Candy companies tap multicultural trends in search of the industry's new sweet spot.

Date: Friday, April 15, 2005 Source: Marketing to the Emerging Majorities

Marketing to the Emerging Majorities via NewsEdge Corporation :
Did you hear the story about Pop Rocks?

No, not the urban legend where the kid from the Life commercial consumed a fatal combination of the candy and Coca-Cola. This is a modern tale. Pop Rocks is part of the latest trend in the candy industry: ethnic sweets.

One of the company's newest products is Pop Rocks Limon, a 25-cent packet of the combustible candy with a unique lemon/salt flavor. It's sold primarily in the Southwest but company executives say it's gaining popularity in colder climes such as Chicago. And it's more than just a new flavor. It's a product designed to appeal specifically to Hispanics. "We wanted to take the fun of Pop Rocks and adapt it to Hispanic tastes," says Mitch Boehm, VP of Sales for Pop Rocks. "The Limon flavor came from our research and our observation of what's going on in the market. We could see it was a good match for us."

Pop Rocks is part of a candy aisle trend. Faced with slowed market growth and a spate of bad publicity from the food police, the candy industry is hustling to come up with new ways to boost revenues. Increasingly, companies are tapping multicultural themes. "It's obvious that the industry is going to get its growth from niches, rather than the mass market," says Bill Wyman, President of Rockwell Consulting, a sales and marketing consulting firm. "Ethnic niches are the most popular."

Already, big names are making big plays in multicultural candy. Hershey Foods has signed Latin singer Thalia to promote its new line of Hispanic-themed candies. 'La Dulceria Thalia' includes Hershey's kisses, wafer bars and lollipops. Look for a print and radio ad campaign primarily aimed at Hispanics of Mexican descent in the U.S. It's all part of a broader push to expand Hershey's appeal to Hispanic consumers, as the company's CEO Rick Lenny told investors earlier this year. "The Hispanic initiative is showing good promise ... With a combination of expanded Hershey offerings, full-year sponsorship of Thalia, and U.S. availability of our recently acquired Pelon Pelo Rico brand, we expect very good results in 2005 within this high-potential market segment."

Nestle is also reaching out to multicultural markets, looking to attract U.S. consumers to a product it already sells overseas. The company has signed on to sponsor "Strut," a cable reality show produced by ABS-CBN International and aimed at young Asian American viewers. The show depicts travel, lifestyle and entertainment settings and Nestle's candy, Frutips, is integrated into the storyline. Audie Vergara, ABS-CBN Manager of Program Development, was on hand when the show filmed a segment in a San Francisco music club. "We got the product out into the hands of the audience. We handed it out. And during the show they were holding up the bags and shaking them like maracas," he says. "That's way beyond getting them to taste it. The client couldn't have been happier."

Even smaller firms are getting in on the action. American Licorice Co. launched Chili Punch Hot & Sour Straws in 2002. Atkinson Candy Co. has a spiced-up version of its peanut brittle on the market. Wyman says other companies are exploring new products that build on Caribbean flavors to appeal to that segment of the Black American market.

Despite the potential, marketing multicultural candy is not child's play. Concerns over childhood obesity rates have put pressure on food companies to cut back their pitching to kids. What's more, many firms are finding ethnic marketing has its own unexpected hurdles. Hershey, for example, had to field a bit of flack when news got out that "cajeta" a key descriptive word in its new candy line has a sexually suggestive meaning to some Spanish speakers, notably those with Argentinian or Dominican backgrounds. A Hershey spokeswoman says the product is aimed primarily at Mexican-Americans, who find the word perfectly innocent.

Other hurdles are more structural. Candy makers new to the ethnic market may find that their sales and distribution processes need tweaking, says Alison Chaltas, a principal with Interscope LLC, a sales and marketing consulting firm. "You may have a team that knows how to deal with 7-11 and a distribution process that knows how to deal with Wal-Mart. But the skills you need to get your product into bodegas and other city locations may be different," she say.

Still, the potential rewards are sweet. "The numbers speak for themselves," says Liz Arreaga, a partner in Mercury Mambo, a Hispanic marketing firm."Hispanics' purchasing power, estimated at $686.3 billion, or 8%, of all spending in 2004, will grow to 18.5% and exceed $3 trillion." Companies of all kinds will increasingly look to ethnic markets for growth, she says. They've become the sweet spot. [FOOD/BEVERAGES]

Fast Fact:

Tuned In To Hispanics
Radio is a top tool to reach Hispanic consumers. While television and print options may proliferate, Hispanic teens and adults still spend time tuned in to their favorite radio stations. How does radio fit in with marketers' attempts to reach Hispanic consumers? See story, p. 2.

Favorite Spanish-language radio formats of Hispanic adults
Mexican Regional 18.4%
Spanish Contemporary 12%
Tropical 7.3%
Spanish News/Talk 3.4%
Spanish Variety 1.4%
Tejano 1.0%
Source: Arbitron

CONTACTS & CONNECTIONS

Pop Rocks, Mitch Boehm, VP Sales, 10395a Democracy Ln., Fairfax, VA 22030-2505; phone: 703-383-9360; website: http://www.poprockscandy.com

Rockwell Consulting, William Wyman, President, 39 Rockwell Rd., Ridgefield, CT 06877-5006; phone: 203-438-0730; website: http://rockwell-consulting-inc.com

Hershey Foods, Richard H. Lenny, CEO, 100 Crystal A Dr., Hershey, PA 17033-0810; phone: 717-534-6799; website: http://www.hersheys.com

ABS-CBN International, Audie Vergara, Manager of Program Development, 859 Cowan Rd., Burlingame, CA 94010-1216; phone: 650-697-3700; website: http://www.abs-cbn.com

Interscope LLC, Alison Chaltas, Principal, 107 John St., Southport, CT 06890-1466; phone: 203-255-3375

Mercury Mambo, Liz Arreaga, Partner, 2401 E. 6th Street, Austin, TX 78702; phone: 512-447-4440; website: http://www.mercurymambo.com

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