Small Candy Makers Sell Chocolate Experience

WASHINGTON ( TheStreet) --Halloween may be a celebration of all things spooky, but it's the sweetest time of year for candy companies. The majority of trick-or-treaters will be filling their bags with candy bars made by Hershey ( HSY), Mars and Nestle ( NESN).

But small candy makers have found ways to get in on the action by building a year-round market for their products. The key is to fill a specialized niche that appeals to a specific sweet-toothed consumer.

Overall, Halloween candy represents more than $2 billion in retail sales, making it a crucial sales period. But the candy industry overall has been holding up well all year.

Halloween Winners

"Confectionery sales in the U.S. have increased almost 3% in the past year, very normal sales growth for the industry," says Susan Whiteside of the National Confectioners Association. "This is probably because candy and chocolate are the ultimate affordable luxuries, a little piece of happiness for less than a dollar."

The fact that Halloween falls on a Saturday this year should also mean an uptick in sales compared to last year. "More people will be home to give candy to trick-or-treaters. More community centers and commercial operations will host gatherings during daylight hours and more adults will celebrate with nighttime parties," says Whiteside.

The National Confectioners Association estimates that two-thirds of its members are small businesses. How are they staking a claim to part of that $2 billion pie?

Some use nostalgia and community ties as their main draw. The Georgia Nut Co., based in Niles, Ill., has produced chocolate and nut products since 1945. It's now in its third generation of family ownership. Customers who have grown up with the brand now bring their children and grandchildren to the factory store.

Other companies appeal to the family market by making their headquarters an entertainment destination. The Wolfgang Candy Co. in York, Pa., offers free tours of its factory and runs an on-site candy shop and old-time soda fountain, as well as a museum that showcases vintage candy-making equipment. The factory also holds occasional dance and music performances and children's activities. The company sells an experience that goes beyond chocolate.

Other companies have taken a more high-end route. Scharffen Berger in San Francisco was one of the first companies to market chocolate as a gourmet item in the 1990s. Since then, plenty of other chocoholics have followed its artisanal path.

Chicago-based Vosges Haut Chocolate produces exotic flavor combinations in fashion-worthy packaging to attract sophisticated foodies. Gourmet truffles feature savory ingredients such as paprika or curry powder. Another popular product is a chocolate-covered bacon bar. Vosges' retail stores in Chicago, Las Vegas and New York look like high-end beauty boutiques, with chocolate assortments displayed as if they were luxury perfumes.

Seattle Chocolates has also created a distinct, female-focused identity, with bright, vividly colored packaging and a line of "chick chocolates" that come in rectangular lipstick-sized boxes. Rather than market its products as special-occasion purchases, the company positions them as everyday indulgences, the kind of affordable reward that many stressed-out shoppers crave.

None of these companies aims to take down Hershey. But they've managed to carve niches that appeal to specific demographics. They have the satisfaction of selling a product that makes people happy.

-- Reported by Elizabeth Blackwell in Chicago.

Elizabeth Blackwell is a freelance writer based in Chicago. She is the author of Frommer's Chicago guidebook, and writes for the Wall Street Journal, Chicago, and other national magazines.

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