American Confectioners Look for Sweet Success in New Candies : Food: Product innovation--even things as seemingly improbable as a tasty, low-fat candy bar--is imperative for survival.

Two years ago, Hershey Foods Corp. test-marketed a low-cal, low-fat chocolate bar but quickly withdrew it.

“Consumers didn’t like the taste,” said Kenneth L. Wolfe, Hershey chairman and chief executive.

This year, though, the biggest U.S. candy producer intends to give it another try. “In the long run, we expect people will want reduced calories more than fat,” Wolfe said.

Product innovation--even things as seemingly improbable as a tasty, low-fat candy bar--is imperative for survival in the confectionery industry. Last year, nearly 1,050 new candies were introduced, up from about 1,020 candies in 1993, according to New Product News.

Candy is America’s favorite snack, accounting last year for 24.3% of the $34.5 billion snack-food industry. By contrast, popcorn accounts for just 3.5%, potato chips 7.5%, and cookies and crackers 22.6%. Almost 90% of Americans eat candy, buying it 24 to 30 times a year--often on impulse.

The U.S. market for candy grew almost 5% last year as Americans downed a record 22.3 pounds of candy per capita. With candy consumption rising every year, Americans’ only virtue seems to be their penchant for “portion control.” Packages of minis now far outsell conventional sizes in the United States.

Hershey--with its Reese’s peanut-butter cups, Kit Kat, Almond Joy, and Mounds candy bars, York peppermint patties, and Hershey Kisses--has about 34% of the market. Arch-rival Mars Inc., the biggest seller throughout the 1970s, has 26%, while Swiss Nestle SA has 9% and E. J. Brach has 7.5%. Regional brands account for more than 20% of sales.

(Hershey also markets Luden’s, Peter Paul and Cadbury products, and Ronzoni, San Giorgio and other pasta brands.)

Most people carry their childhood chocolate preferences with them into adulthood. “The Swiss, for example, prefer Lindt, but in the U.S., Hershey’s milk chocolate is the standard,” said Wolfe.

With so many products out there, companies have had to turn increasingly to high-profile ad campaigns. The company waited 58 years, until 1970, to start advertising; now its spends more than $100 million a year. Hershey has accounts with WPP Group’s Ogilvy & Mather and Omnicom Group’s DDB Needham.

“Candy sales respond to advertising,” said Robert Shelton, director of marketing at Hershey Chocolate U.S.A. “Our most successful commercials show the brand name and package, the product and people eating it, and the ingredients. The message has to remind people how good it tastes, entertain them, break through clutter and be in front of consumers whenever they make a decision.”

Last year, Hershey tried to capitalize on the equity of its Reese’s peanut butter cups, just behind Mars’ Snickers as America’s best-selling candy product, by teaming with General Mills Inc. to produce Reese’s Puffs cereal. Wolfe said co-branding is an effective way to expand Hershey’s presence to other aisles in the supermarket.

The Hershey, Pa., company also said it is introducing a Cookies ‘n’ Creme candy bar this year, mixing chocolate chips and white chocolate. One in 10 Americans prefers white chocolate to milk or dark chocolate. The company is hoping to duplicate the success of its Symphony candy bar, launched to win over the 20% of Americans who favor dark chocolate.

Consumers have had to foot some of the marketing bill. In the past decade, candy prices have been hiked visibly three times--and invisibly several more times, as weight has been chopped. A candy bar, which cost a nickel a century ago, now sells for 45 cents on average.

Men eat more candy than women, and 20% of buyers account for over 60% of volume. Younger people eat more candy than older folks. Kids savor things like Rolos, Gummie Bears, and Twizzlers new Pull ‘n’ Peel licorice. Teens like Reese’s peanut butter Nutrageous, a king-sized candy bar to fill them up.

Wolfe said people eat candy as much for its taste as for emotional reasons, which may explain why people tend to eat more candy in cold weather than hot and on Fridays more than any other day of the week. Halloween, Valentine’s Day, Mother’s Day and Easter mark the high point on the candy calendar.

Candy is eaten all day, but the peak time seems to be mid-afternoon, when 37% of candy products are eaten. Another 16% of candy is eaten as lunch.