Amid the pandemic, the western world can be divided into the shiny-happy whole foods folk and those seeking to alleviate the stress with comfort food or a sugar fix.

“The change in customer behaviour over such a short space of time has been profound,” says Candy Club director Andrew Clark.

On that note, Candy Club is doing a brisk trade in supplying premium confectionery to US retailers, with the coranavirus plague and widespread civil unrest fuelling consumers’ appetites for Sour Pink Cadillacs, Gummy Dinos and Blue Razz Laces.

After listing in February 2019 with an online business-to-consumer model, Candy Club changed to focus on the business-to-business market. Under both models, the company sold exclusive in the US, hence the ‘candy’ moniker.

Unlike so many retailers, Candy Club is not so much a story of online migration but tapping the physical presence of non-food retailers.

While grocers have perfected the art of having chocolate and lollies in the checkout lane, the company realised that the similar space at non-food retailers was being underused.

“We are pursuing a white space category where candy is not the core product,’’ says Clark. “Companies that would never think to have sold candy are now making incremental sales and profits.”

As of the end of June, the company had signed up 4,500 customers, compared with 2,000 at the end of December. Examples are fashion house Polo Ralph Lauren, Barnes & Noble and gift shop Hallmark.

The number of outlets stocked by Candy Club has risen from 4,500 to 8,800.

Management expects to be serving 10,000 clients over 15,000 outlets by the end of calendar 2020.

“We are only a pimple on a pumpkin in terms of the size of the US market,” Clark says. “The company would barely register on industry data because it is so small.”

In a “remarkable” second (June) quarter, the company boosted turnover by 66% to $US2.36 million ($3.27m), with the business-to-business component surging 128% to $US1.6m

The company lost $US400,000 but expects to become profitable in the current quarter.

A former executive with the likes of Cadbury Schweppes and Nestle, Clark says the company has no real ASX comparator given its focus away from mass market lines such as $1 chocolate bars.

For this reason he’s keen to avoid comparisons with Yowie Group (YOW), even though both companies operate fully or mainly in the US. Yowie graces the shelves of Walmart, the world’s biggest retailer.

The Perth-based Yowie saw June quarter sales slump 35% to $US1.95 million, although business picked up in the month of June.

The company has been subject to a prolonged battle for control involving infamous raider Nicholas Bolton – the point of interest not being sweet toothed Americans but the company’s $US11.8 million cash stockpile

A promised 4 cents a share capital return will take care of half of this cash stash. In the meantime, Yowie has a market cap of a mere $7.8m.

Tim Boreham edits The New Criterion ([email protected])

Disclaimer: Under no circumstances have there been any inducements or like made by the company mentioned to either IIR or the author. The views here are independent and have no nexus to IIR’s core research offering. The views here are not recommendations and should not be considered as general advice in terms of stock recommendations in the ordinary sense.