Will transparency demands crack the $35B candy industry? | Leaf Brands, LLC

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Will transparency demands crack the $35B candy industry?

Costume-clad children run around neighborhoods, vying for chocolatey, sugar-filled morsels to fill their bags. And despite parents — in the name of transparency — pouring over their treats, the business and spirit of Halloween remains intact.

The $35 billion candy industry has one great advantage over processed food: it’s always been an indulgence.

“It’s kind of like a reward for yourself,” said Ellia Kassoff, CEO of Leaf Brands, maker of products like Farts Candy.

The question is whether such an indulgence can overcome demands for transparency.
Candy is crushing it

Retail sales of Halloween candy are expected to hit $2.6 billion this year. Each year, sales tick up 1% to 3%, with this year on the higher end, according to Susan Whiteside of the National Confectioners Association. This is because Halloween falls on Saturday this year.

Product launches timed to this Halloween season are primarily caramel and pumpkin-flavored, though they’re not the majority of Hallowen candy on the market — most of the candy purchased is everyday favorites in miniature.

The candy industry is confident in its popularity. Mars, for instance, announced a $100 million expansion to its Topeka, KS, factory, producer of various M&M’s and Snickers products.

“This is an industry positioned for growth and opportunity, and we are creating American products with American workers in cities and towns throughout America,” according to statement from John H. Downs, president & CEO of the National Confectioners Association in September regarding a strong economic report. Every one out of 55,000 U.S. candy industry jobs means another seven are created in related industries.

Such growth comes from innovation like with re-sealable stand-up pouches, products in miniature, and shareable packaging.

“I think from the manufacturing side, innovation will continue to be a really important part of our industry,” said Susan Whiteside of the National Confectioners Association. “I think we’ll see more crazier and inventive flavor combinations. And trends from the broader food industry impacting the candy industry, like we’ve seen in terms of flavor and packaging. Like we’ve seen recently with the pumpkin spice.”

But with these “crazier” and “inventive” combinations comes a growing demand for transparency, which is the real key to candy remaining a viable product in today’s crowded market.

“I think across the board what you’ll see candy companies doing is providing more transparency and more information to consumers about what’s in their products and what those ingredients are used for … I think consumer information is going to continue to increase,” Whiteside said.

The shift from artificial ingredients to natural ones is one the processed foods industry has had to navigate. General Mills is taking out artificial ingredients from its cereals, and Campbell Soup set a goal to take out artificial ingredients by the end of 2018. This has been less relevant to candy producers because the product is seen as an indulgence anyway.

The biggest problem in formulating natural candy is maintaining color. Kassoff discussed the company’s David’s “Beyond Gourmet” jelly beans with 100% natural flavors and colors. The company wanted to tackle creating something made up of flavors from around the world, but that comes at a price in terms of color.

“Trying to get the colors to look vibrant from naturally derived sources — that’s always been a problem,” he said. “With our jelly beans it took us a long time to get them as vibrant as we could, but you’re not gonna see like a bright cinnamon red, because that’s not a natural color.”
Hershey tops the list by over 20%.

That being said, candy’s indulgent, eye-catching colors remain a billion dollar industry segment, with Halloween its No. 1 holiday.

As Whiteside notes, “Hard to think of what Halloween would be like without trick-or-treating and candy corn.”

“We’re a treat. We’re not a food. We’re not a meal. We’re a treat and consumers like to treat themselves,” Mars Chocolate North America president Tracey Massey told Fortune.

By David Oliver

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