Bittersweet News in Confectionery

Published in CSP Daily News

Study predicts c-store volume drop

NEW YORK -- Retailers think confectionery sales will start to suffer in convenience stores as consumers look to bigger stores for better value, intensifying competition in the market, according to a new Deutsche Bank report cited by Confectionery News.

American retailers are becoming aware of a consumer shift away from shopping in c-stores towards buying confectionery together with their other food in larger stores, the report said.

The confectionery industry places great stock in consumers buying their confectionery along with [image-nocss] beverages and snacks on impulse in c-stores and gas stations. Retailers believe that people are now buying for value over convenience, although value is perceived to be diminishing in this channel. So retailers are concerned that confectionery may follow the drop in volumes already being witnessed in alcohol and carbonated soft drinks.

Rising fuel prices also pose a serious problem to convenience sales, eating into consumers' disposable funds, the report added.

Deutsche Bank surveyed 14 of the largest U.S. c-store and gasoline retailers in order to assess how PepsiCo's shares would be affected in light of recent rises in fuel prices.

Prosperity at this level is essential for the PepsiCo, which Deutsche Bank estimated takes 20% of its domestic profits from c-stores.

Respondents to the survey, which represent more than 14,000 stores, also offered some good news for larger players in the confectionery industry. Approximately 77% of those surveyed believed that confectionery had shown the most growth over the past year, and 40% thought that Hershey was doing the best job in promoting its products in c-stores; however, while larger confectionery companies appear to be holding up volume sales well, the convenience market overall is still shrinking, the report said, possibly creating problems for smaller firms.