February 2010
United States Confectionery Market
U.S. Confectionery Market
Overview
2010 USA Economic Trends •Recession ending??? GDP grew 6% in 4th Quarter 2009
•Stock market – DJ – 10,500 …and growing
•Retail sales surprise in 3rd and 4th quarter 2009
•Interest rates remain low
•Consumer spending ????
Issues to watch!
•Unemployment still at 10%
•Housing market still down
•Oil prices rising again
•Still difficult to borrow
•Commodity prices head even higher
•Savings rate up – spending down
2010 USA Retail Trends
•Uptick in third and fourth quarter sales
•Shopping trips declined
•Big spending shift to value channels
•Increased coupon usage
•Confectionery seen as a recession resistant category
•Organic sales decline
•What’s going to happen with Holiday retail sales? •2009 – 3.6% growth (SpendingPulse projection)
•2008 - declined 2.3%
•2007 - 2.4% growth
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2003 20052004 20072006 2008
Cocoa Prices at Historic HighsCocoa price per ton
2009
0
5
10
15
20
25
30
35
40
45
50
Sugar Prices near Historic HighsU.S. Cents per pound Refined beet sugar f.o.b. Midwest
2003 20052004 20072006 2008 2009
$10
$15
$20
$25
$30
Corn Sweetener Prices near Historic Highs
U.S. $ per pound
2003 20052004 20072006 2008 2009
Corn Sweetener Prices have stabilized but are high by historical standards.
Commodities Pricing
Milk – significantly lower in 2009
Peanuts – lower than 2008 but increasing
Walnuts – prices jumped at end of 2009
Pistachios – Iranian crop shortages drive prices higher
Almonds
The 2009 U.S. Confectionery Market
% $ Change
Retail Sales (NCA projection) $29.3 +3.6%
Manufacturers Shipments (NCA projection) $18.7 +3.4%
Domestic Manufacturer Shipments $17.9 +3.4%
Imports $2.0 +0.9%
Exports $1.2 -1.3%
The retail profit margin is approximately 35% for the confectionery category.
The U.S. Retail Confectionery Category generates approximately $29 billion in retail sales
Estimated sales in billionsNCA Shipment Data and Global Trade Atlas Import/Export Data
This analysis shows figures for 2009 shipments and retail sales.
Chocolate Candy represents approximately 58% of total confectionery dollar sales.
Category Retail Sales
$ Billions
Domestic Shipments
$ billions
Shipment % Growth
Vs. 2008
Imports
$ billions
Import % Growth
Vs. 2008
Exports
$ billions
Export % Growth
Vs. 2008
Total
Confections
$29.3 $17.9 +3.4% $2.0 +0.9% $1.2 -1.3%
Chocolate $16.9 $10.8 +3.4% $0.8 +11.2% $0.7 -2.8%
Non-Chocolate $9.3 $5.2 +5.4% $1.1 -3.6% $0.3 Even
Gum $3.0 $1.9 +1.5% $0.2 -18.8% $0.1 +10.0%
2009 Confectionery Categories Analysis
NCA estimates based on Source: 2008 US Department of Commerce,Census Bureau 311D, Confectionery Report andNCA Manufacturer Shipment Reports, IRI Data
Confectionery Sales SteadyDue to price increases in the confectionery industry in 2009 the industry saw an
increase in dollar sales combined with a decrease in tonnage.
2009- US Dept of Commerce 311 D Report and
NCA Manufacturers Shipments
2003 2004 2005 2006 2007 2008 2009
7.1
$29.3
7.2
$28.2
7.4
$27.4
7.7
$28.2
7.6
$27.9
7.3
$27.4
7.1
$25.8
Dollars Sold at Retail, Billions Pounds Sold at Retail, Billions
Total Chocolate Non Chocolate Gum
$92.91
$52.46
$28.34
$9.54
$0
$20
$40
$60
$80
$100
The average U.S. Consumer spent $93 on confectionery products in 2008
2008 US Department of Commerce 311D Confectionery Report
2008 Per Capita Retail Sales
U.S. Confectionery
The Retail Market
Candy and Gum Ranked 4thAmong Food Categories- December 2009
$10.80
$9.20
$9.10
$6.60
$4.50
$4.20
$4.10
$3.80
$13.80
$0.0 $3.0 $6.0 $9.0 $12.0 $15.0
Carbonated Beverages
Milk
Salty Snacks
Candy& Gum
Cereal
Ice Cream
Soup
Cookies
Bottled Juice
Pro
duct
Cat
egor
ies
$ Billions
+2.6%
-15.3%
+7.8%
+4.1%
+1.2%
-0.3%
+1.1%
-1.4%
-1.2%
IRI Food, Drug & MassExcluding Wal-Mart 12/27/2009
Candy and Gum Ranked 4th among 2009 Food Categories in Food, Drug and Mass Outlets
Candy and Gum is the 2nd Largest Snack Category
$9.10
$4.50
$4.10
$2.40
$1.10
$0.50
$0.40
$9.20
$0.0 $2.0 $4.0 $6.0 $8.0 $10.0
Salty Snacks
Candy& Gum
Ice Cream
Cookies
Snack/Granola Bars
Bakery Snacks
Dry Fruit
Misc. Snacks
Pro
duct
Cat
egor
ies
$ Billions
+5.8%
+7.6%
+7.8%
+4.1%
+3.0%
-0.3%
+1.1%
+6.1% IRI Food, Drug & MassExcluding Wal-Mart 12/27/2009
2009 Retail Channel Performance
Channel 2009 $ Sales 2009 % GrowthSupermarkets $4.9 +5.7%Wal-Mart $4.0 +3.4% Mass X Wal-Mart $1.4 +2.2%Convenience Stores $4.6 +3.0%Drug Stores $2.8 +3.0%*Warehouse Clubs $2.5 +4.7%*Dollar Stores $1.2 +6.1%Vending $1.1 -1.9%*Bulk $1.2 +2.1%
Based on 52 Week Sales – Ending December 27, 2009
•Source: NCA estimates based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce. •Sales Figures in billions
The confectionery retail market grew across all trade channels but supermarkets, dollar stores, and warehouse clubs outpaced the overall retail market in 2009.
* Indicates NCA estimate
Confectionery
Seasonal Merchandising
What Affects Seasonal Sales?
•Date/Day of Holiday
•The Economy
•Consumer Confidence
•Merchandising Strength/Visibility
2006 2007 2008 2009 2010 projections *
Valentine’s Day - $971 $1,036 $1,024 $928 $935*
Easter - $1,884 $1,987 $1,846 $1,990 $1,970*
Halloween - $2,146 $2,202 $2,209 $2,207 $2,225*
Christmas - $1,389 $1,420 $1,376 $1,401 $1,420** – projections for 2010
Results and Projection as of February 2010Source: Sales figures are compiled by National Confectioners Association based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce
Confectionery Seasonal Sales(** in millions of dollars)(** in millions of dollars)
Seasonal confectionerysales grew
1.2% in 2009
Seasonal Confectionery Trends
2010 2009 2008 2007 2006 2005
VALENTINE’S +0.7%* -9.4% -0.2% +6.7% +0.1% -4.0%
EASTER -1.0%* +7.9% -7.1% +5.4% +7.0% -7.6%
HALLOWEEN +0.8%* Even +0.1% +2.6% +2.8% +2.3%
CHRISTMAS +1.4%* +1.8% -3.1% +2.2% +1.0% +2.4%
* IRI FD&M
NCA projects a 0.4% increase in 2010 for total seasonal sales.
Holiday 2009 2010 2011 2012 2013
Valentine’s Sat. Sunday Monday Tuesday Thursday
Easter 4/12 4/4 4/24 4/8 3/31
Halloween Sat. Sunday Monday Wed. Thursday
Christmas Friday Sat. Sunday Tuesday Wed
Thanksgiving 11/26 11/25 11/24 11/22 11/28
Shopping Days 29 30 31 33 27
Holiday Dates/Days
Indicates positive date for holiday sales Indicates neutral date for holiday sales Indicates negative date for holiday sales
U.S. Confectionery Trends
Trends - for 2009/2010•Core mass brands grew in units and dollars
•Consumers moved to value channels and value brands
•Seasonal sales rebound with improving economy•Dark chocolate sales continue to grow but at a slower pace
•Dark chocolate sales increased 9% in 2009
•Everyday gourmet chocolate flat in 2009 •Consumers want gourmet product at a value price
•Emerging trends in 2010•More private label chocolates
•Upscale private label/gourmet packaging
•Mass brands introducing more dark chocolate items
•Exotic chocolate flavorings: citrus, spice, salt, fruits
•High cocoa content chocolates
•Gourmet packaging for chocolates
Trends - for 2009/2010•Value products grew significantly
Nut/Coconut Candy grew 12.1% Gummies and chewy candy grew 11.6%
Licorice grew 4.7% Theater Box candies grew 6% King sized candies up significantly
•Sugar Free gum - +7.3% sales Exotic fusion flavors Fortified products
•Seasonal candy increased in in 2009 Reflection of difficult economy More favorable dates in 2009 Seasonal confectionery will grow 2.0%