Great review of the dynamics of the US candy industry

1. United States
Confectionery Market
January 2008

2. Welcome to the National Confectioners Association’s web tools for accessing the latest information
about the dynamic confectionery market. This site is designed to assist the buying, broker and
manufacturing communities with analysis and opportunities for the confectionery category.
The site contains numerous chapters of information. You may click on any chapter from the selections
below or you can print out the entire presentation.
The information contained in the site are year-end 2007 results where possible. Some reporting for year
end results will be completed at a later date in 2008. Information will be updated on a quarterly basis.

3. Table of Contents
Data Overview
I. Confectionery Market Overview VII. The Chocolate Market
II. The Retail Market VIII. The Non-Chocolate Market
III. Confectionery Profitability IX. The Gum Market
IV. Merchandising Opportunities X. New Trends
V. Consumer Segmentation XI. Industry Resources
VI. Seasonal Merchandising

4. Data Sources
There are a number of data sources available on the size of the confectionery market. While each is accurate
for the market sector measured, it is critical that the extent and limitations of each are understood
• The US Census data, MA 311D, projects total manufacturers shipments of confectionery made in the
US, and import/export figures provided by U.S. Customs. The MA311D Report is typically released
in August for the previous year’s results.
• Syndicated data, IRI and AC Nielsen, is available from scanners recording consumer purchases in a
sampling of grocery, drug, convenience and mass merchandisers providing brand and channel
movement data. IRI and Nielsen data are released every four weeks with less than a one month lag
time in actual sales results.
• NCA Monthly Shipment Survey data provides trade association market projections based on key
confectionery manufacturers. The manufacturer reports are released on a monthly basis
approximately six weeks after the close of each month.
• Trade publications use a combination of these inputs to project market data.
This market overview uses data form all of these sources and provides guidelines for understanding the
insight each brings to understanding the confectionery market.

5. US Census Bureau MA 311D
Annual Confectionery Report
• What is it?
– The Census Department annually surveys US confectionery manufacturer to report all confectionery product
shipments in total dollars and pounds and combines information from U.S. Customs reports for imports and
exports thus providing total manufacturers shipment reports.
• What does it mean?
– It is the total output of the US confectionery industry. It is the only source that gives total market information.
• What are its uses?
– Provides manufacturer shipments in dollars and pounds for total industry and sub-categories.
– Provides Per Capita apparent consumption, the total dollars/pounds purchased by everyone in the US
– Use Apparent Consumption to better understand total US consumption - it is the sum of manufacturer
shipments plus imports minus exports
• What are its limitations?
– It provides no information on company, channel, or brand performance
– Historical data tends to get “adjusted” as late reporters and changed information is supplied, short term
trends can change
• What is its relationship to other data sources?
– Syndicated data is either scanner data, of convenience, drug, grocery and mass, which tends to be about 40%
of total market, but it provides brand, company, channel and home panel data on consumers.
– NCA Survey data is a measure of key manufacturers of varying size and does not include all manufacturers,
however it is a much more current estimate providing current month versus the 1 – 2 year old 311D data..

6. Syndicated Retail Data
A Look at Retail Performance
• What is Syndicated Data?
– It measures retail sales for only those items that are scanned when sold
– Syndicated data bases measure Food, Drug, Mass Merchandisers that have scanners at checkout
– They typically do not include sales in Warehouse Clubs, Convenience Stores, Dollar Stores, Wal-
Mart, Department Stores, Specialty Stores, Candy Stores, Bulk Candy sales or many of the
alternative channels
– Generally it is only the larger stores, Food over $2MM, Drug and Mass over $1MM.
• How Representative is it?
– It reports sales of $12 Billion in confectionery sales if Food, Drug and Mass and Wal-Mart are
included; $17 billion if Wal-Mart and convenience stores are included; but only $8.5 Billion retail
without the two. The most common “Reviews Data” report includes only Food, Drug and Mass
excluding Wal-Mart.
– There are private data bases that provide information on Wal-Mart and Convenience Stores
– Depending on retail channels included, it represents 35% - 60% of total US retail sales.
– It is considered to be more accurate in Food channels than other retail outlets measured
– It provides the best detailed insights into the channels where product is scanned
• What good is it?
– It is the only source of product movement information that provides share, sales in units and dollars
at the SKU level and can be built to chain, regional, national levels.
– It provides a reasonably accurate overview of Confectionery Industry performance between
companies, brands, effects of promotional activity, impact of pricing and unique events like
seasonal activates.

7. NCA Manufacturer Shipment Reports
• What are Manufacturer Shipment Reports?
– They measure domestic confectionery manufacturers shipments on a monthly, annual and year-to-
date basis.
– The reports collect data from the largest chocolate and non-chocolate candy manufacturers
• How Representative is it?
– Manufacturer Shipment Reports track shipments that represent approximately 80% of total
chocolate candy shipments and 60% of non-chocolate candy shipments.
– They provide monthly tracking of dollar and tonnage shipments from domestic manufacturers to
wholesalers and retailers
– They provide up-to-date reporting of the confectionery manufacturing industry
– It does not report seasonal sales, trade channel sales or company data. Rather it is a composite of
the total confectionery industry.
– It does not represent import and export shipments as well as the U.S. Department of Commerce
MA311D Report.
• What good is it?
– It is the only source of product movement information that provides share, sales in units and dollars
at the SKU level and can be built to chain, regional, national levels.
– It provides a reasonably accurate overview of Confectionery Industry performance between
companies, brands, effects of promotional activity, impact of pricing and unique events like
seasonal activates.

8. U.S. Confectionery Market
Overview

9. 2007-2008 USA Economic Trends
•Economy slowing
•Retail sales growth down
•Unemployment ends year at 5%
•Up from 4.6% in 2006 but low in historical terms
•Housing market declines affecting job growth
•High oil prices
•Federal Reserve cutting interest rates
•Fears of inflation
•Fear of recession
•Commodity prices higher

10. 2007-2008 USA Retail Trends
•2007 Holiday retail sales slowed
•2.4% growth vs 2.9% in 2006
•Luxury Retailers continue to do well
•Convenience and Drug doing well
•Mass, dollar and supermarket experience slow growth
•Overall retail is growing at a slower pace
High gas pricing negatively affecting all retailers

11. The 2007 U.S. Confectionery Market
The U.S. Retail Confectionery Category generates
approximately $29 billion in retail sales
%
$ Change
Retail Sales $29.1 +3.5%
Manufacturers Shipments $18.9 +3.0%
Domestic Manufacturer Shipments $17.5 +2.7%
Imports $2.2 +4.0%
Exports $0.9 +13.1%
The profit margin is approximately 35% for the confectionery category.
Estimated sales in billions
NCA Shipment Data and Global Trade Atlas Import/Export Data

12. 2007 Confectionery Sales
Manufacturers $ sales grew 3% in 2007
Category Retail Sales Manf. Sales % Lb. Sales %
Total $29.1 Billion $18.9 billion +3.0% 7.2 Billion +2.3%
Chocolate $16.3 Billion $10.6 billion +2.9% 3.5 Billion +0.3%
Non-Choc. $9.4 Billion $6.1 billion +3.8% 3.2 Billion +2.5%
Gum $3.2 Billion $2.1 billion +4.1% 0.6 Billion +0.1%
NCA Estimates base on U.S. Dept. Of Commerce MA311D Report and NCA Monthly Shipment Reports
2006 US Department of Commerce 311D Confectionery Report
2007 NCA Monthly Shipment Reports through October 2007

13. 2006 Per Capita Retail Sales
$100 $93.92
$80
$60 $52.16
$40 $29.77
$20 $9.05
$0
Total Chocolate Non Chocolate Gum
The average U.S. Consumer spent $94 on confectionery products in 2006
Department of Commerce Data is released in late summer. Please return in August for actual 2007 data.
2006 US Department of Commerce 311D Confectionery Report

14. Chocolate Candy represents approximately
56% of total confectionery dollar sales.
Confectionery Categories Analysis
Category Retail Sales Domestic Shipment Imports Import % Exports Export %
$ Billions Shipments % Growth $ billions Growth $ billions Growth
$ billions Vs. 2005 Vs. 2005 Vs. 2005
Total $29.1 $17.5 +3.0% $2.2 +4.0% $0.9 +13.1%
Confections
Chocolate $16.3 $10.4 +2.9% $0.8 +5.4% $0.6 +16.6%
Non-Chocolate $9.4 $5.0 +3.8% $1.3 +2.6% $0.2 +13.6%
Gum $3.2 $2.1 +4.1% $0.1 +7.7% $0.1 -15.3%
The value of imported confectionery consumed is slightly under 15%, however much of this is from US
suppliers producing product overseas and then bringing into the U.S..
NCA estimates based on
Source: 2006 US Department of Commerce,
Census Bureau 311D, Confectionery Report

15. The Confectionery Market is Very Diverse
Next 6-10
12%
Next 11 -30
There are more than 9%
300
domestic confectionery
manufacturers Top 5 Private Label
70% 3%
All Other
6%
Manufacturer Market Share Concentration
• The confectionery category is much more diverse than other similar sized food categories.
• Most food categories are represented by less than five companies.
• There are 300+ suppliers competing for the remaining 30% of confectionery sales.
• The uniqueness of the confectionery category is that each suppliers makes distinctly different items
catering to the diverse tastes and demands of the consumer.
52 Week Sales Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

16. Top Candy Manufacturer Market Share
Nestle
6.1%
Cadbury-Adams
Wrigley 5.6%
12.2% Russell Stover
MARS 3.5%
16.9% Tootsie Roll
2.7%
Lindt-Ghirardelli
2.4%
Farley Sathers Brach's
2.0%
Hershey Ferrero
29.0% 1.8%
American Licorice
1.0% Just Born
0.9%
R.M. Palmer
0.8%
Storck
0.8%
Private Label All Others
Perfetti Van Melle
3.3% 10.2%
0.8%
According to IRI, The top three companies, Hershey, Mars and Wrigley have a combined market share of 58%.
The next twelve largest candy and gum companies have a 28% share, with all others having a 14% share
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

17. Continuous Growth of Confectionery
Total value and pounds of confection sold at retail has increased
consistently over the past five years
$27.4 $27.9 $28.2
$25.8
$24.0 $24.4
7.3 7.6 7.7
7.0 6.7 7.1
2001 2002 2003 2004 2005 2006
Dollars Sold at Retail, Billions Pounds Sold at Retail, Billions
2006- US Dept of Commerce 311 D Report

18. U.S. Confectionery
The Retail Market

19. Confectionery Retail Market
Confectionery is one of the most diverse retail categories with products sold in a myriad of outlets. While most consumable
products have a dominant retail outlet, confectionery products can be sold anywhere.
To be successful with confectionery products, a retailer must strategically determine which consumer need for confectionery
products they will fill. This will depend to a large part on your target consumer. However, no matter whom your target is,
there are confectionery products that can add to your sales and bottom line figures.
Candy and gum is the largest consumable product category in Drug Stores, Mass Merchandisers, Wholesale Clubs and Dollar
Stores and is a top ten product category in Convenience Stores and Supermarkets.

20. Retail Confectionery
Market Share by Trade Channel
Vending Dollar Stores*
Bulk 4.2% 2.9%
Others
5.4%
Warehouse Clubs* 24.9%
7.6%
Drug Stores
8.6%
Mass X Wal-Mart
Supermarkets
4.7%
15.3%
Wal-Mart
11.4% Convenience Stores
15.0% *estimates
* Others include: department stores, food service and ingredient sales, fundraising, give-aways,
independent grocers, mail order/internet, military, specialty/candy stores, theaters and concessions
NCA 2007 estimates based on IRI, U.S.
Department of Commerce, MSA
Vending Data, NCA Shipment Report
and other industry sources.

21. 2007 Retail Channel Performance
Based on 52 Week Sales – January - December 2007
Channel 2007 $ Sales 2007 % Growth
Supermarkets $4.6 +2.4%
Wal-Mart $3.5 +7.3%
Mass X Wal-Mart $1.4 +6.5.5%
Convenience Stores $4.5 +6.2%
Drug Stores $2.6 +3.9%
*Warehouse Clubs $2.2 +2.0
*Dollar Stores $.8 +0.2%
Vending $1.2 +0.7%
*Bulk $1.4 -0.5
The confectionery retail market has grown across all trade channels but convenience stores, club stores,
dollar stores and chain drug stores have outpaced the overall retail market.
* Indicates NCA estimate •Source: NCA estimates based on input from
Information Resources, Inc. NCA/CMA Monthly
Shipment Reports and U.S. Department of Commerce.
•Sales Figures in billions

22. Total U.S Snack Food Sales
Across Major Channels
Snack/
TOTAL U.S. - F/D/MX Granola Cookies Salty Snacks Candy & Gum
Snack/ Cookies Salty Snacks
Mass Granola Candy & Gum
s
ck
Granola
s
kie na
Snack/
DRUG Coo
lt yS Candy & Gum
Sa
Snack Bars
Granola Bars Snack/
FOOD Granola Cookies Salty Snacks Candy & Gum
MISC. SNACKS DRY FRUIT SNACKS SNACK BARS/GRANOLA BARS COOKIES SALTY SNACKS CANDY AND GUM
Candy and Gum sell across each major channel, unlike other snacking
categories. It is equally important as a volume producer for each channel.
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

23. Total Chocolate/Non-Chocolate/Gum
Dollar Share
CHOCOLATE
GUM CANDY
10% 57%
NON-CHOCOLATE
CANDY
33%
U.S. Department of Commerce Census
Bureau 2006 MA 311D Report

24. Candy and Gum Ranked 3rd
Among 2007 Food Categories
$ Billions
$0.0 $3.0 $6.0 $9.0 $12.0 $15.0
Carbonated Beverages -1.4% $13.50
Milk +11.2% $12.40
Product Categories
Candy& Gum +3.5% $8.50
Salty Snacks +2.6% $7.90
Cereal +0.7% $6.40
Ice Cream -1.2% $4.50
Soup +2.4% $4.10
Cookies -1.9% $4.00
Bottled Juice +3.3% $3.80
Candy and Gum Ranked 3rd among 2005 Food Categories in Food, Drug and Mass Outlets
IRI Food, Drug & Mass
Excluding Wal-Mart 12/30/2007

25. Candy and Gum is the
Largest Snack Category
$ Billions
$0.0 $2.0 $4.0 $6.0 $8.0 $10.0
Candy& Gum +3.5% $8.50
Salty Snacks +2.6% $7.90
Product Categories
Ice Cream -1.2% $4.50
Cookies -1.9% $4.00
Snack/Granola Bars +11.0% $2.30
Bakery Snacks $1.00 +8.4%
Dry Fruit $0.50 -4.0%
Misc. Snacks $0.30 +18.1%
IRI Food, Drug & Mass
Excluding Wal-Mart 12/30/2007

26. 2007 Confectionery Sales
Manufacturers Sales Through December, 2007
$ Lbs.
Chocolate Candy +2.3% -0.9%
Non-Chocolate Candy +5.8% +0.5%
NCA Monthly Shipment Reports
Manufacturers Science Associates
estimates for NCA – 12/31/2008

27. Confectionery
Profitability

28. Confectionery Profitability
Not only is confectionery a large product category at $28.2 billion in retail sales, it is a
high profit category. Margins average more than 35% for the category. Candy is also an
expandable category due to the impulse nature of consumer purchases.
Well planned and executed merchandising results in increased sales and profits both
everyday and for the major confectionery seasons. Candy responds extremely well to
merchandising with displays being more important than price reductions enabling
retailers to generate full profit margins from displays.
The profit margin is approximately 35% for the confectionery category.

29. Confectionery
Merchandising Opportunities

30. Maximize sales by offering the
right product assortment
Product Offering Grocery Drug Mass Convenience
Single Serve X X X X
Lay Down Bags X X X
Peg Bags X X Y X
Seasonal X X X Y
Bulk X Y X
Novelty Y X Y X
Gourmet Candy X X X Y
Gift Boxes X X X
Change Maker X X
X = Major sub-category for channel Y = secondary pack for channel
•Consumers purchase different pack types based on the retail outlet
• The proper assortment of confectionery will create the maximum opportunity for sales and profits
Source: DHC Analysis of Retailer Data

31. Confectionery is highly versatile
Candy and gum can be displayed in more store
locations than any other snack category.
Grocery Drug Mass Convenience
•Cash Registers, check •Cash Registers •Check out lanes •Cash registers on or
out aisles •Counter tops •Candy Gondola above counter
•Candy Gondola •Display below cash •Store entrance area •Shelf below checkout
•End Caps, facing front of registers •Seasonal Displays counter
store •Candy Gondola •Seasonal Aisle •End cap displays facing
•Free standing displays •End caps facing cash check out counter
•Main traffic aisle
near cash register lines registers •Coffee bar
•Free standing displays
•Bulk area in produce •Free standing displays near check out lanes •Near food service area
•Secondary areas: near check out counters •In toy sections •Behind counter, near
videos, kids play areas, •Shelf space behind cash cigarettes
deli, in beer/wine areas •Near video, other areas
registers with waiting lines •Vend dispensers outside
•Ethnic aisles •In line with Kids Toys store or on gas pumps
•Grocery section
•Seasonal Displays sections •Seasonal Displays
•Pharmacy area
•Seasonal Aisle •Pharmacy area
•Food service area
•Photo counter
•Seasonal Displays
•Seasonal Aisle
Source: DHC Analysis of Retailer Data

32. Increased Item Assortment
Drives Confectionery Sales
Non-Seasonal Gondola Candy
Grocery Dollar Sales Per MM ACV Index
122
104
82
Less Than 250-350 Items Over 350
250 Items Items
Top performing retailers stock more items
Source: DHC Analysis of Retailer Data

33. Candy/Gum sales grow disproportionately
with increased shelf space.
$2,00 $4,00 $6,00
300
0
250
200
0
Linear Feet
150
100
Dollars Sales
0
50
0
$0
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
Avg. Wkly. $ Sales Avg. Candy Space (linear ft)
Store audits indicate that as display space increases, the amount of candy sales increases,
strongly suggesting the more display space devoted to candy the greater the retail sales.
NCA Survey – Improving the Retail Performance of the Confectionery
Category – Deloitte & Touché LLP/Braxton Associates, 2/95

34. Candy and Gum produce the highest consumer
purchase activity among items commonly
stocked at checkout counters.
Gum/Mint 72%
Candy 69%
45%
Magazines
33%
Soft Drinks
28%
Batteries
0% 20% 40% 60% 80%
Percent of all shoppers who purchase these commodities at front-ends on a monthly basis.
Source: Confectionery Magazine, Feb. 2004,
Volume 89, No.2, pg 7

35. Consumer Shopping Behavior
Retailers Risk Lost Sales If They Don’t
Stock Candy Items Consumers Want.
If you were shopping & could not locate the particular
product you wanted to buy, which would you do?
Buy Another
27%
Flavor/Variety
Buy Another
25%
Brand
Buy Another
12%
Size/Pack
Buy Another
9%
Type Of Snack
Buy Nothing Or
16%
Don't Know
Go To Another 11%
Store
Consumers have the options of buying nothing or going to another store.
Source: DHC Analysis of Retailer Data

36. Candy Is The Most Responsive Category
For Display Treatment
% Increase On Display Only
Candy 169%
Cookies 105%
Carb. Beverages 95%
Bottled Water 95%
Salty Snacks 88%
Wine 68%
Spices/Seasoning 61%
Beer 49%
Source: IRI, Food, 2007

37. Candy Is Under-Displayed Relative
To Response It Generates
% Grocery Store Displays
Salty Snacks 8.0%
Cookies 7.0%
Carb. Beverages 6.1%
Non-Chocolate 5.0%
Candy
Bottled Water 3.8%
Wine 3.5%
Spices/Seasonings 3.4%
Chocolate Candy 3.4%
Beer 2.6%
Source: IRI, Food, 2007

38. Candy and Gum Packaging Dollar Shares
GIFT BOX CHOCOLATES
CHOCOLATE SNACK SIZE 3%
CHOCOLATEBOX=>3.5OZ
7%
22%
CHOCOLATE CHRISTMAS
4%
CHOCOLATE BAR <3.5OZ CHOCOLATE EASTER
10% 6%
CHOCOLATE HALLOWEEN
1%
SUGARLESS GUM CHOCOLATE VALENTINE
11% 4%
SUGAR FREE CHOCOLATE
1%
REGULAR GUM (
3% BREATH FRESHENER
3%
NUT-COCONUT
CARAMEL
1%
N-C VALENTINE 1%
1%
N-C HALLOWEEN NOVELTY N-C HARD SUGAR CANDY
1% LICORICE 3%
3%
N-C EASTER CANDY 2%
1%
N-C CHEWY
N-C CHRISTMAS MINTS
8%
1% 2%
Candy and Gum are available in a wide range of packaging options
to fit the needs of the consumer and the retailer
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

39. U.S. Confectionery
The Consumer

40. Consumer Perspective on
Confectionery Market Structure
• The various reporting agencies tend to group the market and categorize it in terms of
manufacturing processes and package sizes. This is convenient for tracking and
relating manufacturing to retail sales.
• Consumers see the market from the perspective of the reasons for purchase. These
tend to be taste, texture, and package size. There is also a substantial difference
between everyday candy and seasonal candy in terms of purchase motivation.
• The following charts lay out one, of several possible consumer segmentation
approaches. From a market perspective, it is key to have products in each segment,
since candy tends to compete more within segments than between segments.
• In general, these consumer segments do not match up well to syndicated data
segments.

41. Non Chocolate Market Structure
• From a Consumer Perspective, the non chocolate market divides into two broad groups, (1)
those eaten for good taste and fun and (2) those which offer a benefit. It is further segmented
by those who are purchasing for immediate consumption and those who are purchasing for
later/delayed consumption.
• In non chocolate categories the reasons for purchase range from wanting a particular taste or
texture, what activities they will be doing next, if the candy is for decoration, and what brands
are habitually purchased.
• In the functional sub segment the primary driver is the need that is being sought to be fulfilled.
Is the consumer dieting, wanting fresh breath, looking to eat or avoid a particular food group,
seeking a health benefit
• Unlike many categories in the store, non chocolate candy requires a wide variety of candies,
generally brands in each sub-segment to meet the demands of the various consumers
shopping the category.
• Additionally, there is a level above this structure which is “everyday candies” and “seasonal
candies”

42. Chocolate Market Structure
• The majority of Chocolate products are in the “Chocolate Candy
Category”, the functional area has just started expanding over the last
decade.
• Chocolate category is fairly straightforward, there are (1) solid molded
chocolate bars both plain and filled with nuts, grains, fruits, caramels, etc.
(2) enrobed bars with a thin layer of chocolate and a lot of filling, and(3)
pieces – both solid and filled.
• The subset of “piece” has the same structure as the subset of “Bars”
• Consumers tend to see chocolate brands on two levels, physical attributes
and brand personalities.
• Brands tend to compete within their segments, not between segments. It
is necessary to have a representative cross section of brands within each
segment to properly compete.

43. Chocolate Market Structure
Consumer Perspective
Chocolate
Market
Structure
Chocolate Functional
Candy Chocolate
Bite Novelty Healthy Reduced Fortified
Bars
Size Pieces Snacks Confections Confections
Molded Vitamin,
Piece Granola,
Textured Bars Smooth Bars /Gift Shapes Low Calorie Minerals
Grain Bars
Soft
Nut or Cholesterol Improve Body
Chewy/Filled Mini,
Fruit Bars Candy/Toy Nut Bars Low fat Function
Bars Fun Size
Crispy/ Pure
Crunchy Chocolate Small
Low Carb
Bars Bars Pieces

44. Gum Market Structure
From Consumer Perspective
• The gum category is dominated by shape considerations – sticks, chunks, and
panned pellets, and by flavors – fruity, various mints and strong mints.
• Fortified gums have made recent market entry where the gum is a carrier for
additional, functional or healthy ingredients.
• The novelty gum tends to be “kids gums” with bubble gum, shaped gum, and
gum in candy toys.
• Recent high growth has occurred in the strong mint flavored gum products.

45. Confectionery
Seasonal Merchandising

46. What Affects Seasonal Sales?
•Date/Day of Holiday
•The Economy
•Consumer Confidence
•Shopping Patterns/Habits
•Merchandising Strength/Visibility

47. Confectionery Seasonal Sales
(** in millions of dollars)
2004 2005 2006 2007 2008
Valentine’s Day - $1,010 $970 $971 $1,036 $1,075*
Easter - $1,906 $1,761 $1,884 $1,987 $1,865*
Halloween - $2,041 $2,088 $2,146 $2,202 $2,265*
Christmas - $1,342 $1,375 $1,389 $1,420 $1,430*
Results and Projection as of January 2008
Source: Sales figures are compiled by National Confectioners Association
based on input from Information Resources, Inc. NCA/CMA Monthly Shipment
Reports and U.S. Department of Commerce

48. Total Confectionery Seasonal Shares
Valentine's Day
16%
Easter
30%
Christmas
21%
Halloween
33%
• Syndicated IRI data understates actual seasonal sales. It only includes packages with
seasonal graphics, and does not count regular packs sold during the season
– Halloween is severely impacted, none of the “big bags” that are popular are counted as
Halloween sales.
• Actual seasonal sales are 50% to 100% higher than reported in IRI data tables
NCA estimates based on December 30, 2007 IRI
Data, NCA Manufacturers Shipment Reports and
U.S. Department of Commerce MA311D Report

49. Seasonal Confectionery Trends
2007 2006 2005 2004 2003 2002
VALENTINE’S +6.7% +0.1% -4.0% -3.0% -7.6% +6.5%
EASTER +5.4% +7.0% -7.6% +5.5% +2.2% -2.2%
HALLOWEEN +2.6% +2.8% +2.3% +2.4% +0.7% -0.4%
CHRISTMAS +2.2% +1.0% +2.4% -3.5% -1.4% -3.0%
* IRI FD&M
NCA projects a 2.1% increase in 2008

50. Holiday Dates/Days
Holiday 2007 2008 2009 2010
Valentine’s Wednesday Thursday Saturday Sunday
Easter 4/8 3/23 4/12 4/4
Halloween Wednesday Friday Saturday Sunday
Christmas Tuesday Thursday Friday Saturday
Thanksgiving 11/22 11/27 11/26 11/25
Shopping Days 33 28 29 30
Indicates positive date for holiday sales Indicates neutral date for holiday sales Indicates negative date for holiday sales

51. The Reason for the Season
Top Reasons for purchase of Chocolate
Valentine’s Day Easter
• Gift • Easter Basket
• Personal Consumption • Candy Dish
• Candy Dish • Egg Hunt
• Party • Gift
• Baking • Baking/Craft
Halloween Winter Holidays
• Trick or Treat • Candy Dish
• Candy Dish • Gift
• Party • Personal Consumption
• Stocking Stuffer
• Party/Baking
Source: Attitude and Usage Studies of Holiday
Candies, 1999-2003, Hershey Foods

52. Seasonal Sales Trends
900
Halloween
800 Easter
Christmas Candy
4 Week Category Sales ($ millions)
700 Valentine
600
500 Chips and Snacks
400
300
Cookies and Crackers
200
100
0
Jan Dec
Confectionery sales respond well when tied to a seasonal event, indicating consumers
have increased purchase interest when confections are merchandised with a seasonal
theme
What if…
• In the summer months tie candy to potential seasons like Memorial Day, 4th of July, Labor Day and “Back to School”.
Candy should sell at higher levels than other snack categories when tied to seasonal promotion themes based on major
seasonal sales performance.
• In January tie confectionery to the 5th largest seasonal event, “the Super Bowl”.
•Data IRI, 12 months ending 12/30/07

53. Maximize Christmas Candy By Managing
the Season to Meet Consumer Needs
Weeks prior to Christmas
6 5 4 3 2 1
• Decorating and snacking candy should be available early
• Gifts are concentrated in the 3 weeks before Christmas
• Stocking stuffers in the weeks just prior to the Holiday
• Continue to display snacking candy after Christmas
Dechert Hampe 2004

54. Retailers Must Stock the Christmas
Candy Consumers Want
If Desired Christmas Candy Were Unavailable …
22.4%
Buy Another Variety of Brand
25.8%
Buy Another Brand
15.7%
Buy Another Type of candy
5.9%
Buy Non-Seasonal Candy
7.8%
Buy Nothing Or Don't Know
22.4%
Go To Another Store
Retailers risk lost purchases if they don’t carry the proper variety of Christmas Candy
Dechert Hampe 2004

55. U.S. Confectionery
Chocolate Candy

56. Total US Chocolate Market
SEASONAL
CHOCOLATE
EVERYDAY 17%
CHOCOLATE
83%
– The largest segment is Everyday Chocolate, these are bars, bags,
boxes, pieces that are carried and sold year round.
• Total Chocolate growth has been 1.6% indicating a level demand
– Seasonal items are carried only during the seasonal sales periods and
carry specific seasonal markings
• Easter Chocolate declined about 9%
• Halloween Chocolate increased by 4.5%
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

57. Chocolate Candy Channel Breakdown
Mass
Drug Stores
9.1%
17.7%
Wal-Mart
21.1%
Supermarkets
30.8% Convenience
Stores
21.3%
Data is percentages from IRI scan data, and does not reflect the impact of
smaller, less than $1 million outlets nor clubs, dollar stores, candy shops and
other miscellaneous outlets.
IRI, 12/30/2007

58. Chocolate Candy
Packaging Dollar Shares
CHOCOLATEBOX/BAG/BAR=>3.
CHOCOLATE BAR <3.5OZ 5OZ
17% 39%
SUGAR FREE CHOCOLATE
2%
CHOCOLATE SNACK SIZE
SEASONAL CHOCOLATE
12%
VALENTINE CANDY
6%
GIFT BOX CHOCOLATES
SEASONAL CHOCOLATE 5%
HALLOWEEN CANDY
2%
SEASONAL CHOCOLATE AO
SEASONAL CHOCOLATE SEASONAL CANDY
SEASONAL CHOCOLATE
EASTER CANDY 0%
CHRISTMAS CANDY NOVELTY CHOCOLATE
10% 7% 0%
•Chocolate candy in particular is available in multiple serving sizes and packaging options
•The majority of snack size chocolate candy are sold as Halloween product
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

59. Chocolate Candy
Everyday Packaging Dollar Shares
SUGAR FREE DIET CHOCOLATE BAR <3.5OZ
CHOCOLATE 23.4%
2.6%
CHOCOLATE B/B=>3.5OZ
50.7%
NOVELTY CHOCOLATE
0.2% CHOCOLATE SNACK SIZE
16.3%
GIFT BOX CHOCOLATES
6.8%
•Chocolate candy in particular is available in multiple serving sizes and packaging options
•The majority of snack size chocolate candy are sold as Halloween product
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

60. Total Chocolate Packs Dollar
Sales (in Millions) by Outlet Type
Mass 58 192 99 303 74
5
Drug 217 384 125 135 74
4
70
Food
540 953 348 169
3
BAR <3.5OZ BOX/BAG/BAR >3.5OZ SNACK SIZE GIFT BOX CHOCOLATES NOVELTY / OTHER SUGAR FREE DIET
• The highest dollar sales are in the “greater than 3.5 oz” range. These usually are bags in
the 4 oz, 8oz, 16oz or larger and multi pack bars.
– Food remains the best selling outlet for these items, followed by Mass.
• Food Stores also dominate the “less than 3.5 oz. pack sales” and the “snack size” sales..
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

61. U.S. Confectionery
Non-Chocolate Candy

62. Total U.S. Non-Chocolate Market
SEASONAL NON-
EVERYDAY CHOCOLATE
11%
NON-
CHOCOLATE
89%
• Everyday Non Chocolate dominates with 89% of sales
• These items include all individual packages, bags, boxes, dispensers, novelty items
that are not labeled or shaped with seasonal themes.
• Non-chocolate sales have declined -3.8 %, while Diet Candy increased 16%.
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

63. Non-Chocolate Candy Channel Breakdown
Mass
Drug Stores 9.1%
16.2%
Wal-Mart
21.1%
Supermarkets
25.5%
Convenience
Stores
29.5%
Data is percentages from IRI scan data, and does not reflect the impact of
smaller, less than $1 million outlets nor clubs, dollar stores, candy shops and
other miscellaneous outlets.
IRI, 12/30/2007

64. Non-Chocolate Candy
Packaging Dollar Shares
DIET CANDY HARD SUGAR CANDY LICORICE
3% 10% 8%
CARAMEL/TAFFY APPLES
2%
NON CHOCOLATE CHEWY
30%
BREATH FRESHENER
12%
VALENTINE CANDY
3%
NON CHOCOLATE
CHEWY CANDY
10%
EASTER CANDY
5%
CHRISTMAS CANDY
4%
PLAIN MINTS
HALLOWEEN CANDY 6% NOVELTY
4% 10%
The key to non-chocolate candy merchandising is having a full selection within each product sub-category
and a large selection of seasonal offerings.
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

65. Non-Chocolate Candy
Everyday Packaging Dollar Shares
DIET CANDY
4%
CARAMEL/TAFFY APPLES
HARD SUGAR CANDY
2%
10% LICORICE
8%
BREATH FRESHENER
15%
SPECIAL NUT/COCONUT
4% NON CHOCOLATE CHEWY
PLAIN MINTS
34%
7%
NOVELTY
10%
The key to non-chocolate candy merchandising is having a full selection within each product sub-category
and a large selection of seasonal offerings.
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

66. Total Non-Chocolate Packs Dollar
Retail Sales by Outlet Type
1 9
Mass 52 34 23 86 51
5
8
1 36
Drug 68 83 44 199 61
20
34
70
56
Food 167 37 156 92 364 129
44
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Dollar Sales ( in millions)
BREATH FRESHENER CARAMEL/TAFFY APPLES/KITS/DIPS DIET
HARD SUGAR PKG & ROLL LICORICE BOX/BAG >3.5OZ CHEWY
NOVELTY PLAIN MINTS PLU - ALL BRANDS CANDY
• Chewy Candy, items like fruit chews, gummi, taffy, caramel, jelly beans, has the highest sales.
• Food Stores lead in sales in all other categories with the minor exception of Diet.
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/MX

67. U.S. Confectionery Gum

68. Total Gum Market
REGULAR
GUM
20%
SUGARLESS
GUM
80%
• Sugar free gum is more than 80% of the total Gum Market. Gums that
contain sugar as a key ingredient comprise the rest of the market.
• The total growth of 8.1%, with excellent growth in Sugar Free gum of
13.5% and decline of Regular gum of -9.8%
Latest 52 Weeks Ending February 19, 2006
Dollar Sales IRI TOTAL U.S. - F/D/MX

69. Total Gum Retail Shares
by Retail Channel
Drug Stores
Mass
10.4%
6.6%
Supermarkets
Wal-Mart
22.7%
19.9%
Convenience
Stores
40.4%
Convenience Stores have the largest portion of gum sales, 40.4% of total sales.
$Million – F/D/M w/ Wal Mart and Convenience IRI Dec 30,2007

70. Total Gum Retail Dollar Sales by
Retail Channel
$1,400
$1,200
Retail Sales (in millions)
$1,000
$800 $899
$600
$555
$400
$490.8
$200 $253 $340
$174
$142 $67 $119
$0 $30
Food Drug Mass Wal-Mart Convenience
REGULAR GUM (NO SUGARLESS) SUGARLESS GUM
Latest 52 Weeks Ending December 30, 2007
Dollar Sales IRI TOTAL U.S. - F/D/M/C/W

71. U.S. Confectionery
Trends

72. Trends - What's for 2007/2008
•Dark chocolate sales accelerating - +50% in 2007
•Chocolate experiences
Chocolate tastings
Chocolate and wine pairings
•Exotic chocolate flavorings: citrus, spice, salt, fruits
•High cocoa content chocolates
•Gourmet chocolate bars
•Gourmet packaging for chocolates
•Single origin chocolates
•Urban names for upscale chocolates

73. Trends - What's for 2007/08
•Sugar Free gum - +13.5% sales
•Exotic fusion flavors
•Fortified products
•Theater Box candies
•Event merchandising – theaters, birthday, game nights
•Single-serve seasonal items
•New seasonal offerings

74. Key Global Trends Effecting
Chocolate Bars
Convenience Low Fat
Indulgent Low Calorie
Safety Better for You
Ethnic becoming Food Allergies
Mainstream Vegetarian
New Consumer Organic
Segmentation GMO Free
Fortified
Function Low Carb

75. New Candy Product Introductions
1481
1500
1323
1272
1195
1000
500
14 6
0
Non Chocolate Chocolate Gum
2005 2006
Source: Market Research.com, September 2007

76. Major Consumer Trends
• Convenience/Portability
– Hectic Lifestyles, erosion of traditional eating patterns,
mobile eating is mobile purchasing – people eat where they are
• Functional/Fortified
– Positive in additions, Fortified chocolate bars, chocolate with
minerals/vitamins
• Better for You
– Weight loss, low carb, low fat, sugar free, processes vs. whole
• Organic
– Positive in absence, do not want to have bad things in their food

77. Food on the Go
Candy and snack products will be package in more
durable and recloseable packages
–Blister pack Gums
–Tins
–Cups of Chocolate Snacks

78. Chocolate Demographic Opportunities
Manufacturers will offer products to reach emerging
demographic groups.
• Aging -
– No fat, low fat, vitamin fortified, sugarless
– Flavor a must
• Hispanic and minorities
– Intense fruit flavor, tropical fruits, brands from “home”
– Spanish labeling
• No growth in Children’s brands
– Nostalgic items to appeal to adults to remind of youth

79. U.S. Women Love Chocolate
• 93% of women polled eat chocolate
• Milk chocolate (67%) preferred over dark chocolate
• 69% report that they rarely feel guilty about eating chocolate
• 65% eat chocolate candy or chocolate desserts at least weekly
• 86% agree that chocolate fits in a healthy life style
• 52% say eating chocolate makes them happy.

80. Chocolate Moving Beyond the Bar
• Hot trend: Anytime, anywhere packaging
• Snacking can be interrupted thanks to resalable
packaging
• Consumer has full control over portion size, no longer
“all or nothing”

81. Industry Resources
• Front-End Focus:
http://www.magazine.org/content/Files/FrontEnd%5B1%5D.ppt#450,1,Slide 1
• NCA Industry Performance: Retail Sales Data:
http://www.ecandy.com/Content.aspx?MenuID=128&BreadCrumb=Industry%20Performance:%20Retail%20Sales%20Data
• The Heart-Health Benefits of Chocolate Unveiled:
http://www.clevelandclinic.org/heartcenter/pub/guide/prevention/nutrition/chocolate.htm
• Dark Chocolate Is Healthy Chocolate
http://my.webmd.com/content/article/73/81921.htm
• Premium Chocolate:
http://www.retailmerchandising.net/candy/archives/1200/1200pc.asp
• Dark and Decadent Hits the Big Time :
http://www.candyindustry.com/content.php?s=CI/2005/07&p=6