Candy and Soda manufacturers have to adapt to survive

Much of my work these days is focused on healthcare marketing. What’s become important to keeping me fresh (or fresher) from getting healthcare-stale, are opportunities to work outside the healthcare space. My professional career has certainly had an, ‘adapt or perish’ aspect to it having invested many years into the increasingly shrinking commercial printing industry. There are many industries that have faced or are facing a similar inflection point.

Think about PepsiCo for example. How has a company founded in 1898 whose initial product was….soda pop (with sugar), managed to survive for more than 120 years? By adapting to what’s coming. Smart people have run PepsiCo. Former CEO Indra Nooyi recently stepped down and has left the company in good shape. Earnings remain solid. And the most recent quarter saw sales of soda actually rising. But the trend is away from sugary sodas.

Notable from the WSJ article:

“And while consumers cutting back on high-calorie soda has hampered some of the sugary brands, the company managed to post 3 percent growth for its overall Pepsi family in the U.S., fueled by a 29 percent surge in Pepsi Zero Sugar sales. The company is also getting a bump from Bubly, a sparkling water it released last year that’s taking share from established brands like LaCroix and Perrier.”

You probably know that PepsiCo has Frito-Lay as part of its portfolio of companies. Yet this does not stop me from wondering what is the future of a company that makes sugary sodas and salty snacks? Can PepsiCo truly transform itself into a health-oriented drinks and snack food manufacturer?   From my perspective, if they do not continue to try it will indeed perish.

What about the confectionary (ok the ‘Candy’) industry?   The commercial manufacture of candy products in the U.S. dates back to 1876 (by the Chase Candy company), making something called ‘Cherry Mash’.  Back then and for many years after, a sweet treat in the form of candy – be it a candy bar, candy bit, lollipop, sucker or whatever, had nobody worrying about sugar content. 143 years later things shall we say, are different.

Can candy companies transform themselves into being able to make a more healthful treat and still survive? Sweden consumes the most candy per year. From the Daily Meal – ‘A 2016 study done by Jordbruksverket, the Swedish Board of Agriculture, and featured in a recent article by The New Yorker, found that Sweden has the highest candy consumption per capita in the world — about 35 pounds per person per year. That means that the average Swede eats over half a pound of candy every week.’

Sugar consumption and candy consumption are closely correlated. From a study in 2016 published by Warrell, the average American leads the way, consuming over 126 grams of sugar daily. Germany is not far behind — their citizens eat about 103 grams of sugar a day. Coming in at just under that are the Dutch, where the average person enjoys 102.5 grams of sugar per day. At the low end, as you would expect, it’s the Asian countries. The Chinese consume only 16 grams a day, Indonesians a little over 15 grams and Indians, only 5 grams a day on average.

So, what does this all mean? One thing it means is that sugar and candy, especially chocolate, are staples of the Western diet. Is there anything wrong with that? Well, the World Health Organization recommends that people consume no more than 25 to 50 grams of sugar a day.

Mintel reported:

In November 2018 that the estimated total of the U.S. chocolate confectionery sales will have grown 15% since 2012 to reach $18.5B in 2018, with trends like bite size, functional ingredients and premium driving the overall category growth.  

Mintel data revealed the U.S. consumption of candy has been trailing that of chocolate in 2018, especially around the Halloween season. It also noted more than 27% of non-chocolate consumers said they ate less candy than last year (versus 15% eating more), due to sugar and calorie reductions.

So people are trying to eat less candy, apparently not all that successfully, but it has to start somewhere and overall mindset is the first step. Candy makers have to diversify and use their knowledge to introduce interesting new products – maybe not quite as sweet, but definitely healthier in general. The trend is clear that people are more aware of their intake of sugar than they’ve ever been in the past. Candy will remain popular but the opportunities for growth in the industry will likely come from products that are not pure confections.

We’ve recently taken on a client from the confectionary industry that is introducing a non-candy brand into the marketplace. It’s a bold move for them and we all understand that high stakes are at hand.

Adapt or perish. Why should it be different for companies than it is for human beings?

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Disruption, Grocery marketing, Healthcare, Healthcare Advertising, Healthcare marketing and tagged , , , , , , , , . Bookmark the permalink.

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