A. Elizabeth Sloan

Sweet Treats
It’s hard to imagine that health could bring happiness to the sweet-treat category. But America’s insatiable demand for low-carb, low-calorie, and sugar-, fat-, additive-, and even gluten-free treats has spurred unprecedented product innovation, more-than-expected sales growth, and a return of long-gone customers to the confectionery, sweet baked goods, and dessert foods segment.

And just in time. According to The NPD Group, only 15% of in-home dinners and 11% of restaurant evening meals now include a dessert. In addition, the core “sweets” target—children age 5–14—will continue to shrink as a result of demographic trends in the next few years. Moreover, NPD reports that while kids today are snacking more—and making healthier choices—than they did 10 years ago, those age 8–12 ate fewer snack cakes, cupcakes and mini-cakes (down 5.7 eatings/child in 2003 vs 1999); less chewy candy (down 6.1 eatings); and less chocolate candy (down 5.3 eatings). Clearly, sweet-treat marketers must heighten their appeal to audiences other than children, and that means great-tasting, healthy, and convenient foods with gourmet flair!

Healthy snacking is a habit that increases with age, according to Packaged Facts’ 2004 U.S. Snack Market report, and with our aging population so does its potential market size. Adults age 75 and over are the most likely to “snack right”—indexing 156, or over half the adult normal rate; those age 65–74 indexed 130; and those age 55–64 indexed 114.

Healthy snacks are also a fast-emerging opportunity among our 40 million young adults. While those age 18–24 index 119 for tortilla chips/cheese snacks and 114 for frozen hot snacks, they index 162—the highest of any population segment—for nutritional snacks and 124 for energy/diet snacks and bars. While salty snacks, chocolate candy, and cookies have traditionally been the most popular snack foods among teens, NPD reports that nutrition bars are now teens’ fastest-growing snack food. In 2003, teens choose bars as a snack nearly six times more often than five years ago.

And it’s an explosive market: diet candy sales jumped 90% in 2003. IRI reports that low-carb food brands will reach $1 billion in mass channels in 2004. Low-carb brands grabbed 13%, and diet/low sugar, energy, high protein, and fitness bars 25%, of the bar segment. The bar segment topped all food and beverage category growth in the mass market, with a 20% increase in sales last year, 44% over the past two years ending 2/2/04. Granola/breakfast cereal bars share fell to 55%, and rice snacks to 5%. In the natural channel, natural sweeteners enjoyed a 35% sales gain in 2003, baking mixes 34%, candy and individual sweet snacks 32%, energy bars 21%, and bread and baked goods 19%, according to SPINS.

Although NPD reports that carb watchers are still consuming, on average, 128 g of refined carbs per day, low-carb treats like Entenmann’s Carb Counting line are in high demand. Krispy Kreme, the nation’s 5th-fastest-growing restaurant chain in 2003, has lowered its 2005 profit expectations by 10% as a result of low-carb market dynamics, and is introducing low-sugar treats. Hershey’s Sugar-free Chocolate Candy and Russell Stover’s Low Carb and Sugar Free Jelly Beans are among their latest low-carb and sugar-free market entries. Atkins’ Endulge low-carb peanut butter cups, baking/dessert mixes, and flours were among the fastest-growing items in the natural channel last year.

All-natural and organic cookies, baking mixes, and other sweets are also poised for growth. Carousel Foods of America Inc.’s refrigerated single-serve Missy’s All-Natural Puddings include favorites like Crème Caramel and Rice Pudding, while Idella’s Natural Gourmet’s Idella’s Natural Organic Gourmet Cookies have no wheat, dairy, egg, or refined sugars.

But even if it’s healthy, it still needs to be on trend. Nancy’s Pies offers new sugar-free and no-sugar-added seasonal desserts, including pumpkin pie, cookies, and festive Christmas cakes. And what about low-carb/-sugar birthday and wedding cakes? Galaxy Foods offers low-carb, single-serve versions of its decadent gourmet-restaurant desserts, including Fourever Cappuccino Mousse and Dolce De Leche Mousse. While portion sizes are getting smaller for some, bigger is better, such as Cookie Tree Bakeries’ Mega Bite 1/4 Pound Soft & Chewy individually packaged gourmet cookies. Organic and all-natural versions of more-upscale items like scones, biscotti, and meringue cookies, such as BakeHouse Fat Free/Low Fat Meringue cookies in English Toffee, Cinnamon Chocolate, and other exotic flavors, are also appearing.

Contributing Editor
President, Sloan Trends & Solutions, Inc.
Escondido, Calif.
[email protected]