It is now two years since Limited Edition (LE) confections debuted. In that short time the candy market has seen more than 60 short-term (six to eight weeks) residents come and go. In the process, The Hershey Company garnered lots of incremental shelf space … much to the dismay of Hershey competitors, but to the apparent delight of retailers … and created some permanent line items such as Kit Kat White Chocolate and Reese’s White Chocolate. Limited Editions became permanent additions.

The Hershey Company (their new name) that started the LE craze isn’t about to stop. Kit Kat Extra Creamy and Reese’s Big Cup with Nuts are scheduled for imminent release, along with the recycling of some previous LEs. Hershey has added some fuel to their fire with the pairing of its brands in the form of ‘TwoSomes’ such as Hershey’s Extra Creamy Chocolate plus Heath or plus Whoppers. Nestlé is still in the game, having shipped Crunch Dark in mid-May.

To gain some insight into consumer options at this time, we visited a 7-Eleven store in Texas. It had nine items under the Reese’s brand … base Reese’s Peanut Butter Cups, King-Size Reese’s Peanut Butter Cups, White Chocolate, Peanut Butter Lovers, Chocolate Lovers, Reese’s Sticks, Reese’s Pieces, Reese’s Mini Pieces and Reese’s Pieces with Nuts!

On the Kit Kat front, there were four offerings, regular and king-size bars, along with Kit Kat White and Big Kat. So two slots or facings turned into 13. That must be what Hershey Chairman, President and Chief Executive Officer Richard H. Lenny means when he speaks of  “… leveraging Hershey’s iconic brands.” While several companies have marketed Limited Editions (see table) Hershey has been the most active, and it is safe to say it has gathered the most incremental slots at retail.

“With very few exceptions, [Limited Editions] become immediate top sellers and provide incremental sales in the order of 9 percent to 10 percent,” according to Derek Schmitt, President of Category Solutions LLC of Plano, Texas. “They work especially well in ‘two for’ pricing where there is a high degree of trial of Limited Editions—one regular bar and one Limited Edition.”

John Scardina, vice president of merchandising at Eby-Brown Company in Naperville, Ill., agrees with Schmitt to a degree. Scardina says: “Limited Editions start out adding incremental sales but longer term they can cannibalize base brand sales, and you can start to see an erosion in sales in other SKUs.”

Scardina did feel that LEs are “a way to test new flavors, but we don’t believe consumers will eat two bars at once long-term, and with so many varieties, eventually the consumer is going to make a preference choice and consume only one bar with regularity,” he concluded.

We asked Scardina how you plan-o-gram for Limited Editions. “You don’t! Items that warrant placement will move from Limited Edition status and become everyday items. At that point in time you can make plan-o-gram decisions,” he replied. Scardina feels that eventually Limited Editions “will lose some of their luster and focus and become more truly limited in their offering then what we are seeing today.”

Dick Dvoracek, merchandise manager at McLane in Temple, Texas, feels that Limited Editions “are ‘plus’ business, but you’ve got to manage it. Eight of 10 items do well, but now and again you have to find a home for some product,” says Dvoracek.

“They create excitement and help keep the category fresh,” says Al Ciaramella, director of marketing at MTC Distributing in Modesto, Calif., “but there is a challenge in inventory management, slots in the warehouse … there is an extra cost, and that’s being realistic,” he says. “While they give a boost to the category, some brands, probably the smaller brands, will suffer due to a lack of space,” Ciaramella concludes.

Not everyone sells Limited Editions. “We need proven sellers,” says Ed Stern, Director of Nothing Better, a vend operator in Alexandria, Va. “Besides, we service a lot of hospitals and have less chocolate in our mix,” he concludes.

You won’t find Limited Editions at 6 Flags Theme Parks either. “We don’t stock Limited Editions; we need the same item all the time, and can’t keep changing items over the course of a season when the edition runs out,” says Jennifer Shaw, Candy Buyer at 6 Flag Theme Parks. The theatre candy buyers we talked to echoed her sentiments.

Small retailers we talked to had positive experiences with Limited Editions. Kishnor Patel, president of Mega Dollar Max in Houston, says that LEs “added sales to my store, and are still selling well. We have a mixture of demographics in this area, and our customers appreciate variety,” he concludes.

Nick Yousef, manager at Quik Stop Food Stores in Sherman and Savoy, Texas, stocks three Reese’s LEs in addition to the base Reese’s Peanut Butter Cups brand. As far as Nick is concerned, the LEs are essentially all incremental business. “There may be a very small decrease in RPBC (base brand) sales, but if there is a decrease, it is not a lot. It’s almost the same.”

The top person of a major candy company agreed to talk to us off the record. “There will not be, in my opinion, net category growth in the long term. As a way to test new flavors and concepts this makes sense, and while Limited Editions create some buyer excitement, and are a great way to create blockage in retail slots, there will be no long-term benefit.”

Lenny disagrees with our anonymous source. First-quarter earning per share for 2005 at Hershey increased 12.3 percent on a consistent basis, and he expects “organic sales [growth] to be above our ongoing 3-4 percent expectations.” That’s in the context of an industry that’s growing maybe 1 percent per year. 

The emergence of ‘TwoSomes’ as a branding strategy adds even further leverage for Hershey’s “iconic brands” and the potential exists for endless ‘TwoSomes’ combinations, considering the number of brands Hershey controls.

Most observers don’t look for the Limited Edition surge to go away any time soon since it’s good for the candy category. They believe that Limited Editions provide consumers with variety and the fun and excitement of trying new combinations of tastes and textures. Then the more popular combinations stay around and provide category growth in the form of permanent items.

Anytime the producers can provide consumers with what they are looking for, it helps the candy category increase the share of snacking attention and keeps the category vibrant and competitive.

It appears that Limited Editions have altered the landscape of the candy industry, at least for the foreseeable future. Time will tell.

Jim Echeandia is publisher of the Candy Information Service; he may be reached at (903) 965-4700 or consultant@texoma.net.