Confectionery: Interview: Jelly Belly eyes international growth
Jelly Belly uses pop-up stores to introduce product to Chinese consumers
Jelly Belly Candy Co., the privately-owned US confectioner famed for its jelly beans, has, in the last decade, expanded rapidly overseas.
A decade ago, the US business and its jelly beans, said to be a favourite of President Reagan, did business in 20 markets. A solid international presence, yes, but, over the last ten years, Jelly Belly has grown its global operations significantly.
"We are now close to 80 countries," Sharon Duncan, vice president of Jelly Belly's international operations, tells just-food.
Jelly Belly makes "roughly between 25% and 30%" of its sales outside the US, a proportion that has jumped. "It's probably tripled [in the last five to ten years] as a percentage," Duncan says.
Speaking to just-food at the ISM 2014 show in Cologne, Duncan says Jelly Belly's newest markets are Oman and Bahrain. Typically, when the company enters a new market, it focuses on its core jelly bean range.
After a period of time, Jelly Belly then introduces more of its product portfolio, which also includes chocolate-covered malt balls, candied almonds and Sunkist confectionery, which the company describes as "bursting with natural flavours and free from artificial colours".
Duncan says the broadening of Jelly Belly's portfolio, as well as moving into more markets, has boosted the company's sales.
"If we look at our oldest market, which is the UK, it has taken in everything and continues to take in a broad range," she says.
Jelly Belly, launched in 1976, has, Duncan claims, has become a "lifestyle brand" for some consumers. In the UK, the company's largest market, Jelly Belly beans are sold in fashion chains like Top Shop and River Island.
However, the company's moves to broaden its range has been prompted by growing consumer interest in natural products, or lines without artificial flavours.
Consumers, Duncan says, like the "wow flavours" in the Jelly Belly range, some of which need to be produced using artificial flavours.
Nevertheless, she acknowledges there is a "trend" towards more natural lines and Jelly Belly has developed a line - Be Naturals - to meet that demand. "They are all natural flavours and colours," she says and the range has gained listings in "probably five or six markets, particularly in Europe".
Jelly Belly's Sunkist range and its line of dips also offer choice to consumers that want natural products. "We have a Sunkist line that is fruit pectin - all natural colour and flavour - and, within the dips line, out of those five SKUs, all are natural colour and four are natural flavours. What the consumer needs and wants, they've got the choice."
That said, Duncan is unsure whether the rising interest in natural flavours and colours would supplant the level of demand for the core line and she says the company is unlikely to move more of its portfolio to natural ingredients.
"We really don't. There are certain markets that require it - and many times it is the trade that requires it, not the consumer," Duncan claims. "We don't see a lot of people changing from the original Jelly Belly into a natural product line. Where we see our natural product line is gaining new business."
She adds: "We offer the alternative. We understand there are some people that don't want to see artificial colours. That's ok. We can do it. You just have to understand there's a trade-off sometimes between flavour and colour."
The moves into Oman and Bahrain underline the importance Jelly Belly, like a number of snacks and confectionery manufacturers is placing on the Middle East. However, for different reasons, Jelly Belly is also focusing on its businesses in Canada and China.
Jelly Belly has just set up a direct subsidiary in Canada, a country that "bounces between" being the company's second- and third-largest market, Duncan says, after seeing sales in the country stagnate. "We've been using a distribution network up there and we're now going into our own direct sales and marketing, so that's a focus for us to grow faster than we have been and penetrate deeper," she says.
The company, Duncan admits, has struggled to grow its business in both the supermarket and speciality channels in Canada and hopes taking back control of the business will help. "We've been using a distributor up there since its inception, probably for the last 25 years. We get it up to a certain point of growth but then it seems we have a higher percentage of speciality and we miss on the national side with the grocers and hypermarkets. Then we changed distributor. All of a sudden, that distributor is really good on the national side but all of our speciality starts to decline. We said: 'This is silly, let's just do it ourselves'."
Eighteen months ago, Jelly Belly also set up a subsidiary in China. However, while the short-term aim in Canada is to get the business growing again, in China, the company wants to build on the growth it is seeing.
"We have been dabbling there since 1997. We had a master distributor but who knows Jelly Belly better than us right? We bit the bullet almost two years ago and said: 'The only way we are going to make this work is set up a subsidiary and handle it ourselves. The market is changing so rapidly over there we have got to be on the ground running."
The subsidiary is based in Shanghai but is a national office, with Jelly Belly planning to continue to expand west into China's tier-two and tier-three cities.
"The second- and third-tier cities are really looking for Western brands. They kind of get short changed as everyone wants to concentrate on the first-tier cities, like Beijing, Shanghai and Guangzhou."
When Jelly Belly enters a regional city, it sets up a pop-up store to allow Chinese consumers to sample its products. Building an online presence will also be vital, Duncan says. "Online sales are so important in China to get into those more rural areas as you go west. We are starting our online sales programme as we speak and we will be on the top three online sites like Tymall within the next 30-60 days."
Chocolate consumption in China is growing, a trend that has, for example, prompted the likes of Hershey to up its investment in the country. However, chocolate is not the largest confectionery category in China. Sugar confectionery is the largest part of the market and Duncan says Jelly Belly is confident about its prospects.
"We don't have competition in China - unless you take all of confectionery. There is no-one doing gourmet jelly beans to the level we are. I've seen a couple of people who obviously thought they could do the same thing we do but they don't have the brand identity. The Chinese consumer is not stupid, they want Western brands, they want to be part of that lifestyle - and they want to know that the quality is good," Duncan says.
China, Jelly Belly's fifth-largest market by sales, is "probably within the next two to three years going to be number two or maybe even number one".
Jelly Belly's international ambitions show no sign of easing up just yet.
This latest briefing from just-food on global confectionery analyses some of the key issues facing the sector - and interviews some of the leading players in the sector....
About Confectionery The Confectionery market in the US is comprised of chocolates, sugar confectionery, and gum. In 2013, the Chocolate segment was the leader in the Confectionery market in the US fol...
Confectionery comprises of chocolate, sugar confectionery, and gum. Cocoa and sugar are the raw materials for chocolate and latex is the raw material used for gum. Many new varieties of confectionery ...
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