Life may be like a box of chocolates – but if you use a TPM/O solution you know what you’re going to get on Valentine’s Day.
Valentine’s Day is big business for the confectionery industry in the USA, ranking third behind Easter and Christmas and outranking Halloween. Given that 87% of Americans enjoy seasonal Valentine’s Day chocolate and candy, consumers anticipate that this year they will spend around $1.6 billion on candy for Valentine’s Day celebrations. They may be underestimating themselves, since according to IRI the seven-week 2022 Valentine’s Day selling season resulted in total candy, mint and gum (CMG) record sales of $4.1 billion.
Valentine’s Day chocolate sales have been growing year on year, with 2022 up nearly 9% from 2021, with ‘seasonal’ (Valentine’s Day specific) chocolate increasing 6.2 percent over the same period. Planned Valentine’s Day candy spend has doubled to $16 per person since 2010. And it’s not just due to inflationary pricing, since whilst 92 percent of consumers believe confectionery prices are somewhat or a lot higher than they were last year, demand has yet to be affected.
What’s interesting is that sales have been growing when retailers promoted less, and any price cuts were shallower than in past Valentine’s Day periods, resulting in a reduction of promotional lifts and trade efficiency.
Where sales picked up, or rather where the trade promotion reductions were offset, was in shoppers increasing their average weight of purchase, shifting to larger pack sizes evidenced by the volume for CMG category sales up by 3.3% but units down 0.5%. Accordingly, consumers took more trips and spent more dollars per visit, but overall household category penetration was down about 1% for total chocolate and non-chocolate over the period.
All of which is to ask, then, what is now the role of confectionery promotions for Valentine’s Day? Is it fluctuating, and how can you prepare in an environment where retailers may be cutting back on discounting due to inflation price rises and in order to avoid trading shoppers down (hallelujah), but in which day-after sales clearances remain a staple? Are there actually premiumization opportunities, given the growth in candy dollar spend for Valentine’s Day year on year?
Confectionery stalwart Spangler Candy, home of such brands as Dum Dums and Sweethearts, faced this dilemma when they needed to automate their trade management processes. So, they brought in Blacksmith’s TPM and TPO solutions in order to integrate syndicated data, margin detail and historical data in one place to avoid using three different planning systems.
Valentine’s Day this year falls on a weekday, which historically helps sales as males in particular shop for last minute confectionery gifts, according to Walgreens, with 70% of chocolate hearts there purchased in the 48 hours leading up to Valentine’s Day. Question is, if purchases are so last minute, do they need to be at a discount? Retailers are beginning to find that they don’t need to discount the proverbial turkeys at Christmas, or in this case seasonal chocolates on Valentine’s Day.
Valentine’s day itself is no surprise, but the confectionery promotions in it appears to be in a state of flux. You can get ahead by recommending promotion strategy based on analysis of your prior year sales using a TPM/O system. Know what works from previous years to help ensure you recommend and use the right mechanics. It’s never too early to start planning for Valentine’s Day next year.