NCA’s John Downs lifts up the industry with inspiring State of the Industry keynote
Entering this year’s State of the Industry Conference donning a striking personalised lab coat, backed by an uplifting soul soundtrack, the National Confectioners Association (NCA) president and CEO John Downs offered heartfelt praise for a sector facing a number of industry challenges, reports Neill Barston.
Offering an engaging and direct appraisal of market conditions, he told the assembled record gathering of 700 guests for the event today at the JW Marriott, Turnberry, Miami, US, today, that in his tenth year in the sector, he was proud to be part of what he said was “an amazing industry,” as it posted elevated annual sales performance of $48billion for the US region, up nearly $6bn on figures attained the previous year (See our exclusive video review of SOTIC 2024 here).
As the State of Treating Report, also unveiled this morning, showed that growth was largely down to market inflation, with Downs acknowledging that there were notable supply chain issues, most notably significantly increased sugar and cocoa prices within the past year, as well as ongoing manufacturing labour shortages that were impacting on the industry,
Despite such considerations, the NCA’s president offered a warm note of thanks to company employees within the sector, who have helped deliver sustained performance in the industry, noting “We’re here on the shoulders of our frontline people,” he said of the event, noting the contribution of some 696,000 employees in the industry within the US.
Tackling challenges
Addressing some of the headline issues facing the sector, he said: “Sometimes the road can be bumpy along the way, and that has certainly that has been the case over the last years, but we all know as a nation we have had some bumpy times. But as an industry, we keep lifting higher and higher,” which he added was behind the choice of the Jackie Wilson song of that sentiment, which he summed up the determination of the industry as a whole.
Related to this, he revealed that research has found that consumers’ number one concern regarding ESG governance issues is how a company treats its employees, with Downs adding that his experience over the past decade had taught him that it was a business segment that engaged earnestly with its staff, and valued their respective inputs. Underlining this, he acknowledged that the past year had seen a notable rise in industrial strikes across other sectors within the past year, but observed that significantly, this had not been a major factor within confectionery. He said this served as a testament to the quality of companies operating within the industry.
“Being sustainable is important, but it’s about how a company treats its employees, and there is a clear indicator that the value of a business is intrinsically linked to this. I know that this speaks to the heart of who we are and what we do.
“I want others to look to our industry for inspiration, and I believe we have really compelling powerful narratives for brands and companies, as we have at NCA, with initiatives such as Always a Treat, and Power of Sweet. Employees play a vital role in crafting those narratives and making those products.
“The other thing about our narratives is that they are real and authentic, and we say what we mean, and we mean what we say, and they show the dedication, innovation and magic that turns simple ingredients into our special treats. We are an amazing collection of brands, companies, and business models and faces and voices. The ‘secret sauce’ of the NCA is its diversity, the small, the mid-sized and our very large companies. That diversity brings us strength, but it’s unity that is where we get our power, and the power of collective action,” which he added was crucial in creating a competitive advantage for the sector, as it continued to undergo industry tests.
State of Treating report
Another major highlight of the second day, was the State of Treating report, delivered by Elise Fennig, the NCA’s chief of staff and senior vice president of operations.
She confirmed the US market reaching an enhanced position of $48 billion sales in the US for the past year, up nearly six billion on figures attained last year, which was attributed mainly to inflation within the industry.
As the study noted, retail prices have risen significantly, up by over 30% since 2019’s results, as pressure on manufacturers with core ingredients experiencing key pressure including cocoa (which has doubled in value in the past year), as well as sugar costs experiencing a steep increase.
Significantly, the report revealed that while levels of consumption of chocolate had dipped this past year, though a total of over 98% of American consumers purchased at least some chocolate, candy, gum, and mints in 2023, with $25.9B sales in chocolate, $19.2B, non-chocolate candy, and $3.7B within the gum category.
One particularly intriguing factor to emerge from the presentation, was the potential power of technology in the retail landscape, with around 7% of sales presently generated through e-commerce, which is expected to rise further. So too is the dawn of AI as a major channel for manufacturers – with around 11% of consumers presently reported to be using the new tech-platform for their shopping.
As Elise Fennig noted, such platforms as ChatGTP offered ‘huge potential’ for the market, with younger generations leading the charge in engaging with such technology.
Furthermore, on wider trends, the research found, the marketplace prompted 41% of consumers to make changes to their confectionery purchases over the past year. Sales promotions took on a key role as fewer consumers perceive chocolate and candy to be as affordable as it has been traditionally. BOGOs have become consumers’ preferred discount type.
As the study observed, a review of promotional strategies to drive incremental purchases and trial during key weeks would be advised in order to leverage confections’ superior trade efficiency to win shelf space during the seasons and offer pack size variety to provide a range of price points.
The study also found that price now dominates the confectionery purchase decision across all generations. Overall, brand is the second-most important factor when purchasing confectionery, though there are substantial differences in brand loyalty by generation. Other purchase factors with large generational gaps are mood, nutrition, and sustainability commitments. The private-brand share for confectionery is far lower than that in snacks and other categories.
Significantly, as Elise Fennig noted, the triple factors of price brand and mood now appeared to be heavily influencing consumers purchasing decisions during the past year.
Linked to this, the study asserted that nine in 10 shoppers can be persuaded to spend a little more on chocolate or candy than planned. Seeing their all-time favorite or a brand they love, as well as holidays, special occasions, and doing something nice for themselves or others are the top consumer-cited reasons to splurge.
Sales of chocolate and non-chocolate candy with attributes such as organic, vegan, and sugar-free were inconsistent in 2023. Many consumers perceive attributes such as sugar- free or organic as “better-for-you” (BFY). But while about half of shoppers believe there is such a thing as BFY confectionery, only about 10% of shoppers purchase what they consider BFY confections regularly.
John Downs added; “Our new research shows that, even when faced with unpredictable environmental shifts and changes, consumers feel a strong connection to chocolate and candy. And they embrace classic favourites and innovative novelties with an emotional drive that keeps the category fresh and vibrant. Consumers seek out chocolate and candy to help enhance holiday seasons, family celebrations, and those important ‘treat yourself’ moments.”
