General Mills plans expansion of its international business
MILWAUKEE General Mills has said that it plans to keep building its international business in order to avoid negative effects of the slow economy. Its international segment is its fastest-growing business at present, the company has said.
General Mills’ chief executive officer, Ken Powell, explained to the company’s shareholders that it will continue to grow brands such as its Haagen-Dazs ice cream business, Old El Paso brand Mexican foods and cereals and other staples such as Cheerios. He said that General Mills also plans to launch 300 new products in 2009.
Figures for the company’s international sales have doubled from $1.3 billion in 2003 to $2.6 billion in fiscal 2008, the company reported. That reflects growth of 21 percent over last year’s sales.
Mars promises to maintain high quality in chocolate production
HACKETTSTOWN, N.J. Mars Snackfood U.S. has stated that it will continue to use 100 percent cocoa butter in its production of chocolate candies, maintaining its standards of quality and purity.
The company made the statement in order to differentiate its chocolate products from other companies that use coca butter substitutes in production, yet also label their candies “chocolate.” The company explained that cocoa butter is a key ingredient for making chocolate which assures its texture and creaminess.
Todd R. Lachman, president of Mars Snackfood U.S. told the press, “Mars chocolate products are pure, authentic chocolate and they’re going to stay that way. We simply won’t compromise the purity and authenticity of our chocolate by diluting it with a cocoa butter substitute. This company was built on quality—it’s one of our core principles—and we will not lower the bar on chocolate quality.”
Mars has reported U.S. annual sales of $7 billion for combined sales of food, snack and pet care products. Additionally, the company has spent more than $70 million to expand a manufacturing plant in Elizabethtown, Penn. Mars has been producing chocolate candies for more than 100 years.
Sweetened merchandising can grow candy sales
Manufacturers and retailers seem to be paying more attention to how they are merchandising candy. In a recent investor update, Hershey chief executive officer David West said that in an attempt to make candy aisles easier for consumers to shop, the company is testing new displays that group products by purchasing occasion, such as movie candy, gifts and items for the candy dish.
“Merchandising is really important to the category,” said Lisbeth Echeandia, a consultant with Frey Enterprises, a consumer packaged goods consulting firm. “The center of the store isn’t being shopped as much, so confectionery needs to be where consumers are.”
Echeandia said a steady stream of new products isn’t enough to keep consumers interested. “We need to merchandise in a more fun, logical way,” she said. “We are realizing that just because you build it doesn’t mean they will come.”
Industry experts said a better organized candy aisle boosts sales. “More than 70 percent of consumers make their decision on what to buy in the candy aisles and spend less than 30 seconds in the aisle,” said Jenn Ellek, a spokeswoman for the National Confectioners Association. “Fixtures that provide segmented, easy-to-distinguish sections by confectionery category provide the highest sales.”
Signage can help, particularly for such hot segments as theater candy. Walgreens clearly labels its three-foot in-line theater section, located at the front of the store, with signage. “I’ve seen some nice signage at chains like H-E-B for the theater section,” Echeandia said. “Jelly Belly has also done well with in-line displays in bins that attract attention to the product.”
Retailers can get an even bigger boost with outposting—especially in such segments of the category as theater or premium chocolate, which have been high-growth areas.
CVS recently debuted a four-foot wood endcap fixture in some locations to house premium chocolate, one of the fastest-growing segments in the candy category. The fixture, placed in the front of the store, holds Lindt, Ghirardelli, Dove, Green & Blacks and M&M’s new Premiums brand, among others. Premium bagged chocolate is merchandised on the front of the fixture, while bars, boxed candy and more bags are located on the sides.
“Cross merchandising has always been an effective and easy way for retailers to increase their confectionery sales, and theater box marketing is no exception,” Ellek said. Within the aisle, she has seen retailers use signage to draw attention to a theater box set with between 12 and 20 different products. “Retailers can also use a shopping-interruption technique and set up a display highlighting a movie theme with DVDs, popcorn, beverages and, of course, confectionery,” she said.
Since NCA data show that 35 percent of customers pick up a candy or snack during their shopping trip, Ellek said retailers who take advantage of point-of-shopping interruption throughout the store to encourage more buying see a spike in sales.
“Top-performing retailers use in-store features, displays and promotions to increase confectionery sales,” Ellek said. “Retailers can use shelf dividers, call-outs and section breaks to accentuate the aisle and give consumers every opportunity to purchase.”
Grabbing more space in other departments isn’t an easy sell. “The primary roadblock to more creativity in merchandising the category is territorial issues at retail,” Echeandia said. Chocolate may be a natural near greeting cards and sugar-free candy has cross-selling opportunity near the pharmacy, but too often buyers aren’t working together to make the most of those synergies.
“Retailers should know that there is a $10 billion growth opportunity in the confectionery category based on best practices of top retailers,” Ellek said. “Merchandising confectionery is one of the easiest and most lucrative ways retailers can increase sales and bottom-line profits.”