Is Tootsie Roll Losing The Candy Aisle Battle Because It’s Stuck In The Past?

Image courtesy of allistrations

You may not know how many licks it takes to get to the center of a Tootsie Pop lollipop, but anyone who’s ever gone trick-or-treating knows Tootsie Roll well. That could be a problem for the candy company, according to a new report that says the confectioner is relying too much on nostalgia at the cost of innovation.

In a report titled “All Tricks, No Treats,” Spruce Point Capital Management predicts that Tootsie Roll Industries stock could drop by 25-50% because the company is stuck in the past and isn’t innovating as much as its competitors.

Spruce Point says the more than 100-year-old company’s brands — including its namesake candy as well as Andes mints, Dots, and Sugar Daddy — are “withering along with its core customers.”

“In Spruce Point’s opinion, Tootsie Roll’s historical success is tied to consumer nostalgia around select products and children’s craving of sugary snacks,” the report said.

Sales haven’t grown in six years, claims Spruce Point, estimating that Tootsie Roll is losing market share.

“Our channel checks reveal it uniformly receives the worst product placement on the shelves” especially during the Halloween season, Spruce Point says.

For example, it found that Tootsie Roll products were often on the bottom shelf at stores like Target, Duane Reade, and Walmart — while other brands enjoyed eye-level placement — and absent from checkout counters — where impulse purchases like candy often happen.

And while competitors like Hershey have experimented with “healthy and indulgent snacking,” Tootsie’s products “fail to address consumer demand for healthier products.” Instead, Spruce Point says the company has stuck with going after the younger set, resisting “industry self-regulatory movements” to limit marketing to children.

This, despite the fact that Tootsie Roll’s labels show it has shrunk its serving size, “an implicit acknowledgement consumers are eating less candy,” Spruce Point notes.

We’ve reached out to Tootsie Roll for comment on Spruce Point’s report, and will update this post if we receive a response.