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Candy sales hit the sweet spot

The economy may be souring, but one industry has stayed sweet: According to the National Confectioners Association, Americans bought more than $29 billion worth of candy in 2007, up about 3 percent from the previous year.

Consumers "are being conservative with money, but they still want to treat themselves," said Lisa Dunlop, 44, owner of Bon Bon Confections, a shop on Bainbridge Island specializing in fudge and candy favorites.

Part of the sales increase may be the sweet stuff's role as self-medication; it's a way to get through malaise induced by high food and gas prices.

"I think if people are feeling sad or blue, chocolate is one of those things they want to have," said Lee Johnson, owner of Fiori Chocolatiers in Bellevue.

"It's not a financial decision, it's an emotional decision when it comes to candy and chocolate," said Alison Betts, 35, of San Diego, shopping at The Chocolate Box in downtown Seattle. For Betts, other sacrifices are more easily made: "I would rather walk and save money on gas than not eat chocolate."

Area chocolate and confection makers reflect the trend in candy consumption. Seattle Chocolates, for example, posted a 12.3 percent jump in first-half sales over last year, according to Chief Executive Jean Thompson.

Analysts at The Nielsen Co., which tracks consumer habits, go as far as calling the candy business "recession-proof," compared with other discretionary items, such as tobacco and carbonated beverages (though beer also tends to do well when the economy is hurting).

Chocolate, in particular, is a favorite go-to.

"People are not going to give up the chocolate," said Sean Seedlock, vice president of marketing and sales for Fran's Chocolates, which has retail stores in Bellevue and the University District. "Chocolate and specialty chocolate is somehow 'recession-proof.' We're going through our 25th year (of business), we've seen a couple of recessions -- and we still see that we can get through it."

Candy and chocolate sales patterns also depend on where the sweets are being sold, said Seattle Chocolate's Thompson. It stocks smaller stores and grocery chains and has seen sales of its products in boutique stores or tourist towns go down. But sales of Seattle Chocolates through the grocery channel have gone up. The chocolates are now carried in more than 8,000 grocery stores, something Thompson acknowledges has helped the company's sales triple in the past three years.

"Sales in small towns are not down, but are down in big towns because people aren't coming there on vacation now," Thompson said. "But people don't stop shopping at the grocery stores." Overall, department stores are experiencing slower sales, but grocery and big-box retailers such as Costco are experiencing a boost, she said.

Chocolate may have a leg up on conventional candies. While there may not be proven health benefits to gobbling Lemonheads, research in recent years has revealed the antioxidant power of dark chocolate. A bar of chocolate with high cacao content -- at a recommended 72 percent or higher -- also has less room for fat and sugar.

Bon Bon owner Dunlop said a customer once came in to her shop citing "doctor's orders" when buying high cacao-content sweets.

Chocolate's trendiness also helps its sales. "Chocolate is now the thing," Fiori's Johnson said. "You do have a segment of the population that's really wanting to find what's the best of the best, or the best tasting. The nice thing with chocolate is the best of the best isn't terribly expensive."

Using organic or hard-to-find ingredients will result in a higher retail price, but these sources may also prove to be insurance for specialty chocolate makers during times like these.

"We haven't been as impacted by the economic downturn as other industries have been," Johnson said. "Generally, organic food prices are a little higher to begin with, so you'll see a lot of organic food manufacturers' prices staying about where they were." Fiori sources as much as it can locally to keep costs from being affected by transportation and gas prices.

Others are motivated by conscience when shopping for confections. Dunlop said her buying demographic is especially conscious of what's organic or fair trade, as well as what's locally made, even if it means a higher price. "For people, it's a lifestyle," she said. "It's worth it."

At the same time, the big-name manufacturers have been suffering. Earlier this year, the Hershey Co. raised its prices. Last year, it announced plans for job cuts and closures of several U.S. manufacturing plants, causing merger speculation. This spring, Mars Inc., the maker of M&Ms and Snickers, bought out Wm. Wrigley Jr. Co., which is known for its chewing gum as well as Life Savers.

The industry's biggest candy makers are likely to see consolidation, much like the airline industry, said Pat Conroy, a consumer products expert at accounting and consulting firm Deloitte & Touche USA LLP. The rising price of ingredients is part of the issue, he said.

But it's not necessarily the economy causing the candy giants' woes, Thompson said. "American taste buds are kind of evolving -- just like the Europeans are looking at (conventional chocolate) and going, 'This is not chocolate.' "

Julie Mistaria, 33, made a special lunch-break run to The Chocolate Box, in anticipation of a colleague coming in from Portland. There are distinctions between her sweets: "See's is 'candy,' " she said. "It's not chocolate. Better chocolate -- it just tastes good."

But no matter how popular specialty confections become, there will still be a buying population for the M&Ms of the world. "Sometimes people just want a really inexpensive chocolate fix," Johnson said.

Source: Seattle Post Intelligencer

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