Professional Candy Buyer January – February 1999 Special Report: Kids’ candy Today’s kids are smarter, quicker and often harder to impress than kids 20 or even 10 years ago. In order to keep up with the ever changing tastes and demands of this fickle audience, candy suppliers are finding themselves tied closely into all of the emerging pop culture icons, from cartoon characters to pop music stars to web sites. The influences involved in kids’ purchasing habits are almost limitless – television, movies, peers, magazines, and now even the Internet. And tracking all of these influences certainly does not guarantee success. For instance, an anticipated smash at the box office can fail miserably, leaving an expected trend in kids’ products languishing on store shelves nationwide. Conversely an unexpected theater success can find suppliers and retailers scratching their heads as consumer search in vain for product tie-ins. Suppliers tell Professional Candy Buyer a crystal ball might be the most reliable source for answers when predicting future trends in the kids candy category. “Kids are more sophisticated as consumers than ever – that changes their perspective of what’s unique and fun,” explains Bruce Thompson, vice-president of marketing for Amurol Confections Co. “A 12-year-old a decade ago is like a 10-year-old today. They grow up faster, and they have and want more choices.” Sid Good is president of Good Marketing, Inc., a marketing company that specializes in understanding kids as consumers. Good has worked with companies that include OddzOn/Cap Candy, Mattel, Hasbro and Playskool, and developed the concept for the Cap Cand Fossil Pop. He says the first rule of marketing to kids is recognizing the “wow” factor. “Kids are the ultimate consumers, and if you don’t deliver on fun and on taste, they’re not going to buy it again,” Good says. “Kids are much more savvy [today]. They’re watching more television, more movies. They’re much more in touch with what’s going on.” With boring considered a four-letter word among the younger set, most suppliers are going straight to the source to find out what kids want. Joe Milligan, marketing director for Richardson Brands, Inc., explains: “We talked to a lot of kids and we show kids a lot of options. We try to take what they’re telling us and not water it down. They want things that are risqué; they don’t want boring. They want their candy and packaging highly eventful.” Good says the biggest challenge in testing and talking with kids is clearly identifying details you need to address. “We talk directly to kids as often as we can to try and validate assumptions we make in developing concepts and ideas,” Good emphasizes. “You need to know the limitation of what you can gain through research and apply it in the appropriate way.” Decision Makers And Influencers Along with growing up faster, kids are gaining more influence over their parents than ever before, according to Richardson Brands’ Milligan. He points to automobile commercials airing during kids’ television programming as evidence of this trend. Advertisers are trying to encourage the nag factor, he explains. “Kids are consistently increasing their influence over their parents’ purchase decisions, as well as making more decisions for themselves earlier in life.” Gary Evans, Cap Candy’s senior director of field sales, agrees that the influence of television is genuine, and confirms that children today are not the same as 20, 10 or even five years ago. “A lot of the changes in today’s kids is generated by the technology around us. It’s much more fast-paced, and more competitive, which is ultimately better for consumers,” Evans says. Controlling spending patterns of kids is not relational to their stature. In fact, kids spend $50.7 billion annually, with the largest share going to candy, according to Nickelodeon/Yankelovich Youth Monitor. “Kids have more money in their pockets now than in the past,” Steve Yacht, Concord Confections, Inc. group product manager tells Professional Candy Buyer. “Kids today are spending quarters the way they used to spend nickels and dimes.” And because kids have more money to spend, Good says quality is more consequential than ever before. “There’s a growing purchasing power, and since kids have more money, they’re spending it on higher priced items that they feel have value,” he says. Extreme Spending Measures With more disposable income than ever, and more influence than before, how are kids spending their extra dollars? Bigger, brighter and stronger is the direction for packages, products and flavors, according to Professional Candy Buyer sources. Suppliers say kids are interested in tropical fruit flavors, mouth puckering sours and outrageous shapes and themes. “The trend now is more intense flavors, stronger flavors. Sour is very strong right now,” says Georges Firmignac, marketing director for Trolli, Inc. Trolli’s Brite Crawlers gummies feature intense sour flavor in neon colors. Dana Wilkes, director of marketing for American Candy Co., says he’s seeing color-your-mouth items continue to do well in the kids candy category. So well, in fact, that the company recently launched Droolers super sour fruit flavored color-your-mouth suckers. “Kids are most interested in things that are on the cutting edge,” Wilkes says. Impact Confections, Inc. is also taking advantage of the color-your-mouth trend, reports Joe McEnerney, national sales director. He says the resurgence of the trend has lead to the introduction of Paint Shop, paint brush-shaped lollipops that pack with a miniature paint can of sour powdered candy. Beacon Sweets, Inc. is adding a sour kick to its newest oversized gummi line with a giant sour gummi tongue. Director of Sales and Marketing, David Skinner, says kids’ candy manufacturers are continuing to take traditional flavors and make them sour. In addition, Beacon Sweets is developing interactive candy products, including Color-an-Egg, which features candy eggs kids can color using food grade “paint’ and then eat. “We’re looking for unique novelty ideas, things that capture the kids’ imaginations,” Skinner explains. Spangler Candy Co. Marketing Manager Jim Knight points out variety is also important to young consumers. “Trends we are currently exploring are novelty products and extreme flavors,” he says, adding: “Mixed bags, filled with a variety of kid-targeted products, are pervading the market.” He also puts a lot of stock in the importance of packaging as a way to reach kids. Spangler is currently in the middle of a three-year program to update all of its packaging. “[Packaging] has to be consistent, colorful, fun, modern and explain to the kids what the product is,” Knight says. “On the retail side, it also has to protect the product, keep it fresh and reach the store in a configuration that will attract consumer attention and sell.” But Knight goes on to explain that more than just the bag or box, packaging also includes the stick, the wrapper, the coupon or premium, the shipping case or display graphics and layout, and the pallet configuration. “Some of the display options to attract parents and kids include power panels, display shippers and counter display boxes, and all of it has to work together to give a product the extra push to get it out the door.” Location, Location, Location Though kids are usually the ones consuming the array of super sour, gross, mouth-coloring products out on the market, they aren’t always the ones making the initial purchase. When it comes to who’s buying kids’ candy, suppliers say the answer depends on the type of retail outlet where the candy is purchased, as well as the store’s location and the product’s location within the store. “Parents are buying the products by the bag in the grocery, drug and mass market retailers,” points out Knight. But, he adds: “Unless it’s near the checkout or in a counter display vehicle where kids can grab one or two, kids [who] are buying by the piece, migrate to the convenience store. Consolidation in the retail market is affecting all categories, and has impacted the traditional purchasing habits of kids, according to Amurol’s Thompson. He explains that consolidation has resulted in fewer retail store locations for both large retailers and smaller mom-n-pop varieties. Kids are not able to walk or ride their bikes to corner stores as often as in the past, he points out. “Most of the time kids are accompanied by a parent because they need to be driven to the store by car,” Thompson explains, adding that the parent is more likely to make the purchase in the larger retail store or supermarket. Boxes of individual candies go to c-stores where the child is the consumer and bags ship to the supermarket chains where the consumer is usually mom, explains Eric Ostrow, vice-president of marketing for Ce De Candy, Inc. Despite the fact that the sale of the bagged candy in the supermarket is aimed at parents, the location of the bags tends to be at the eye level of children, reinforcing the belief that children are the true decision makers, Ostrow tells Professional Candy Buyer. Play Value’s Value While the traditional kids’ candy sector was in place long before suppliers first envisioned the impact of pairing candy with toys, today’s kids’ candy market cannot be examined without looking at the influence of interactive candy. Most suppliers agree the interactive candy category has had an impact on all types of kids’ candy. Some say it’s good advertising, others say price points for traditional products have risen as a result of interactive activity. Impact’s McEnerney says the emergence of interactive candy was inevitable. “It’s linking two things that have always been together: toys and candy.” Richardson’s Milligan points out the boost to traditional kids’ candy is closely tied to the growth of interactive items. “The candy used to make interactive items edible is traditional candy, and any recognition given to a specific sector is good for the candy category as a whole,” he says. The use of branded candy in interactive products also leads to increased awareness, Milligan adds. He also says the high price points in the interactive markets are allowing traditional candy suppliers to bump up the price of kids’ items without much fear of consumer backlash. “The five-cent items can be bumped up to 10 cents and the 10-cent items to 15 cents, and with consumers paying 99 cents to $4.99 for interactive items they barely notice a five cent increase.” Interactive candy has also opened the door for candy to be sold in outlets that have typically been unreceptive to candy. Yale Gordon, managing partner of Heisler Gordon & Associates, a marketing company that specializes in reaching young candy consumers, says novelty products have opened non-traditional avenues of distribution, such as craft stores and specialty education stores. “It’s allowing the candy business to open up new channels,” Gordon says. Concord’s Yacht agrees, pointing out that the interactive market has helped bring attention to the kids’ candy category and has expanded the available options. “It also brings the category to channels it might not have the opportunity to otherwise participate in,” he says. However Gordon cautions that interactive candy items often have short life spans. “Kids don’t generally go out and buy [the toy] again. Once you have the product, you’re just refilling it,” he says. Opportunities For Licensing When it comes to tying kids’ candy to other successful properties, most sources agree that licensing is a high-risk, high-reward marketing strategy. For smaller companies, that’s especially true. “Licensing is a little too risky for us. There are up-front fees and royalties,” explains Beacon’s Skinner. He adds that the window of opportunity is shorter, and it can put a strain on production as suppliers work to meet tight distribution schedules. Spangler’s Knight says licensing is beneficial if the circumstances are right. “Licensing can be a good opportunity if it is a good match between two reputable companies and promotes the product or its attributes in the proper fashion.” He adds, however, that licensing is not always necessary when you have a strong brand name with consumer recognition. According to kids marketing author Dr. James U. McNeal, kids begin developing brand loyalty at an early age with brand recognition beginning by the age of three. Most suppliers tell Professional Candy Buyer that when considering a licensing proposal, they look for these and concepts that aren’t too closely tied to an obviously short-lived fad. “We make our evaluation based on something that’s not going to be popular for a few weeks. We look for staying power,” says Impact’s McEnerney. “We knew dinosaurs were popular and we tried to tap into that.” American’s Wilkes says one of the benefits of the licensing route is that it delivers instant recognition. “Licensing gives you value and added opportunity for traditional and non-traditional products. We’re having tremendous success with the Disney items.” While tying a product to a popular character or film can be profitable, Amurol’s Thompson says the license has to make sense of the product and the product make sense for the license in order to even hope for success. Kids Will be Kids Although there is no question kids’ purchasing habits and interests today are different than in the past, some constants remain. Kids are always interested in fun, wackiness and things they think their parents don’t approve of. “There’s still a rebellion factor,” says Beacon Sweets’ Skinner. “You see things that have shock value. If you can shock the parents, then the kids are going to love it.” Heisler Gordon & Associates’ Gordon adds that kids are “discerning, aware and want products designed for them, rather than min-versions of adult products.” Instead of reinventing the wheel, suppliers might choose to take a well-established product and add a new dimension or gimmick. “A lollipop might not look exactly like it did 40 years ago, but a lollipop is a lollipop. All these categories have been around. There’s a different twist, but nothing has really changed,” says Richardson’s Milligan. Chris Tzetzo, director of marketing for Mayfair Candy Co., says exciting packaging, trendy products and unique gimmicks are no substitute for the most important factor in kids’ candy – taste. “We’re marketing more toward a parent than a kid; however, we look at what we put in the bag to satisfy that kid. We’re looking to put in name brands, quality candy and good tasting candy designed for children,” Tzetzo explains. Kids know and recognize quality candy, agrees Amurol’s Thompson. “Whatever you’re selling has to taste good, regardless of whether it’s an inexpensive piece of candy or an interactive toy that costs $10.” Good Marketing Vice-President Bruce Good says it’s also important to the parent that it be a quality product before they will buy or approve it for their kids. “You have to deliver the quality to the kid and the parent.” Overall, the kids’ candy sector is filled with exciting new products, merchandised alongside the traditional favorites. As for the next trend, if you believe Cap’s Evans, expect to see continued attention paid to “delivery systems” or dispensers. “There was a lot of innovation in gum. That’s waned, and now the innovation is in dispenser. That’s an area that will continue to grow.” 