NOT BITTER, NOT SWEET

Despite recent growth among sugar-free items and the introduction of vitamin-fortified sweets, the "better-for-you" candy dirigible simply hovers, only satiating the sweet tooth of select consumers.In the early 1990s, the candy category got a lift from the existing, albeit small, segment. Product renovations in the sugar-free niche attracted new consumers, as did the low-fat chocolate introductions,

Despite recent growth among sugar-free items and the introduction of vitamin-fortified sweets, the "better-for-you" candy dirigible simply hovers, only satiating the sweet tooth of select consumers.

In the early 1990s, the candy category got a lift from the existing, albeit small, segment. Product renovations in the sugar-free niche attracted new consumers, as did the low-fat chocolate introductions, Hershey's Sweet Escapes and Milky Way Lite. Additional products that fulfilled consumers' need for natural and organic products hit the market as well.

Since then, sales of those brands have lost some air and settled into a stable float, said retailers polled by SN.

"The low-fat market is really declining. The lights aren't doing that well. The Sweet Escapes have a few [stockkeeping units] that are doing well, and actually a couple of SKUs that we have discontinued," said David Taylor, director of packaged goods at Ukrop's Super Markets, Richmond, Va.

Despite the depletion in sales, the low-fat varieties still have a market.

"It has a market, but you're not going to get anybody who wants a Snickers to switch over to a Sweet Escape. It has a different market," explained an anonymous source at a large Midwestern wholesaler.

Jim Corcoran, director of trade relations at the National Confectioners Association, McLean, Va., supported the unidentified source's comments. "Still [the low-fat chocolate bars] are strong within the chocolate category. They represent $60 million in sales in food, drug and mass, according to [Information Resources Inc.] data," he said.

"There is a consistent group of customers out there that are looking for low-fat treats. I don't think anyone ever feels that low-fat and reduced-fat candies, chocolate candies, are going to displace the whole-candy category. But there is a segment of the population who would like to have those products," Corcoran added.

Currently, "better-for-you" candies comprise about 1% of the entire sweet section, according to information from the NCA.

Even though it's a small segment, food retailers consider it essential to their overall candy presentation.

Denny Voight, general-merchandise merchandiser and buyer at Rosauers Supermarkets, Spokane, Wash., said his stores carry the products "to give the customers of our stores more candy selection, and to get more customer base.

"[The 'better-for-you' products] appeal to people who want to lose weight but don't quite have the will power to cut back on what they really like," he added.

Although the individual sub-segments may not be gassing up the confection zeppelin, tastier formulations and packaging changes have helped swell the sugar-free market, supermarket representatives said.

Voight agreed, saying he is seeing "more item presentation in a growing category, particularly among organic, natural and sugar-free products."

According to the IRI's data, the diet-candy segment in food, drug and mass outlets totaled $76.7 million in sales for the 52-week period ended July 19, 1999, a 9.1% increase over the same period a year ago. Supermarkets had higher sales than the other two formats, at $31 million, a 7% increase, the data revealed.

However, drug stores realized the highest percentage of growth at 11.4%, while mass merchandisers followed with 9.8%. Supermarkets came in last, indicating the potential for growth, Corcoran said.

Some retailers said they noted an increase, while others, such as Spartan Stores, Grand Rapids, Mich., and Genuardi's Family Markets, Norristown, Pa., did not want to comment because they do such little business with "healthy" candy.

Perhaps the inconsistency among supermarket responses is due to market variations. Often supermarkets are established in areas due to the type of population in that given area. Because "better-for-you" candies appeal to a small consumer group, the tightness of the niche allows for greater fluctuation.

"Although we have seen some growth in the 'better-for-you' candy segment, it has been limited due to the very segmented market," explained Sam Anderson, director of public relations at Brookshire Grocery Co., Tyler, Texas. "There are definitely more specialized companies manufacturing this type of product than in the past, and these candies are much improved over a few years ago. Also, manufacturers have improved their ability to make 'diet' candies taste good," he added.

Similarly, Tom Yarrows, category manager at Big Y Foods, Springfield, Mass., said he has seen some growth among those items as a result of more variety and better packaging. He merchandises them alongside traditional full-sugar types, and offers temporary price reductions as a buying incentive.

Other retailers such as the source at the large Midwestern wholesaler said their stores merchandise sugar-free products in the traditional candy gondola as well.

Tidyman's uses its bulk candy section to display sugar-free items, in addition to its candy aisle, said Patty Kilcup, director of consumer and governmental affairs at Tidyman's, Greenacres, Wash.

Over the last couple of years, some chains have switched from merchandising in a diet section to displaying sugar-free sweets on the candy aisle because they hope to attract more attention to the products.

"We don't have a huge section, but we do identify the sugar-free by displaying it all together," Rosauers' Voight said.

The NCA's Corcoran said he has heard the sugar-free items no longer appeal only to diabetics, but also to "the consumer who is looking for low-fat foods, diet foods. You look at the diet-soda category or other fat-free categories -- many of them do extremely well."

Some retailers, however, have not made the same assessment. Grocers such as the Midwestern wholesaler, Big Y's Yarrows and Kilcup still see diabetics as the primary sugar-free candy shopper.

"I can't see anybody going there and buying it because it's sugar-free, because there are calories in it. I think it's being sold to diabetics," said the unidentified source at the Midwestern wholesaler.

"There has been some growth in the sugar-free segment. In fact, some sugar-free gums and mints sell just as well as products containing sugar. However, sugar-free candies are still relatively flat in sales with a very select market, comprised mostly of consumers on special diets," Brookshire's Anderson added.