5.25 State of Treating

May 25, 2022
State of Treating 2022

2021 Review and 2022 Outlook
Presented by:
Anne‐Marie Roerink | 210 Analytics
1
Presented by:
The State of Treating
2022
• Robust 2021 Annual Review
• Interwoven with State of Treating

• Consumer survey
• November 2021
• 1,525 consumers
• Combined with real‐life overlay by IRI
• Made possible by
Blommer Chocolate Company
2
State of Treating 2022©
1
May 25, 2022
2021 brought inflation‐driven dollar

gains for food retailing
2016‐2021
Total food/beverages dollar and unit growth
2016 2017 2018 2019 2020 2021
Dollar
growth +1.5% +1.3% +2.0% +2.2% +13.8% +1.8%
Unit +0.5% ‐0.3% +0.4% +0.2% +8.3% ‐3.3%

growth
Source: IRI, MULO+C, Total store 2016‐2021 vs. YA
3
CMG Candy was a powerhouse in 2021

All three categories contributed to growth
$29 billion
2021 sales Vs. ‘20 Vs. ‘19
Chocolate Non‐chocolate Gum/mints

+10.2%
Dollars
+3.5%
Units
$16.7B $9.1B $3.1B
+2.0% +9.2% +14.5% +3.8%
Volume +14.1% +17.9% ‐19.6%
Source: IRI, MULO+C, 52 w.e. 12/26/2021
4
2
May 25, 2022
However, versus pre‐pandemic,

candy trails total food/beverages
Dollars vs. 2019 Units vs. 2019
20.0%
Performance trends 16.3%
are highly affected by: 15.0%
 Consumer engagement
10.4%
 The 2020 performance 10.0%
that sets the baseline

for growth 5.0% 3.9%
 Level of inflation
 Manufacturer ability to 0.0%
Total food & beverages Total CMG
meet demand ‐2.6%
‐5.0%
5
Click & collect drive online sales

While a growth area, online drives ±10% of sales Why?
Confectionery e‐commerce 51% Convenience
Chocolate Non‐chocolate Gum/mints 39% Free shipping
39% Items I can’t find locally
36% Better prices/specials
31% Part of grocery order
27% Gifting
$1.8B $1.2B $245M
+17.0% +26.3% +13.7%
$3.2B
+20.0% = +$539M
6
3
May 25, 2022
Assortment contraction
Availability in the light of supply chain challenges
versus mood being the #1 purchase driver
2021 | Average items/store
Items Change vs. YA
884 ‐3.2%
500 ‐0.9% 7
124 ‐5.8%
7
+9.2% Chocolate stuns again

Increases over last year’s records
Size and growth of chocolate subcategories

50.0%
Sugar free
40.0%
$257M | +34.3%
30.0%
Bag/box/bar (bbb)
>3.5 oz Seasonal Premium
20.0% $6.5B | +10.1% $3.3B | +13.5% $1.8B | +13.0%
10.0% Gift boxes

$342M | +14.8%
0.0%
Bbb <3.5 oz
$5.0B | +6.7% Snack size Novelty
‐10.0% $1.2B | ‐1.4% $7M | ‐3.3%
8
4
May 25, 2022
+14.5% Non‐chocolate retakes the lead

Gains for all segments

35.0%
Novelty
30.0%
$1.1B | +29.6%
Chewy
25.0%
$4.6B
20.0%
+14.9%
Hard/rolls
$597M | +12.4% Caramel/taffy
15.0%
$119M | +10.8%
Specialty nut
10.0% Total seasonal $354M | +5.9%
$1.3B | +13.5%
5.0% Sugar‐free
Plain mints $97M | +7.3%
0.0% Licorice $349M | +5.1%
$513M | +3.5%
‐5.0%
9
+3.8% Gum/mints stage a comeback

Move ahead of 2020 levels

9.0% Breath fresheners
8.0% $601M | +7.1%
7.0%
6.0% Sugarless gum

5.0% $2.2B | +3.5%
4.0%
3.0%
2.0%
Regular gum
$372M | +0.4%
1.0%
0.0%
‐1.0%

10
5
May 25, 2022
Household penetration Annual trips
98.4% 34.6
+0.0% +4.0%
‐0.4% ‐2.8%
Dollars per trip Annual $ per buyer

$6.32 $219
“I find
myself picking up
some chocolate instead of
stopping by the bakery. I
+5.7% +9.9% mean, who wants to pay
+14.1% +11.0% $3.95 for one supermarket
cupcake? These prices are
Vs. ‘20 Vs. ‘19 out of control.”
Source: IRI, All Outlets, Household Panel 52 w.e. 12/26/2021
11
Strong performance across channels

2020 baseline does influence the 2021 growth percentages
Dollars — chocolate and non‐chocolate
Mass Grocery Drug C‐Store Club Dollar E‐Comm
Dollars +12% +7% +9% +13% +19% +6% +19%
Units +4% +0% +2% +6% +13% +2% +13%
Source: Total candy – Dollar sales w.e. 12/26/2021
12
6
May 25, 2022
Reasons for buying

different sizes, brands Experimentation fuels sales
or types Candy category drives high levels of innovation
Innovation share of $ sales
2019 2020 2021
8.0%
7.4%
7.0% 6.8%
6.0%
43% 6.0%
5.0%
5.2%
4.3%
Trying 4.0% 3.8% 3.8% 3.7%
3.4%
something new 3.0%
= 2.0%
2.2% 2.1% 2.2%
Encourage 1.0%
experimentation
0.0%
Non‐chocolate Chocolate Breath fresheners Gum

13
The marketplace also prompted change

Amid significant supply chain disruption, out‐of‐stocks and inflation were prime drivers
Reasons for buying different sizes, brands or types
“I love these
peanut butter candies
51% but my store hasn’t
had any in weeks. Just
29%
like half‐and‐half, Looking for
Preferred size,
cream cheese and
type or brand toilet paper.” something on sale
was out‐of‐stock or less expensive
14
7
May 25, 2022
An affordable treat 89%

Despite inflation, candy maintains its image Perceive groceries as more
expensive
Increase in the price/unit vs. 2020: 55%

Groceries Chocolate Non‐chocolate Ice cream Perceive chocolate and candy
are more expensive
$3.30 $2.48 $1.99 $3.88

+4.6% +6.9% +6.5% ‐1.3%
Cookies Snacks Bakery
$3.01 $3.33 $5.14

+5.6% +5.6% +4.0%
15
Promotions are not as deep

And have the biggest impact on price
Mix Shift / Increased Change in Total Price /

Premiumization Everyday Price Promotion Volume Change
1.4% 2.5% 5.0% +8.9%
2.5% 3.4% 5.6% +11.5%
1.2% 2.4% 3.6% +7.1%
16
8
May 25, 2022
Promotional activity is declining

and returns are lower
Change in volume sold on merchandising vs. YA
Change in volume lift vs. YA
‐6.0 ‐6.3
‐27.6
‐29.8
17
Even so, incrementality remains key

Seasonal spikes drives an important part of the business
Total CMG base and incremental dollars by week
Base Dollar Sales Incremental Dollars
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

18
9
May 25, 2022
6‐wk Valentine’s Day season
$3.2 billion
$4.6B 11.1% of sales
7‐wk Easter season
Seasonal candy $4.4 billion

$ +13.5% | +14.1% 15.2% of sales
Lbs +4.7% | ‐1.7%
Vs. ‘20 Vs. ‘19 8‐wk Halloween season

$5.0 billion
17.3% of sales
$21.1B 8‐wk End‐of‐Year season
$5.6 billion
Everyday candy 19.0% of sales
$ +10.5% | +16.7%
$18.1 billion or 62.6% of sales
Lbs +5.5% | +6.0%
Source: IRI, MULO+C, 6 w.e. 2/21/21; 7 w.e. 4/11/21; 8 w.e. 10/31/21; and 8 w.e. 12/26/21
19
Addressing usage Extending usage occasions

occasions Beyond consumption, sharing and other
usage occasions can drive second purchases
Consumer participation in usage occasions across the Big 4

Confectionery Holidays
43%‐57% Candy bowl
30%‐50% Baking
25%‐48% Decorating
Ranges reflect
engagement levels across
the four holidays
19%‐28% Crafting
20
10
May 25, 2022
Valentine’s Day
Both brick‐and‐mortar and online
channels drove growth 80%
Celebrated
Chocolate & non‐chocolate in 2021
$2.8B +2.9% 87%

2019
$391M +85.5%
$3.2B +8.7%

21
Easter
Online drove all growth
78%
Celebrated
$4.2B +11.8% 86%

2019
$466M +7.7%
$4.6B +11.4%

22
11
May 25, 2022
Halloween
Strong in‐store sales with a big online
boost 85%
Celebrated
$4.8B +12.1% 90%

2019
$451M ‐1.8%
$4.3B +10.8%

23
Winter holidays
Strong in‐store sales with a big online
boost 88%
Celebrated
$4.9B +13.2% 91%

2019
$686M +11.5%
$5.6B +13.0%

24
12
May 25, 2022
Celebrate with candy There are many more!

some or all years Secondary seasons and candy moments
Road trip Back yard BBQ Amusement park
35%
Mother’s Day
43% % do 91% 89% 79%
Mother’s 83% 65% 65%
28% Day % include candy
sometimes/always
Father’s Day
22% Pool day Beach day Hike/walk Camping
Summer holidays
77% 89% 72% 28%

18% 57% 65% 58% 76%
Super Bowl CandyUSA.com/NCM
25
2.
Celebrate secondary and self‐invented holidays
From graduation, Mother’s/Father’s Day to s’mores and National Candy Month
26
Pictures: 210 Analytics
13
May 25, 2022
The in‐store experience Consumer‐

rating plateaued vs. 2021 suggested
Keeping candy an experiential category improvements:
is crucial as ±90% of sales are in‐store
 Addressing
2015 Candy aisle report card 2022 pricing and
promotions
9% I love it, it’s just like a candy store 31%
 Variety matters
It’s okay,
49% 45%  Engage the senses
but nothing exciting or memorable
It’s really no different than  Consider various
42% 24%
the bread aisle production claims
 Optimize
“I love my candy shopability
aisle. I want to
live in it.”
27
2021-2022
Category
Performance
Drivers & Growth
Opportunities
28
14
May 25, 2022
Areas of category growth & opportunity

1. Inflation is likely to further boost dollar sales
2. Re‐engagement with holidays and celebrations
3. Social media can inspire and drive purchases
4. E‐commerce is a continued area of growth
5. Item growth trends
6. Production and ingredient claims
7. Consumer segmentation: explaining growth
8. Emotional wellbeing: candy’s role as a treat

29
1.
Price per unit 2019‐February 2022
Package price increases are less dramatic due to smaller sizes
Candy (chocolate + non‐chocolate) price per unit and change vs. YA
$3.00 14.0%
$2.72 $2.69
$2.53 11.9%
$2.42 12.0%
$2.50 $2.34
$2.30 $2.29 10.4%
$2.15 $2.17 $2.21
$2.14 10.0%
$2.00
7.6%
8.0%
7.3%
$1.50
5.8% 5.6% 7.0% 5.8%
5.5% 6.0%
$1.00
3.6% 4.0%
4.0%
$0.50
2.0%
$0.00 0.0%
2019 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 5 w.e. Jan 4 w.e. Feb
30 '22 26 '22
Source: IRI, Integrated Fresh, MULO, 2019‐2/26/2022
30
15
May 25, 2022
1.
Considerations for profitable growth
Price Price Promotional investment

levels forecasting Plan for promo intensity to
Weigh pros and cons Watch price elasticity increase, if supply allows, as
of price increases dynamics and manage shoppers are looking for
and timing of execution inventory tightly deals
Targeted marketing Innovation/renovation

The Who behind candy growth Focus on innovation and equity
is changing; stay relevant and building benefits to support
resonate with communications higher prices
31
2.
(Re)‐engagement with the seasons
Primary, secondary seasons and candy moments
$100M
Opportunity in recouping lost household
penetration and trips in Valentine’s Day,
Easter and Halloween vs. pre‐pandemic
Source: IRI National Consumer Panel, All Outlet, Chocolate + Non‐Chocolate / Valentine’s
(6 WE 2.21.21); Easter (7 WE 4.11.21;Holiday (7 WE 12.26.21)
32
16
May 25, 2022
2. 3.
Leverage virtual ideation and
cross‐merchandising
Ability to drive searches by occasion, brand or activity
33
Pictures: 210 Analytics
3.
Opportunity in linking online
inspiration to the online purchases
240M Active monthly usage | % of total

Facebook
77% Facebook
Active social media
users in the U.S. 70% YouTube
53% Instagram
36% Twitter
2h 7min 31% TikTok
Average daily time on 28% Snapchat
social media 28% Pinterest
34
17
May 25, 2022
3.
High candy engagement
Candy is a social media darling
 Elf on the Shelf candy
inspiration!
 I like to give personalized

gifts instead of just a bar
66%
or box of chocolate. Of active social media users have searched
Instagram has tons of for confectionery‐related content
inspiration.
53% Gifting ideas
 Fun teacher appreciation
week gifts. We need 52% Baking with chocolate/candy
s’more teachers like you! 38% Serving/presentation ideas
 I threw a sixties party and 36% Decorating with candy
researched a candy buffet
with retro candies 36% Crafting with candy
…
35
4. Household penetration
Online remains growth area

Winning from the first click 15.2% | +16.7%
 You don’t have the fun

displays to remind you. Annual trips/buyer
 Candy is more of a spur of

the moment thing for me.
61%
4.9 trips | +12.8%
Bought at least some groceries online in 2021
 It’s not on my radar if I
Dollars per trip
haven’t bought it before.
 It’s fun to browse the

candy aisle and see
what’s new.
49% $9.72 | ‐2.0%
Bought at least some confectionery online Annual $/buyer

 It’s much cheaper at the
dollar store than my Up from 36% last year
online grocer.
$47.31 | +10.6%
36
18
May 25, 2022
4.
Growth in total food e‐commerce
Plus opportunity for candy to close the gap 2022 Outlook
• Continued
Share of food & beverages sold online investments in
digital assortment,
speed of delivery
12.5% and consumer
11.7% 11.5% experience will
9.9% 10.4% 10.3% continue to drive
incremental share
• Heavy users drive
5.8% increased sales,
4.5%
3.3% particularly in
grocery delivery /
pickup
• Immediate need
2017 2018 2019 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2022 e‐commerce
Forecast continues to play a
significant role
Note: Based on 205 CPG categories currently tracked in e-commerce. Estimated 2020 e-commerce share for all CPG categories is 7.8% for edible and 22.3% for
nonedible, accounting for $175B total CPG ecommerce sales. E-commerce data is based on projected receipt-based sample and reported data with varying levels of
granularity and accuracy available. 1. eMarketer U.S. Retail e-commerce Sales Share, by Product Category: % of Total Retail Sales. Source: IRI Omnichannel, data
ending 12/26/21. IRI Strategic Analytics forecasts.
37
Non‐chocolate over indexes

among frequent online shoppers
E‐commerce enthusiasts – All Outlets Dollar Index*
Total Total Seasonal Non‐Seasonal Total

Candy Chocolate Chocolate Chocolate Non‐Chocolate
Seasonal Non‐Seasonal Non‐ Sugar Free

Non‐Chocolate Chocolate Candy
*Dollar Index = E‐Shopping Enthusiast Consumer Segment Product

Dollars/Segment’s % of Population /. Source: IRI Consumer Network Panel 52
w.e. 12/26/21 E‐ShopperLink Segmentation
38
19
May 25, 2022
5.
Pockets of Premium Standup bags

growth chocolate volume sales
$575M Mass +11% +13%

NCA definition of
premium chocolate:
Dollars: +12.5% Food +3% +11%
>$12.85/lbs for 24
months, excluding
novelty and sugar‐
Units: +11.8% C‐store +23% +20%
free
Volume: +10.6% Drug +6% +12%
39
Growing interest in exploring 5.
low‐sugar/no sugar options 73%

Of consumers agree that
they expect there to be
Interested in low/no sugar candy sugar in candy
78%
Say it’s fine to occasionally
44% treat yourself
Sugar‐free chocolate:
1.5% of sales
+34.4%
Sugar‐free chocolate
19% 49% 32% 1.1% of sales
+7.3%
40
20
May 25, 2022
5.
The reasons may surprise you
Managing a medical condition is among the lowest
Reasons for being interested in low‐sugar/sugar‐free “I got used to

eating it when at
49% Managing my sugar intake my grandma’s.
Now I like it
41% Maintaining a healthy weight better than the
39% Better for dental health regular stuff”
38% Wanting to lose weight

35% Feel better about eating sugar‐free candy
….
22% Managing a specific medical condition
41
Better‐for‐you candy 5.
Is there such a thing? Yes, say consumers
Consumers’ definition of “better‐for‐you” chocolate or candy
51% Dark chocolate

36% Small portions
33% Natural
“I’m doing Keto and
31% Sugar‐free/less sugar eating no sugar at all. I
discovered a whole bunch
31% Healthy inclusions of great tasting, sugar‐free
candies and chocolate at
26% No artificial ingredients CVS. Don’t feel like I’m
missing out at all.
Thank you!!”
42
21
May 25, 2022
Better‐for‐you candy 5.
Buy it? Sometimes, say consumers
Buying “better‐for‐you” chocolate or candy, per your own definition
47%
“I think there is such

26% a Ithing,
think like
therereally dark
is such
chocolate or those mini
a thing, like really dark
portions. Personally,
chocolate or those mini I don’t
15%
12% believe in that
portions. premiseIthough.
Personally, don’t
Candyinisthat
believe not premise
about health;
though.
Candyeatisannotorange
aboutinstead.
health; eat
It’s just
an orange something
instead.
Never Hardly ever Sometimes Frequently It’s just yummy.”
something
yummy.”
43
Real rules 6.
Package callouts can prompt interest
Package callouts that

prompt an increased
purchase likelihood:
31%
28%
Real (dairy, fruit, sugar, etc.)
Natural flavors
77%
27% Natural colors Cite 1+ package callouts that
27% All natural
would increase their chocolate/
24% Natural sweeteners
candy purchase likelihood
44
22
May 25, 2022
6.
Sustainability commitments matter
These consumers look for benefits and claims that align to their beliefs
54% 53% 49% 42%

Supporting Giving back to Commitment to Commitment to
special causes the community fair pay, diversity limit packaging
and inclusion waste
“If I see a
display with candy
bars supporting
St. Jude or something
like that, yes, I’ll
absolutely buy
a bar.”
45
Important, but… 6.
All is relative when bringing in price, mood & brand
Importance of sustainability (people, planet and community) in relation to

price, brand and mood
Gen Z
25%
23% 22% 1. Mood (30%)
18% 2. Sustainability (24%)
Price (24%)
12%
Boomers
1. Brand (23%)
2. Mood (21%)
Mood Price Brand Sustainability AllAll
four4 equally
equally …
4. Sustainability (6%)
46
23
May 25, 2022
6.
Surround sound
From package label to social media
Preferred way(s) of learning about a

brand’s practices and commitments
Facebook
Gen Z 47% Package label
1. Social media 38% Brand’s website
2. Store’s website 32% Social media
28% Store’s website
Boomers 25% In‐store signage
1. Package label
2. Brand’s website
47
Source: IRI, Total Outlets, chocolate + non‐chocolate, 52 w.e. 12/26/2021

Balancing current 7.
Contribution to every $100 spent on candy

spending with future
wants and needs
Millennials Gen X
2021 share of $ growth
$22 $31 and growth rate vs. +11.0% average
31% Millennials (1.4x)

33% Gen X (1x)
Boomers 24% Boomers (0.9x)
Seniors
$37 $9
48
48
24
May 25, 2022
There are many candy 8.
moments for a reason

The importance of emotional well‐
being creates a special place for treats
72%
78%
Believe it is
perfectly fine Physical Emotional
to occasionally health well‐being
treat with
chocolate or
candy
Physical health and emotional well‐being are interconnected

49
49 State of Treating 2022©
2022-2026
Forecast
50
25
May 25, 2022
Continued growth expected

Euromonitor predicts a 2% CAGR 2021‐2026
Projected Projected
2022 thru 2026*
Total $38.3B $40.7B

$21.5B $23.0B
$13.3B $13.8B
*Includes inflation $3.5B $3.8B
Source: Euromonitor, data pulled April 4, 2022 | constant 2021 prices
51
A world of opportunities
1. In an omni‐channel world, 2. Capitalize on continued 3. Convert in gifting and the

impress in store growth in e‐commerce many other occasions
4. Underscore candy’s role in a 5. Celebrate all the seasons 6. Narrow the gap between
happy, balanced lifestyle and create your own inspiration and purchase
7. Have fun with social media. 8. Be transparent in all 9. Proactively address

Be the next viral trend! areas of sustainability economic pressure
52
26
May 25, 2022
The State of Treating 2022

Questions?
• Download a copy of the full report

• CandyUSA.com
Contact me any time!

Anne‐Marie: aroerink@210analytics.com
Or find me on LinkedIn
53
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May 25, 2022

State of Treating 2022

• Interwoven with State of Treating

• Combined with real‐life overlay by IRI

2021 brought inflation‐driven dollar

2016 2017 2018 2019 2020 2021

Unit +0.5% ‐0.3% +0.4% +0.2% +8.3% ‐3.3%

CMG Candy was a powerhouse in 2021

Chocolate Non‐chocolate Gum/mints

However, versus pre‐pandemic,

that sets the baseline

Click & collect drive online sales

2021 | Average items/store

Items Change vs. YA

Source: IRI, MULO+C, 52 w.e. 12/26/2021

+9.2% Chocolate stuns again

Size and growth of chocolate subcategories

10.0% Gift boxes

+14.5% Non‐chocolate retakes the lead

Size and growth of chocolate subcategories

+3.8% Gum/mints stage a comeback

Size and growth of chocolate subcategories

6.0% Sugarless gum

Source: IRI, MULO+C, 52 w.e. 12/26/2021

Household penetration Annual trips

Dollars per trip Annual $ per buyer

Strong performance across channels

Dollars — chocolate and non‐chocolate

Mass Grocery Drug C‐Store Club Dollar E‐Comm

Dollars +12% +7% +9% +13% +19% +6% +19%

Units +4% +0% +2% +6% +13% +2% +13%

Source: Total candy – Dollar sales w.e. 12/26/2021

Reasons for buying

Source: IRI, MULO+C, 52 w.e. 12/26/2021

The marketplace also prompted change

Reasons for buying different sizes, brands or types

An affordable treat 89%

Increase in the price/unit vs. 2020: 55%

$3.30 $2.48 $1.99 $3.88

Cookies Snacks Bakery

$3.01 $3.33 $5.14

Promotions are not as deep

Mix Shift / Increased Change in Total Price /

1.4% 2.5% 5.0% +8.9%

2.5% 3.4% 5.6% +11.5%

1.2% 2.4% 3.6% +7.1%

Source: IRI, MULO+C, 52 w.e. 12/26/2021

Promotional activity is declining

Source: IRI, MULO+C, 52 w.e. 12/26/2021

Even so, incrementality remains key

Total CMG base and incremental dollars by week

Base Dollar Sales Incremental Dollars

Source: IRI, MULO+C, 52 w.e. 12/26/2021

6‐wk Valentine’s Day season

7‐wk Easter season

Seasonal candy $4.4 billion

Source: IRI, MULO+C, 52 w.e. 12/26/2021

Addressing usage Extending usage occasions