Regardless of the new terrain being encountered during the coronavirus crisis, IBISWorld Senior Industry Analyst Matthew Barry tells Convenience World that selling confectionery in convenience stores had been a struggle for five years.
“Fierce price-based competition among supermarkets has constrained revenue growth for confectionery products at convenience stores,” he said.
“Consumers have become more health conscious and opted for healthier alternatives to high-sugar-content snacks, such as confectionery.”
These factors have, barring pandemic times, underpinned weaker demand for confectionery products at convenience stores.
He says, however, that demand for confectionery products during the prolonged COVID-19 lockdown period has increased, despite not being considered a staple or essential food product, as groceries are stockpiled and consumers look to treat themselves.
Meanwhile, the products of confectionery manufacturers that have chosen to upgrade with automated machinery are expected to be at less risk of COVID-19 contamination, Mr Barry says.
“Major player Mondelēz, which owns the brands Cadbury, Ritz and Pascall, has heavily invested in automation over the past five years,” he said. “For example, in September 2018 the company invested $20 million in new automated machinery to wrap Flake and Twirl Bars.”
Looking ahead to when the COVID-19 outbreak is expected to be under control, Mr Barry anticipates a decrease in confectionery sales volumes in the short term as households burn through stockpiles.
Furthermore, as restaurants and dessert bars begin to reopen, there is projected to be a surge in demand for these substitute dine-in dessert options.
IRI food and grocery consultant Brooke Olliver-Burnside says chocolate sales in convenience outlets have increased during lockdown, while total sugar confectionery declined over the few weeks to near the end of April.
Wunderman Thompson Managing Partner (Shopper) Georgia Bruton agrees with Ms Olliver-Burnside that chocolate has been a winner in the category since lockdown began.
“Any of the more impulse-purchase products, such as gum, smaller lollies and snack-sized chocolate bars, appear to be experiencing a decline.
ACAPMA CEO Mark McKenzie comments that the substantial fall in petrol sales across the country, averaging about 40%, has affected the sector, including confectionery.
He says a part of the revenue loss from fuel sales experienced by many service station operators in recent weeks has been offset by an increase in convenience sales across the board in terms of confectionery, coffee and grocery items, with some stores struggling to secure products because supermarkets “have taken so much”.
The “silver lining” though, he emphasises, is that people are rediscovering that service stations sell confectionery, food and groceries.
“It’s been significant enough for us to see an increase in non-fuel sales across the national network, but particularly in petrol and convenience centres in suburban centres because people are no longer travelling to and from work but rather purchasing food and groceries from their local convenience stores in suburban areas,” Mr McKenzie said.
