May 2009
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United States Confectionery Market. May 2009. U.S. Confectionery Market Overview. U.S. and world economies in recession Stock market declines 30%+ Retail sales declining in 2008 Q 3-4 and 2009 Q 1 Unemployment over 8% in May 2009 Up from 4.6% at year-end 2006

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May 2009

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May 2009

United States

Confectionery Market

May 2009


May 2009

U.S. Confectionery Market

Overview


May 2009

  • U.S. and world economies in recession

  • Stock market declines 30%+

  • Retail sales declining in 2008 Q 3-4 and 2009 Q 1

  • Unemployment over 8% in May 2009

    • 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

2008-2009 USA Economic Trends


May 2009

  • 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

2008-2009 USA Retail Trends

Credit crunch and lost investments impacting consumer spending


May 2009

Cocoa Prices at Historic Highs

Cocoa price per ton

2004

2005

2006

2007

2008

2003


May 2009

Sugar Prices near Historic Highs

U.S. Cents per pound

Refined beet sugar f.o.b. Midwest

2004

2005

2006

2007

2008

2003


May 2009

Corn Sweetener Prices near Historic Highs

U.S. $ per pound

2004

2005

2006

2007

2008

2003


Commodities pricing

Commodities Pricing

Milk

Corn Syrup

Peanuts

Walnuts

Pistachios

Almonds


The 2008 u s confectionery market

The 2008 U.S. Confectionery Market

The U.S. Retail Confectionery Category generates

approximately $28 billion in retail sales

%

$Change

Retail Sales$28.3+2.0%

Manufacturers Shipments$18.4+2.0%

Domestic Manufacturer Shipments$17.3+3.1%

Imports $2.0+0.3%

Exports $1.2+20.4%

The retail profit margin is approximately 35% for the confectionery category.

Estimated sales in billions

NCA Shipment Data and Global Trade Atlas Import/Export Data


2009 confectionery sales retail sales summary through april 2009

2009 Confectionery SalesRetail Sales Summary through April 2009

Trade Total Sales% GrowthChocolate% GrowthNon-Chocolate% GrowthGum% Growth

Measured Confectionsvs. 2008Confectionsvs. 2008 Confections vs. 2008 vs. 2007

FDMx$8.9 billion+3.7%$5.0 billion+3.7%$2.5 billion+2.4%$1.3 billion+6.1%

FDMW$12.7 billion+3.2%$7.0 billion+4.1%$3.6 billion+1.3% $2.0 billion+3.4%

FDMWC$17.2 billion+3.7%$8.9 billion+4.4%$5.0 billion+2.9%$3.3 billion+3.0%

All Others$11.4 billion*$7.3 billion*$3.7 billion*$0.3 billion*

Total Sales$28.0 billion+3.7%$16.1billion+4.1%$8.6 billion+2.3%$3.3 billion+4.9%

Trade Channels:

F – Supermarkets

D – Drug Stores

M – Mass Merchants

W – Wal-Mart

C – Convenience Stores

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 4/19/2009


May 2009

2008 Per Capita Retail Sales

The average U.S. Consumer spent $93 on confectionery products in 2008

2008 US Department of Commerce 311D Confectionery Report


May 2009

Chocolate Candy represents approximately

59% of total confectionery dollar sales.

2008 Confectionery Categories Analysis

This analysis shows figures for 2008 shipments and retail sales.

NCA estimates based on Source:

2008 US Department of Commerce,

Census Bureau 311D, Confectionery Report and

NCA Manufacturer Shipment Reports


The confectionery market is very diverse

The Confectionery Market is Very Diverse

There are more than

300

domestic confectionery

manufacturers

  • 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


Confectionery sales steady

Confectionery Sales Steady

Due to price increases in the confectionery industry in 2008 we saw an increase in dollar sales combined with a decrease in tonnage.

2008- US Dept of Commerce 311 D Report


May 2009

U.S. Confectionery

The Retail Market


Retail confectionery

Retail Confectionery

Market Share by Trade Channel

*estimates

* * Others include: department stores, food service and ingredient sales, fundraising, give-aways, independent grocers, mail order/internet, military, specialty/candy stores, theaters and concessions

NCA 2008 estimates based on IRI, U.S.

Department of Commerce, MSA

Vending Data, NCA Shipment Report

and other industry sources.


2008 retail channel performance

2008 Retail Channel Performance

Based on 52 Week Sales – Ending April 19, 2009

Channel2009 $ Sales2009 % Growth

Supermarkets$4.7+3.3%

Wal-Mart$3.7+2.0%

Mass X Wal-Mart$1.4+1.8%

Convenience Stores$4.5+4.7%

Drug Stores$2.8+5.4%

*Warehouse Clubs$2.3+3.0%

*Dollar Stores$.9+3.1%

Vending$1.1-1.5%

*Bulk$1.4-0.5%

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

  • 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


Total chocolate non chocolate gum dollar share

Total Chocolate/Non-Chocolate/Gum Dollar Share

U.S. Department of Commerce Census

Bureau 2008 MA 311D Report


Candy and gum ranked 3rd among food categories april 2009

Candy and Gum Ranked 3rdAmong Food Categories- April 2009

IRI Food, Drug & Mass

Excluding Wal-Mart 4/19/2009

Candy and Gum Ranked 3rd among 2008 Food Categories in Food, Drug and Mass Outlets


Candy and gum is the largest snack category

Candy and Gum is the Largest Snack Category

IRI Food, Drug & Mass

Excluding Wal-Mart 4/19/2009


May 2009

Confectionery

Seasonal Merchandising


May 2009

  • Date/Day of Holiday

  • The Economy

  • Consumer Confidence

  • Merchandising Strength/Visibility

What Affects Seasonal Sales?


May 2009

Confectionery Seasonal Sales

(** in millions of dollars)

20052006200720082009 projections

Valentine’s Day - $970$971$1,036$1,024$928

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*

* – projections for 2009

Results and Projection as of May 2009

Source: 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


May 2009

Total Confectionery Seasonal Shares

  • 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


Seasonal confectionery trends

Seasonal Confectionery Trends

200920082007 2006 2005 2004 VALENTINE’S -9.4%-0.2%+6.7% +0.1% -4.0% -3.0%

EASTER +7.9%-7.1%+5.4% +7.0% -7.6% +5.5%

HALLOWEEN *+0.1%+2.6% +2.8% +2.3% +2.4% CHRISTMAS*-3.1%+2.2% +1.0% +2.4% -3.5%

* IRI FD&M

NCA projects a 2.0% increase in 2009


Holiday dates days

Holiday Dates/Days

Holiday2009 2010 2011 2012 2013

Valentine’s Sat. Sunday Monday Tuesday Thursday

Easter4/12 4/4 4/24 4/83/31

HalloweenSat. Sunday Monday Wed.Thursday

ChristmasFriday Sat. Sunday Tuesday Wed

Thanksgiving 11/26 11/25 11/24 11/2211/28

Shopping Days29 30 31 33 27

Indicates negative date for holiday sales

Indicates positive date for holiday sales

Indicates neutral date for holiday sales


May 2009

U.S. Confectionery

Trends


Trends for 2008 2009

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


Trends for 2008 09

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


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