NCA Confectionery Industry Review February 2010 by SupremeLord

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									   United States
Confectionery Market

    February 2010
U.S. Confectionery Market

        Overview
  2010 USA Economic Trends
•Recession ending??? GDP grew 6% in 4th Quarter 2009
•Stock market – DJ – 10,500 …and growing
•Retail sales surprise in 3rd and 4th quarter 2009
•Interest rates remain low
•Consumer spending ????
               Issues to watch!
•Unemployment still at 10%
•Housing market still down
•Oil prices rising again
•Still difficult to borrow
•Commodity prices head even higher
•Savings rate up – spending down
    2010 USA Retail Trends
•Uptick in third and fourth quarter sales
•Shopping trips declined
•Big spending shift to value channels
•Increased coupon usage
•Confectionery seen as a recession resistant category
•Organic sales decline
•What’s going to happen with Holiday retail sales?
   •2009 – 3.6% growth (SpendingPulse   projection)

   •2008 - declined 2.3%
   •2007 - 2.4% growth
    Cocoa Prices at Historic Highs
Cocoa price per ton


 $4,000
 $3,500
 $3,000
 $2,500

 $2,000
 $1,500
 $1,000
    $500
         $0
                      2003   2004   2005   2006   2007   2008   2009
      Sugar Prices near Historic Highs
U.S. Cents per pound   Refined beet sugar f.o.b. Midwest
     50
     45
     40
     35
     30
     25
     20
     15
     10
       5
       0
              2003      2004   2005   2006   2007   2008   2009
   Corn Sweetener Prices near Historic Highs
             Corn Sweetener Prices have stabilized but are high by historical standards.
U.S. $ per pound

      $30


      $25



      $20


      $15


      $10
                   2003     2004       2005         2006     2007        2008       2009
Commodities Pricing

Milk – significantly lower in 2009
Peanuts – lower than 2008 but increasing
Walnuts – prices jumped at end of 2009
Pistachios – Iranian crop shortages drive prices higher
Almonds
 The 2009 U.S. Confectionery Market
            The U.S. Retail Confectionery Category generates
                 approximately $29 billion in retail sales
                                                                                           %
                                                                          $              Change
Retail Sales (NCA projection)                                             $29.3          +3.6%
Manufacturers Shipments (NCA projection)                                  $18.7          +3.4%
Domestic Manufacturer Shipments                                           $17.9          +3.4%
Imports                                                                    $2.0          +0.9%
Exports                                                                    $1.2          -1.3%

     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
Chocolate Candy represents approximately
  58% of total confectionery dollar sales.
                            2009 Confectionery Categories Analysis
 Category          Retail Sales   Domestic     Shipment     Imports            Import %            Exports        Export %
                   $ Billions     Shipments    % Growth     $ billions         Growth              $ billions     Growth
                                  $ billions   Vs. 2008                        Vs. 2008                           Vs. 2008

 Total             $29.3          $17.9        +3.4%        $2.0               +0.9%               $1.2           -1.3%
 Confections

 Chocolate         $16.9          $10.8        +3.4%        $0.8               +11.2%              $0.7           -2.8%


 Non-Chocolate     $9.3           $5.2         +5.4%        $1.1               -3.6%               $0.3           Even


 Gum               $3.0           $1.9         +1.5%        $0.2               -18.8%              $0.1           +10.0%




This analysis shows figures for 2009 shipments and retail sales.


                                                                   NCA estimates based on Source:
                                                                   2008 US Department of Commerce,
                                                                   Census Bureau 311D, Confectionery Report and
                                                                   NCA Manufacturer Shipment Reports, IRI Data
                              Confectionery Sales Steady
              Due to price increases in the confectionery industry in 2009 the industry
                saw an increase in dollar sales combined with a decrease in tonnage.

                                      $27.4         $27.9         $28.2         $27.4     $28.2    $29.3
               $25.8




                                                                          7.7       7.4         7.2
                              7.1             7.3           7.6                                        7.1




                      2003                   2004      2005          2006          2007      2008 2009

                               Dollars Sold at Retail, Billions      Pounds Sold at Retail, Billions
2009- US Dept of Commerce 311 D Report and
NCA Manufacturers Shipments
       2008 Per Capita Retail Sales
$100          $92.91

 $80

 $60                                      $52.46


 $40                                                                      $28.34

 $20                                                                               $9.54

  $0
             Total                  Chocolate                     Non Chocolate    Gum



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




                     2008 US Department of Commerce 311D Confectionery Report
U.S. Confectionery

The Retail Market
    Candy and Gum Ranked 4th
Among Food Categories- December 2009
                                                                     $ Billions
                                        $0.0         $3.0            $6.0           $9.0       $12.0             $15.0

                     Carbonated Beverages                                                      +2.6%            $13.80

                                     Milk                                             -15.3% $10.80
Product Categories




                             Salty Snacks                                   +7.8%      $9.20

                            Candy& Gum                                  +4.1%          $9.10

                                   Cereal                      +1.2%        $6.60

                               Ice Cream              -0.3%     $4.50

                                     Soup            -1.4%    $4.20
                                                                                                       IRI Food, Drug & Mass
                                  Cookies           +1.1%     $4.10                                    Excluding Wal-Mart 12/27/2009


                             Bottled Juice         -1.2%     $3.80


                        Candy and Gum Ranked 4th among 2009 Food Categories in Food, Drug and Mass Outlets
                                     Candy and Gum is the
                                  2nd Largest Snack Category
                                                                  $ Billions
                                     $0.0         $2.0            $4.0           $6.0       $8.0                $10.0

                           Salty Snacks                                                 +7.8%                 $9.20

                          Candy& Gum                                                +4.1%                    $9.10
Product Categories




                             Ice Cream                         -0.3%     $4.50

                               Cookies                        +1.1% $4.10

                     Snack/Granola Bars        +3.0%      $2.40

                         Bakery Snacks          $1.10 +6.1%                                        IRI Food, Drug & Mass
                                                                                                   Excluding Wal-Mart 12/27/2009


                              Dry Fruit     $0.50 +5.8%

                           Misc. Snacks     $0.40 +7.6%
   2009 Retail Channel Performance
    Based on 52 Week Sales – Ending December 27, 2009


 Channel                                2009 $ Sales                          2009 % Growth
 Supermarkets                           $4.9                                  +5.7%
 Wal-Mart                               $4.0                                  +3.4%
 Mass X Wal-Mart                        $1.4                                  +2.2%
 Convenience Stores                     $4.6                                  +3.0%
 Drug Stores                            $2.8                                  +3.0%
 *Warehouse Clubs                       $2.5                                  +4.7%
 *Dollar Stores                         $1.2                                  +6.1%
 Vending                                $1.1                                  -1.9%
 *Bulk                                  $1.2                                  +2.1%
  The confectionery retail market grew across all trade channels but supermarkets, dollar stores, and
                     warehouse clubs outpaced the overall retail market in 2009.

* 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
    Confectionery

Seasonal Merchandising
What Affects Seasonal Sales?

  •Date/Day of Holiday
  •The Economy
  •Consumer Confidence
  •Merchandising Strength/Visibility
             Confectionery Seasonal Sales
                                           (** in millions of dollars)


                          2006                                     2007     2008     2009        2010 projections *
        Valentine’s Day - $971                                     $1,036   $1,024   $928        $935*
        Easter -          $1,884                                   $1,987   $1,846   $1,990      $1,970*
        Halloween -       $2,146                                   $2,202   $2,209   $2,207      $2,225*
        Christmas -       $1,389                                   $1,420   $1,376   $1,401      $1,420*
               * – projections for 2010




                                                                                     Seasonal confectionery
Results and Projection as of February 2010                                                sales grew
Source: Sales figures are compiled by National Confectioners Association
based on input from Information Resources, Inc. NCA/CMA Monthly Shipment
                                                                                         1.2% in 2009
Reports and U.S. Department of Commerce
      Seasonal Confectionery Trends

                      2010   2009   2008   2007    2006    2005
VALENTINE’S           +0.7%* -9.4% -0.2% +6.7% +0.1%       -4.0%
EASTER                -1.0%* +7.9% -7.1% +5.4% +7.0%       -7.6%
HALLOWEEN             +0.8%* Even   +0.1% +2.6% +2.8%      +2.3%
CHRISTMAS             +1.4%* +1.8% -3.1% +2.2% +1.0%       +2.4%


* IRI FD&M

     NCA projects a 0.4% increase in 2010 for total seasonal sales.
                                    Holiday Dates/Days

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


         Indicates positive date for holiday sales    Indicates neutral date for holiday sales           Indicates negative date for holiday sales
U.S. Confectionery
      Trends
               Trends - for 2009/2010
•Core mass brands grew in units and dollars
   •Consumers moved to value channels and value brands
•Seasonal sales rebound with improving economy
•Dark chocolate sales continue to grow but at a slower pace
   •Dark chocolate sales increased 9% in 2009
•Everyday gourmet chocolate flat in 2009
   •Consumers want gourmet product at a value price


•Emerging trends in 2010
   •More private label chocolates
        •Upscale private label/gourmet packaging
   •Mass brands introducing more dark chocolate items
   •Exotic chocolate flavorings: citrus, spice, salt, fruits
   •High cocoa content chocolates
   •Gourmet packaging for chocolates
Trends - for 2009/2010
•Value products grew significantly
                  Nut/Coconut Candy grew 12.1%
          Gummies and chewy candy grew 11.6%
        Licorice grew 4.7%
        Theater Box candies grew 6%
        King sized candies up significantly


       •Sugar Free gum - +7.3% sales
        Exotic fusion flavors
        Fortified products

       •Seasonal candy increased in in 2009
        Reflection of difficult economy
        More favorable dates in 2009
        Seasonal confectionery will grow 2.0%

								
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