Focus on Core Brands Fundamental to Candy, Snack Profits
A panel of experts representing a distributor, a manufacturer, a consultant and an association executive agreed that turning attention to the core brands that sell in c-stores is the first step to increasing candy and snack profits.
Moderator Scott Ramminger, AWMA president, asked the panelists what they believe is the one strategy the industry should consider as it tries to improve profitability across the supply chain.
Mike West, national director of convenience for Hershey, said that achieving this goal is a process. “You need to design and develop a plan that is the best for the category. Then you have to have discipline to stick with it…you have to score card continually to verify it is meeting expectations,” West noted. “Make sure you have the best-selling core items first, then you can add new products to the mix.”
According to John Scardina, vice president of merchandising, candy & snacks, Eby-Brown Co., “We decided that as a company we needed to be deeply involved in category management. At the end of the day, our main goal is to keep our retailers happy and profitable. We are back to getting the core ready and talking about consumer-driven demand with our retailers.”
The panelists also agreed that speed-to-shelf is an issue for the convenience industry, and that retailers need a good exit strategy to move slow-moving items out of the store.
“Retailers could benefit greatly from using markdowns to move this product out,” Scardina noted.
Kit Dietz of Dietz Consulting discussed the joint study conducted by AWMA, NCA and NACS on candy profitability. “Our research indicates that one of the barriers to speed-to-shelf is space,” he noted. “It would save on reverse logistics if you consider that 50 percent of SKUs turn less than one item a month.”
Ramminger touted AWMA’s new InfoMetrics program that allows distributor data to be pooled and then sold to manufacturers. “Distributors can also use this data to drill down their own performance against others,” he said.
As for moving forward with the recommendations in the study, Larry Graham, NCA president, said, “It’s great the associations have been able to work together to identify how we can improve profitability across the supply chain. We need to continue this collaboration as we try to put the ideas in the study into action.”
