Christmas Report 2010 The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Contents • • • • • • Executive Summary Christmas Season and Candy Christmas Candy Sales Results Christmas Candy Support Opportunities 2010 Key Takeaways The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Executive Summary - Results Candy Category is big, growing, and critical to winning Holiday shoppers for retailers • Christmas confectionery sales grew at a 4.3% rate Drug stores sales grew by 6.7%, supermarket sales grew 4.4% and Mass merchant sales grew 0.8% • Christmas seasonal candy used for gifts, stocking stuffers and Holiday parties contribute 54 percent of candy sales in November and December • Chocolate seasonal candy sales grew 5.4% while nonchocolate seasonal confections declines by -7.0% • Continuing a trend that has developed over the past years, seasonal Christmas confections grew at a 3.9% pace during the month of December Sales on Christmas confections also grew in November and Seasonal Christmas Chocolate grew in October by +3% pointing to Retailers capitalizing on early season sales Key Takeaways • Mass and Drug staked claim in 2010, and won the season – Promoted broad range price points for all shoppers – drove price image to win the season – More Feature Advertising across brands lifted category for all – Non-branded Seasonal Thematic ads branded retailer as Holiday solution • Aggressive pricing kicked off strong December sales performance The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Executive Summary - Opportunity Retail support was mixed Key Insights • While % of Merchandised Volume increased for • Recommend more F&D Christmas Seasonal Chocolate and Non-chocolate supporting a broad range of candy, incremental volume declined price point, particularly at the lower range to drive • While Candy ads increased in Drug, +10%, and incremental sales focusing on Mass, +39%, they declined in Grocery (8%) December where efficiencies run higher • F & D support lagged 2009 levels and Prominent feature ad placement declined in 2010 for candy • Effectively managing retail execution the entire • Drug and Mass did a better job than Grocery of promoted a variety of different price points to Halloween AND Christmas address all types of shoppers Holiday period is critical ‘right’ product being on floor, • Halloween candy drove November sales raising minimizing risk and the question: “Did leftover Halloween candy maximizing incremental impede on Christmas candy incremental sales? volume throughout the season • Christmas Seasonal items per store trending down pointing to opportunity for innovation The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Contents • • • • • • Executive Summary Christmas Season and Candy Christmas Candy Sales Results Christmas Candy Support Opportunities 2010 Key Takeaways The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Consumers Entered Holiday Season Concerned About the Economy, But Ultimately Spent Initial reports on Consumer Confidence were conservative for December U.S retail sales rose the week before Christmas, putting Holiday sales on track to hit the high end of estimates Retail sales rose 4.8 percent for the week ended December 25 compared with the year-earlier period …with in 10 Americans expected “more” layoffs over next six months Source: BIGresearch® Optimism about the economy has grown…and consumer spending suggested the economy perked up in the 4th quarter and appears to be entering the New Year with some momentum Source: International Council of Shopping Centers and Goldman Sachs The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Consumers Took Advantage of Holiday Deals and Spent More On-line Than Ever • Approximately two third of American shopped on Black Friday weekend, spending an average of $365.34 on gifts and other discounted merchandise, up $22.03 from last year Source: National Retail Federation • Online sales for November and December rose 13% from 2009 There was a +17% year-over-year surge Christmas week* Source: comScore – On Cyber Monday* shoppers spent $1.03 billion, the first ever billion dollar internet sales day on record That was followed by $911 million on Tuesday, $868 million on Wednesday and $850 million on Thursday Source: comScore – 88.2% of retailers had special promotions on Cyber Monday this year, up from 72.2% in 9009 Source: National Retail Federation – Approximately seven million shoppers were reported to use their mobile device to shop for gifts or research products and promotions, up from the estimated four million in 2009 Source: National Retail Federation Christmas Week* = Week Ending December 26 Cyber Monday* = The Monday after Black Friday, November 29, 2010 The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Food & Candy Sales Trended Positively For Christmas Holiday • Dec Grocery Store sales were down (.5%) from Nov and up 2.7% from Dec 2009…Oct thru Dec Grocery Store sales were up 2.7% from the previous year U.S Census Bureau 1/14/2011 *Adjusted for seasonal variation • Sugar & Sweets Expenditure was up +2.2% for Dec 2010 vs Dec 2009; +3.8% for Oct-Dec 2010 vs Yago Bureau of Labor Statistics • By mid- December, 20% of consumers say they purchased food or candy as gifts National Retail Federation • Baking homemade Christmas cookies (81.6%) topped the list of December activities BIGresearch.com The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Candy & Gum Continues To Be a Key Category To Retailers In Terms Of Size and Growth! Candy & Gum •Racks up over $9 Billion in sales annually in FDMx alone +2,7 +0.8% +1.5% +3.8% •Is the 5th largest food category •Is growing faster than the top at +3.8% vs a year ago (3.0%) ©2010 Symphony IRI Group The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Candy Sales During Christmas Season Represents 19% Of Annual Sales Close to 40% of annual Candy $ sales occur during the eight weeks that make up the Halloween and Christmas seasons 8% 11% 20% 19% ©2010 Symphony IRI Group The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Seasonal Christmas Non-choc Merchandising Levels Matched 2009 Only Twice During Season …and had only one week above 40% ACV, compared to three weeks in 2009 ©2010 Symphony IRI Group The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Despite Promoting a Week Later, 2010 Candy @ Drug & Mass Ads Increased…Thanksgiving Thru New Year’s • Grocery candy promotions actually decreased (8%) • Drug continued to promote candy the most +10% vs 2009 • Mass saw the largest increase over the prior year, +39% © 2010 Market Track Private and Confidential The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Holiday Snack Ads Grew and Candy’s Share Of Snack Ads Grew In Proportion To Other Snacks WE Nov 7, 2010 29 WE Nov 14, WE Nov 21, WE Nov 28, 2010 2010 2010 WE Dec 5, 2010 WE Dec 12, WE Dec 19, WE Dec 26, 2010 2010 2010 WE Jan 2, 2011 © 2010 Market Track Private and Confidential The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Prominent Feature Ad Placement Declined In 2010 For Candy Newspaper Wrap/ROP Ad placement all but disappeared, while some front page share shifted to other pages Although there was an increase in features, overall quality has declined over the past three years © 2010 Market Track Private and Confidential The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Drug Addressed all shopper segments with The Lowest Overall Price Perception, As Well As Largest Share Of Candy Under $1.00 Price Perception by Trade Class For ForMuch Muchofofthe theSeason, Season,Drug Drugand andMass Mass‘owned’ ‘owned’the thelower lowerand andmiddle middletier tier seasonal seasonalprice pricepoints points($2.50-$5.00 ($2.50-$5.00and andlower) lower)and andpromoted promotedaavariety varietyofof different differentprice pricepoints pointsto toaddress addressall alltypes typesofofshoppers shoppers Grocery Grocerystarted startedthe the season with a low season with a low price priceperception, perception, but butfocused focusedon on Higher Price point Higher Price point items itemsafter afterweek week 12/12 12/12 WE Nov 7, 2010 31 WE Nov 14, 2010 WE Nov 21, 2010 WE Nov 28, 2010 WE Dec 5, 2010 WE Dec 12, 2010 WE Dec 19, 2010 WE Dec 26, 2010 WE Jan 2, 2011 © 2010 Market Track Private and Confidential The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Confectionery and Snacks Share of Holiday Snacking by Trade Channel All Alltrade tradeclasses classesdelayed delayedCandy Candypromotions promotionsby byone oneweek weekand andincreased increasedCandy’s Candy’sshare shareofofCategory Category Drug and Mass gave the most share to Candy consistently weeks 48-51, while Grocery delivered Drug and Mass gave the most share to Candy consistently weeks 48-51, while Grocery deliveredonly only1/5 1/5ththtoto 1/3 1/3rdrdofofthe theholiday holidaysnacking snackingfeatures featurestotoconfectionery confectionery © 2010The Market Track Private and Confidential NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers 32 Drug & Grocery showed increases in promotions that did not specify a manufacturer (“Other”); Grocery delivered less ads overall 17,627,400,000 • Overall Drug and Mass added Ad support for most manufactures while Grocery reduced for most • Both Drug and Grocery channels promoted more ‘Other’ manufacturer, indicating a shift to less product-or manufacturer-specific advertisements and towards seasonal themed ads 33 © 2010 Market Track Private and Confidential The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Examples of ‘Other Manufacturer’ Other OtherManufacturer Manufacturerrefers referstotoads adsininwhich whichaaspecific specificmanufacturer manufacturerisisnot notcalled calledout, out,and and ininsome somecases, cases,an anuncommonly uncommonlyadvertised advertisedmanufacturer, manufacturer,such suchas asininthe theexamples examplesbelow below InInthis thisad, ad,Ashbury Ashburyand and Merci are both Merci are bothconsidered considered “Other “OtherManufacturer” Manufacturer” Target, Buffalo 12/19/2010 Walgreens, Los Angeles 11/07/2010 Walgreens, Kansas City 12/12/2010 © 2010 Market Track Private and Confidential Kmart, Baltimore 12/19/2010 Walmart, Atlanta 12/26/2010 Rite Aid, San Diego 12/24/2010 34 The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Contents • • • • • • Executive Summary Christmas Season and Candy Christmas Candy Sales Results Christmas Candy Support Opportunities 2010 Summary The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Although December Is Dominant Candy Month For Christmas, November Sales Growing +5.8% +14.0% +2.0% +7.9% (0.7%) +10.8% +7.8% +3.9% +2.7% (7.3%) (3.5%) (18.9%) ©2010 Symphony IRI Group The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Snack Size And Box/ Bag/ Bar Drove Chocolate Sales Growth In November/ December TTL Choc • Halloween candy drove November sales growth raising the question: “Did leftover Halloween candy impede on Christmas candy incremental sales? Box/Bag/Bar > 3.5oz Seasonal Christmas Choc Gift Boxes Box/Bag/Bar < 3.5oz Snack Size Seasonal Halloween Choc ©2010 Symphony IRI Group The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Seasonal Christmas Non-chocolate Declined Vs 2009 • Lower merchandising in both months (25%-50% ACV)* for overall NonChoc drove declines in across all segments except Chewy & Hard/Roll Candies TTL Non-Choc Seas Christmas Non-Choc Chewy Candy • Yet, as with Chocolate, Halloween candy drove November sales growth Novelty Candy Hard Sugar/PKG & Roll Cndy • Early Christmas seasonal trends were especially impacted by Halloween gains Seas Halloween Non-Choc ©2010 Symphony IRI Group The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Christmas Seasonal Items Per Store Trending Down Pointing To Opportunity For Innovation The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Contents • • • • • • Executive Summary Christmas Season and Candy Christmas Candy Sales Results Christmas Candy Support Opportunities 2010 Key Takeaways The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers Key Takeaways • Category is big, highly relevant, and critical to winning Holiday shoppers for season • Mass and Drug staked claim in 2010, and won the season – Promoted broad range price points for all shoppers – drove price image to win the season – More Feature Advertising across brands lifted category for all – Non-branded Seasonal Thematic ads branded retailer as Holiday solution • Opportunity for improvements in Grocery – A higher share of Feature and Displays for Candy supporting consumer holiday snacking behavior is warranted – Broader range of price points, particularly at the lower range for price impact – Improved Execution, especially in December where efficiencies run higher – Improve Halloween execution as residual inventories adversely impacted merchandising efficiencies with November promotional discounts – Effectively managing plans and retail execution the entire Halloween AND Christmas Holiday period is critical to maximize incremental opportunities during highest seasonal volume periods – Ensuring ‘right’ product mix is merchandised on the floor will minimize risk and maximize incremental volume throughout the season The NCA fosters industry growth by advancing and promoting the interests of the confectionery industry and its consumers