billion online on consumer packaged goods, less than 1 percent of all food and beverage sales.
- In 2019, we spent $70 billion online on CPG and over $435 billion on e-commerce overall.
Mobile commerce also propelled forward:
- We spent $2 billion on mobile commerce sales in 2010.
- We spent $208.13 billion in mobile commerce sales in 2018.
But how is all this impacting the confectionery industry specifically?
Early sales data show some steep declines in the gums and mint category as a result of COVID-19. Specifically, according to data from IRI, a Chicago-based market research firm (@iriworldwide), over the latest 52 weeks ending June 14, 2020:
- Gum sales dropped 8.2 percent
- Breath freshener sales dropped 11 .8 percent
- Gift box chocolates sales were down 8.3 percent
But not every confectionery sector is facing declining sales right now.
The same IRI data does also shows:
- Chocolate candy sales up 2.7 percent
- Non-chocolate candy up 2.4 percent
- Non-chocolate chewy candy up 5.2 percent
Sales figures aren’t the only measure of impact, though. The confectionery industry also has weathered unprecedented mass event cancelations.
And while some groups have taken their events virtual, like ECRM and IFT, there’s no doubt that the lack of in-person networking will have long-term consequences.
Nancy Minard, CMP, independent meeting professional, Minard Planners, LLC, works as a self-employed event planner and she’s seen first-hand how devastating all the cancelations have been.
“First is the financial punch if the event was a revenue generator, and the degree to which the organization relied on that will tell the tale,” Paschall explained. “Second is the loss of opportunity to come together as an industry.”
She said the effects are felt at every level.
“The individual attendee misses out on networking, contact-building, education, perhaps continuing education units related to a certification, and that sense of shared experience that only a live event can offer,” Paschall said. “Exhibitors and other supporters lose the chance to get their offerings in front of current and potential customers and to see what competitors are debuting. Speakers won’t be able to deliver their carefully prepared presentations in person with real-time feedback and follow up. Volunteer leaders may not have their moment to shine at the podium or in front of peers at special events or moments of transition. And the staff who worked so hard for so long will feel a great sense of disappointment.”
Which brings us to the next unprecedented impact: travel restrictions. Countries all over the world have implemented travel bans, and as we write this Americans are not allowed to travel to the European Union — a situation that would have seemed completely unfathomable as recently as last year.
As of now, ISM is planning its 2021 event in Germany, but whether or not Candy Industry editors, as United States-based journalists, will be allowed in the country remains to be seen. That uncertainty makes it difficult for everyone to plan their business for the next year.
Nonetheless, the confectionery industry persists. None of this has stopped candy makers from launching new products. That may now be the ultimate act of hope — releasing a new product. It shows that a company believes everyone is going to come out on the other side eventually — and when they do, they’ll want to spend money on new candy.
Managing Editor Alyse Thompson recently compiled an extensive list of new products that were slated to debut at the NCA’s Sweets and Snacks Expo in Chicago before the show was canceled due to the pandemic.
And she also wrote about how SmartSweets launched Sweet Chews during the COVID-19 pandemic.
“The launch of Sweet Chews was originally set for Expo West at the beginning of March. However, due to the cancelation of the show and the current situation with COVID-19, we decided to push the launch back to April 7,” Tara Bosch, founder and CEO of SmartSweets, explained.
The circumstances also impacted their marketing strategy.
“We pivoted our launch marketing plan from being adventure-themed, which supported on-the-go snacking with the individually wrapped chews, to an opportunity to create a daily dose of sweetness in our community’s day by bringing them a moment of excitement with a new innovation they have been asking for,” Bosch said.
As mentioned, over the next few weeks Candy Industry will post sector-by-sector breakdowns of the industry, taking an in-depth look at how it's faring and what the future might look like.
We hope this coverage will offer a good overview of the state of the candy industry as it stands in 2020. We hope that in the coming year the confectionery industry will continue to rise to the challenges it meets as it always has — with innovation, perseverance and a little sweetness.