january 2009 united states confectionery market. u.s. confectionery market overview
TRANSCRIPT
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January 2009
United States Confectionery Market
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U.S. Confectionery Market
Overview
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2008-2009 USA Economic Trends •U.S. and world economies in recession
•Stock market declines 30%+
•Retail sales decline in second half of 2008
•Unemployment ends year over 7%
•Up from 4.6% at year-end 2006
•Housing market bubble burst
•Unstable oil prices
•Year ends with historically low interest rates
•Difficult to borrow – credit crunch
•Consumer spending declines
•Commodity prices higher
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2008-2009 USA Retail Trends
•Shopping trips declined
•Spending shift to value channels
•Increased coupon usage
•Confectionery seen as a recession proof category
•Organic sales decline
•2008 Holiday retail sales declined
•Other than gasoline purchases retail sales declined
1.5% in December vs 2.4% growth in 2007
Credit crunch and lost investments impacting consumer spending
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$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2003 20052004 20072006 2008
Cocoa Prices at Historic HighsCocoa price per ton
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0
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Sugar Prices near Historic HighsU.S. Cents per pound
Refined beet sugar f.o.b. Midwest
2003 20052004 20072006 2008
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$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
Corn Sweetener Prices near Historic Highs
U.S. $ per pound
2003 20052004 20072006 2008
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Commodities Pricing
Milk
Corn Syrup
Peanuts
Walnuts
Pistachios
Almonds
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The 2008 U.S. Confectionery Market
% $ Change
Retail Sales $28.0 +2.2%
Manufacturers Shipments $18.3 +1.0%
Domestic Manufacturer Shipments $17.5 +1.0%
Imports $2.0 +0.2%
Exports $1.2 +21.6%
The profit margin is approximately 35% for the confectionery category.
The U.S. Retail Confectionery Category generates approximately $28 billion in retail sales
Estimated sales in billionsEstimates based on NCA Shipment Data and Global Trade Atlas Import/Export Data
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Category Retail Sales Manf. Sales % Lb. Sales %
Total $28.0 Billion $18.3 billion +1.0% 6.9 Billion -4.0%
Chocolate $15.9 Billion $10.3 billion +2.9% 3.4 Billion -1.9%
Non-Choc. $8.6 Billion $5.7 billion +3.8% 2.9 Billion -7.9%
Gum $3.5 Billion $2.2 billion +4.1% 0.6 Billion +0.1%
2008 Confectionery SalesManufacturers $ sales grew 1% in 2008
NCA Estimates base on U.S. Dept. Of Commerce MA311D Report and NCA Monthly Shipment Reports
2008US Department of Commerce 311D Confectionery Report
2008 NCA Monthly Shipment Reports through November 2008
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Trade Total Sales % Growth Chocolate % Growth Non-Chocolate % Growth Gum % Growth
Measured Confections vs. 2007 Confections vs. 2007 Confections vs. 2007 vs. 2007
FDMx $8.8 billion +2.0% $5.0 billion +1.9% $2.5 billion +0.2% $1.3 billion +6.1%
FDMW $12.4 billion +1.4% $6.9 billion +1.2% $3.6 billion -1.2% $2.0 billion +6.2%
FDMWC $16.8 billion +2.2% $8.6 billion +2.3% $4.9 billion +0.1% $3.2 billion +4.9%
All Others $11.4 billion * $7.3 billion * $3.7 billion * $0.3 billion *
Total Sales $28.0 billion +2.2% $15.9 billion +2.3% $8.6 billion +0.1% $3.5 billion +4.9%
2008 Confectionery SalesRetail Sales Summary
NCA Estimates base on U.S. Dept. Of Commerce MA311D Report and Information Resources, Inc.
2008 US Department of Commerce 311D Confectionery Report
2008 IRI Reports through 12/28/08
Trade Channels:F – SupermarketsD – Drug StoresM – Mass MerchantsW – Wal-MartC – Convenience Stores
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Total Chocolate Non Chocolate Gum
$90.73
$51.32
$28.95
$7.97
$0
$20
$40
$60
$80
$100
The average U.S. Consumer spent $91 on confectionery products in 2007
2008 US Department of Commerce 311D Confectionery Report
2007 Per Capita Retail Sales
Department of Commerce Data is released in late summer. Please return in August for actual 2008 data.
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This analysis shows figures for 2007 shipments and retail sales. The chart will be updated in August.
Chocolate Candy represents approximately 58% of total confectionery dollar sales.
Category Retail Sales
$ Billions
Domestic Shipments
$ billions
Shipment % Growth
Vs. 2006
Imports
$ billions
Import % Growth
Vs. 2006
Exports
$ billions
Export % Growth
Vs. 2006
Total
Confections
$27.4 $16.5 +3.0% $2.2 -0.8% $0.9 +15.0%
Chocolate $15.5 $9.9 -0.3% $0.8 +4.6% $0.6 +18.9%
Non-Chocolate $8.7 $4.7 -0.8% $1.2 -4.9% $0.3 +12.9%
Gum $2.4 $1.5 +4.1% $0.1 +8.1% $0.1 -15.4%
2007 Confectionery Categories Analysis
NCA estimates based on Source: 2008 US Department of Commerce,Census Bureau 311D, Confectionery Report andNCA Manufacturer Shipment Reports
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The Confectionery Market is Very Diverse
Private Label2%
Next 11 -308%
Top 564%
Next 6-107%
All Other19%
• The confectionery category is much more diverse than other similar sized food categories.
• There are 300+ suppliers competing for the remaining 30% of confectionery sales.
• The uniqueness of the confectionery category is that each suppliers makes distinctly different items catering to the diverse tastes and demands of the consumer.
Manufacturer Market Share Concentration
52 Week Sales December 30, 2008 Euromonitor
There are more than 300
domestic confectionery manufacturers
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U.S. Confectionery
The Retail Market
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Retail Confectionery
Mass X Wal-Mart4.8%
Others22.7%
Vending3.6% Dollar Stores*
3.0%
Supermarkets16.2%
Convenience Stores15.2%
Wal-Mart12.8%
Drug Stores9.3%
Warehouse Clubs*7.6%
Bulk4.8%
* * Others include: department stores, food service and ingredient sales, fundraising, give-aways, independent grocers, mail order/internet, military, specialty/candy stores, theaters and concessions
*estimates
NCA 2008 estimates based on IRI, U.S.Department of Commerce, MSA Vending Data, NCA Shipment Report and other industry sources.
Market Share by Trade Channel
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2008 Retail Channel Performance
Channel 2008 $ Sales 2008 % GrowthSupermarkets $4.7 +1.6%Wal-Mart $3.7 -0.1% Mass X Wal-Mart $1.4 +0.1%Convenience Stores $4.4 +4.3%Drug Stores $2.7 +3.7%*Warehouse Clubs $2.3 +3.0%*Dollar Stores $.9 +2.1%Vending $1.1 -1.5%*Bulk $1.4 -0.5%
Based on 52 Week Sales – January - December 2008
•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 has grown across all trade channels but convenience stores, club stores, dollar stores and chain drug stores have outpaced the overall retail market.
* Indicates NCA estimate
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Total Chocolate/Non-Chocolate/Gum Dollar Share
U.S. Department of Commerce Census Bureau 2008 MA 311D Report
CHOCOLATE CANDY
58%
GUM9%
NON-CHOCOLATE CANDY
33%
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Candy and Gum Ranked 3rdAmong 2008 Food Categories
$12.80
$8.80
$8.50
$6.60
$4.50
$4.30
$4.00
$3.80
$13.50
$0.0 $3.0 $6.0 $9.0 $12.0 $15.0
Carbonated Beverages
Milk
Candy& Gum
Salty Snacks
Cereal
Ice Cream
Soup
Cookies
Bottled Juice
Pro
duct
Cat
egor
ies
$ Billions
-0.1%
+2.6%
+2.0%
+7.2%
+2.9%
+0.9%
+0.1%
+4.5%
+0.8%
IRI Food, Drug & MassExcluding Wal-Mart 12/28/2008
Candy and Gum Ranked 3rd among 2008 Food Categories in Food, Drug and Mass Outlets
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Candy and Gum is the Largest Snack Category
$8.50
$4.50
$4.00
$2.30
$1.00
$0.50
$0.30
$8.80
$0.0 $2.0 $4.0 $6.0 $8.0 $10.0
Candy& Gum
Salty Snacks
Ice Cream
Cookies
Snack/Granola Bars
Bakery Snacks
Dry Fruit
Misc. Snacks
Pro
duct
Cat
egor
ies
$ Billions
-3.6%
+25.6%
+2.0%
+7.2%
+2.1%
+0.9%
+0.1%
-0.3% IRI Food, Drug & MassExcluding Wal-Mart 12/28/2008
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Confectionery
Seasonal Merchandising
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What Affects Seasonal Sales?
•Date/Day of Holiday
•The Economy
•Consumer Confidence
•Merchandising Strength/Visibility
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2005 2006 2007 2008 2009 projections
Valentine’s Day - $970 $971 $1,036 $1,024 $1,000*
Easter - $1,761 $1,884 $1,987 $1,846 $1,990*
Halloween - $2,088 $2,146 $2,202 $2,209 $2,225*
Christmas - $1,375 $1,389 $1,420 $1,376 $1,400*
Results and Projection as of January 2009Source: 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)
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• NCA estimates based on December 28, 2008 IRI Data, NCA Manufacturers Shipment Reports and U.S. Department of Commerce MA311D Report
• Syndicated IRI data understates actual seasonal sales. It only includes packages with seasonal graphics, and does not count regular packs sold during the season
Total Confectionery Seasonal Shares
Christmas21%
Valentine's Day16%
Halloween34%
Easter29%
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Seasonal Confectionery Trends
2008 2007 2006 2005 2004 2003
VALENTINE’S -0.2% +6.7% +0.1% -4.0% -3.0% -7.6%
EASTER -7.1% +5.4% +7.0% -7.6% +5.5% +2.2%
HALLOWEEN +0.1% +2.6% +2.8% +2.3% +2.4% +0.7%
CHRISTMAS -3.1% +2.2% +1.0% +2.4% -3.5% -1.4%
* IRI FD&M
NCA projects a 2.0% increase in 2009
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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
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U.S. Confectionery Trends
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Trends - for 2008/2009
•Everyday gourmet chocolate sales rose 28% in 2008•Growth slowed in second half of 2008
•Dark chocolate sales continue to grow but at a slower pace•Dark chocolate sales increased 12%
•Core mass brands grew in units and dollars
•Emerging trends•Exotic chocolate flavorings: citrus, spice, salt, fruits
•High cocoa content chocolates
•Gourmet packaging for chocolates
•Single origin chocolates
•Increased offering of “Everyday Gourmet” chocolate items
•Consumers want gourmet product at a value price
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Trends - for 2008/09•Sugar Free gum - +11.0% sales
•Exotic fusion flavors
•Fortified products
•Value products grew significantly•Theater Box candies
•Licorice grew 9.4%
•Gummies and chewy candy grew 7.6%
•Seasonal candy declines•Reflection of difficult economy and unfavorable dates
•Seasonal confectionery down 2.9%
•More favorable dates in 2009
•Increased sugar-free product offerings
•Increase lower calorie products offered