In a world of food continually striving to be better, either in health or in taste, the confectionery category has picked the two trends of permissibility and indulgence to base its products on.
The trend to remove artificial colours, make the ingredients all natural, add fruit juice and lower calories all feeds into the idea of making sweets more healthy. But, lest we forget, this is confectionery, and there is an equal trend of making it richer, tastier, more indulgent and more of a treat.
Richard Brittle, purchasing director of Hancocks says: “2008 has seen a slow start to the confectionery Features > Business, as is usually expected after strong sales in the last quarter of 2007. Consumers tend to have a period of constraint following excess spending and eating.”
The issues of obesity and competition from supermarkets continue to plague the confectionery industry. However, Hancocks is reporting an 8.5% sales increase for 2007.
Sales of core branded items grew by 15% which was matched by weighout sales, also up 15%. Lesser known brands and own label items in the seasonal sector, mainly Easter and Christmas, grew 21%.
Brittle says: “Looking at the immediate issues, inflation is hitting us hard at the moment, as is the cost of transportation. Imported products have also effectively increased in price due to a fall in the pound some 8% over the last couple of months. However, confectionery has a history of performing well in tougher economic climates as it remains an affordable treat for many. The sales growth of many of our customers only goes to reinforce this fact.
“The majority of the big branded houses have a great deal of NPD and promotional activity planned for 2008 but the lack of a football event this year is a shame as it is always a boost for sales.
“What Hancocks seeks from a supplier is quite simple – competitive pricing, good service, real NPD and investment in the independent sector so that it can continue to compete in the marketplace,” says Brittle.
He adds: “As sugary foods continue to get attacked – which is unjustified as no food is bad, it is simply the amount of it that you eat – the manufacturers continue to reformulate their products. Lite products, sugar free, less fat, more vitamins, removal of HVOs, natural colours and flavourings have all been seen during 2007. Labelling has also improved to include allergen advice and nutritional information.
“Green issues are now being targeted, and efforts to reduce waste and make packaging more recyclable are in full swing.”
According to Hancocks, pick and mix grew massively in 2007. Hancocks saw sales growth of 15% for the weighouts category, and this year has continued in a similar manner. “With the ability to select as much or as little as you like, the category remains popular with children and adults alike. Stands can also be put into many outlets to produce extra sales and profits,” says Brittle.
Brittle reports the gum market as the star of the show for 2007, growing at 16.9% following the launch of Trident. “With most of the growth as a result of incremental sales this is excellent news for the confectionery market and further NPD from both Wrigley’s and Trident during 2008 should help to keep the category buoyant.”
Last year saw the chocolate category moving towards more adult chocolates with Cadbury, Mars and Nestl eacute; all bringing out dark chocolate versions of favourite brands. While the trend towards healthier still continues with chocolate being made more permissible, there is also a strong trend to indulgence and taking some ‘me time’.
According to Nestl eacute; Rowntree it grew by 6% last year, in line with the market. One of its success stories was the KitKat range, with did well across its three variants, two finger, four finger and chunky, in both milk and dark chocolate.
Overall KitKat grew by 10% and within that KitKat two finger grew by 6%, KitKat Chunky grew by 5% and KitKat four finger grew by 27%.
Building on this success Nestl eacute; is launching a new variant in March in the form of KitKat Senses, combining KitKat wafer with hazelnut praline. The new bar is designed to bring more women into both the KitKat brand and snack confectionery. Graham Walker, UK trade communications manager of Nestl eacute; Rowntree, says: “KitKat Senses targets two of the major, long-term consumer trends within confectionery: indulgence and permissibility.
“Consumers have told us they are looking for a confectionery product which offers ‘all the indulgence without the sacrifice’ and KitKat Senses has the credentials to provide the ideal solution. The combination of only 165 calories with a deliciously indulgent product recipe means KitKat Senses makes break-time even better for women.”
Walker comments that 70% of confectionery is bought on impulse and taking advantage of this, and the run up to Easter, Nestl eacute; has filled eggs in Black Magic, Smarties, Milkybar and Heaven. These are in a foil-wrap pack rather than traditional foil as this can keep them fresh and reduces returns.
Nestl eacute; has also seen Milkybar grow by 7% since it changed to all natural ingredients, leaning towards the permissibility trend.
Sharing bags grew by 7.4% and these are useful products to stock on shelf in display outers or hanging on clip strips. They can also be placed in various places in-store, next to wine for example, to encourage impulse purchase, so it is important wholesales have them in stock.
Nestl eacute;’s new brand, Heaven, launched in February of last year, is continuing to do well and is now worth more than pound;10m.
Gabrielle Bond, trade marketing manager of Bendicks says: “Boxed chocolates are increasingly trading up into premium sectors, resulting in premium chocolates now being worth pound;62.3m.”
Looking to develop this trend, Bendicks has developed new products in the form of its Mint Collection. The pack is now bigger and this has increased the selection to 23 mints, including new the Intense English Mint. The new variant uses distinctive mint oil from the Black Mitcham mint plant grown by a local farmer.
Another new product is the Bendicks Bittergingers combining Chinese ginger extract and ginger pieces in fondant in dark West African chocolate.
Bond adds: “Valentine’s Day and Mother’s Day were worth pound;59.5m in 2007, an increase of 4% across the previous two years.” She also highlights Easter and Father’s Day as key occasions. “The end of the school term is seeing strong growth in sales of token gifts. Bendicks already offers a number of suitable gifts for teachers including Mingles 150g boxes, Chocolate Classics and Bendicks Bars.”
Bendicks has also added to its Werther’s Original range with a sugar free variety which is suitable for diabetics. Bond says: “The Sugar Free variant will meet the demands of new and loyal consumers who are looking for the same delicious creamy Werther’s Original Butter Candies taste in a sugar free variant.”
According to Cadbury Trebor Bassett, confectionery has experienced consistent growth in the last year driven by chocolate and gum making it a pound;4.2bn category and the impulse channel plays a vital role in sustaining a strong performance within the category, accounting for 42.2% of total sales.
Wispa was brought back in October of last year and Cadbury says it added an incremental pound;7m of value to the category.
Kate Harding, trade communications manager of CTB, says: “The limited edition re-launch of Wispa – prompted by the demand from loyal fans who used social networking sites to petition for its return – proved hugely successful. The consumer response to the nostalgic 80s favourite has been overwhelming and proved that most successful single bar launch of last year.”
Cadbury says the wholesale channel plays a crucial role in the success of the confectionery category and Cadbury has a 32% share of the impulse channel. Harding says: “We will be focused on doing everything necessary to grow the category; fewer, bigger and better promotions, original marketing campaigns, improved merchandising solutions and strong sales support.”
Harding adds: “It is important to keep core confectionery ranges fully stocked at all times. Wholesalers should flag the confectionery category with key brands such as Cadbury Dairy Milk, Maynards and Bassetts. Dual features have been proven to deliver big sales increases in depot, particularly if merchandised within a high footfall area. Positioning sugar hanging bags near large block chocolate provides an option for retailers looking to stock the sharing area of their store. Cadbury advises wholesalers to site chocolate within the main confectionery section of the depot. Strong point of sale that enhances the shopping experience for retailers can be used to drive impulse sales.”
Last year Green Black’s revamped its range of large block chocolate bars, upgrading packaging, changing flavours, dropping formats and aiming to increase the accessibility of the brand to provide more entry points for new consumers. The 150g bars have been discontinued and the three most popular Butterscotch, Cherry and Ginger are offered in the 100g core range. The packaging has been updated with the cocoa percentage on the front of each bar. Jamie Ewan, senior brand manager of Green Black’s, says: “As consumers become more educated about premium chocolate, they’re increasingly interested in the percentage of cocoa in a bar as a part of their purchasing decision. Green Black’s popularised dark chocolate is made with 70% cocoa solids in the UK, so it’s fitting that we’re now leading the way in displaying cocoa percentage across dark, milk and white chocolate bars.”
“We’ve also made the difference between variants much clearer. Many consumers aren’t aware that we make milk chocolate, and the new packaging will make it easy for them to identify the range of milk bars on the shelf.”
Last year also saw the launch of organic chocolate gift boxes The Assortment, The Prestige Assortment, After Dinner Mint Chocolate Leaves, After Dinner Chocolate Squares and The Miniature Bar Collection.
This year Green Black’s are launching Butterscotch Mini Eggs, Butterscotch Egg with Mini Eggs and a Luxury Milk chocolate egg with the Miniature Bar Collection for Easter.
Gemma Barton, senior brand manger of Green Black’s, says: “Butterscotch is one of our biggest sellers in large block, and it makes sense to share this success with our Easter range. The flavour provides an accessible entry point for consumers who enjoy sweet milk chocolate to try the more intense taste of Green Black’s for the first time. Easter encourages trial from consumers trading up to premium brands like ours anyway – it’s therefore a perfect time of year to introduce the flavour to our seasonal gifting range.”
Mars Snackfood says that the wholesaler and cash and carry channel is missing out on pound;1.13m sales of confectionery per year by failing to offer the products their customers want because of out of stocks. Mars advises reducing the number of facings given to slower selling lines, and maximising those given the best sellers as this can increase their everyday chocolate sales by 4%. If the range in the depot is over complex the retailer will struggle to find the lines they are looking for. In addition, depot managers will find it difficult to keep fast sellers well-stocked and retailers will often leave empty handed.
In 2007 Mars launched Mars Planets which, according to Mars, was its biggest launch for 2007 and has become the biggest bitesize category launch ever, adding over pound;15m incremental sales to the bitesize category.
Snickers TV adverts saw Mr T telling viewers to ‘get some nuts’ while a Galaxy Smooth Dark variant was added to the range. Galaxy Mistletoe Kisses were added at Christmas, backed by TV advertising.
Mars will be introducing ‘Be Treatwise’ labelling across the Easter 2008 range. All shell eggs will be labelled on back-of-pack, and the self-eat products such as mini and filled egg pack, on the front-of-pack.
According to Ferrero, Ferrero Rocher is the number one gifting box chocolate and has maintained its share of fixture. The 200g box in particular is reported to have shown a strong performance when promoted and it is important that consumers can access the brand at the right price point and in the right place.
Ferrero says the gifting occasion is changing and gifting and sharing are no longer limited to purely formal events. It says, an increasing number of more ‘everyday’ gifting occasions are developing and Ferrero Rocher is the number one gifting boxed chocolate brand year-round.
Ferrero advises focusing on the core range throughout the year, the 200g box, the 300g box the 50g flow pack and the 50g box.
Ferrero has also added to its Kinder range with the Kinder Bueno Eggs. Sarah Ingram, impulse sales director of Ferrero, says: “We’re excited about Kinder Bueno Eggs, offering young adults aged 16-30 a ‘little bit of what they fancy’. The great thing about these mini eggs is that they are not just specific to Easter and will sell throughout the spring season.”
Ferrero’s main Kinder offering the Kinder Surprise eggs continue to do well. It is the second largest standard filled egg and is an all year product, while, obviously, it has an affinity with Easter. Ferrero says the brand grew by 173% last year through full price display, and the single eggs grew by 4% last year.
Ingram adds: “Kinder Surprise has a huge following and parents particularly love the fact that they are able to offer their kids a permissible treat.”
Mintel says that most areas of the sugar confectionery market are fairly stagnant, and the future is somewhat uncertain as it faces up to an increasingly restricted core consumer base.
Primary considerations will therefore be achieving the balance between health and reassurance for adults, while retaining the fun and treat factor for both adults and children.
According to Wrigley, the mouth freshening category is worth pound;395m, growing by 8.6% on 2006, and the chewing gum sector is currently growing three times faster than total confectionery. The chewing gum category is currently worth pound;276m up 15% since last year, with Wrigley achieving 4.2% growth.
Alexandra MacHutchon, communications manager of Wrigley, says: “Innovation is the key factor driving the chewing gum category. The Wrigley Company prides itself on its approach to innovation and being the first to launch new product and packaging concepts. In fact, a third of Wrigley sales come from products less than five years old with sugar-free continuing to be a key focus, responding to the vast amount of consumers who want a healthier option.”
Last year saw the launch of Extra Fusion, designed to deliver breath freshening with a fruit flavour. The range included Spearmint with Melon and Peppermint with Berry. Extra Fusion Tab has three flavours in one Raspberry, Blackcurrant Grapefruit and Orange, Pineapple Banana.
MacHutchon says: “We are extremely pleased with the addition of Extra Fusion, an exciting twist to the Extra brand, retailers should stock up to ensure they cash-in on this exciting new profit opportunity.”
Wringley says that 30% of its sales are through the independent channel via wholesalers and cash and carries. It advises reducing out of stock as this can increase sales and offer additional profit for the depot.
For 2008 Wrigley is launching a special offer on Extra Fusion: when retailers purchase a flow wrap Extra Fusion five-pack they will receive an Extra Fusion pack free.
Cadbury continues to contribute to the gum category with Trident, and will be starting this year with the launch of Trident Splash Apple Apricot Flavour, Trident Soft Strawberry Smoothie Flavour and Trident Soft Spearmint.
Kate Harding, trade communications manager of CTB, says: “It will be another exciting year for the gum market in the UK. Following the revolutionary launch of Trident last year, CTB will be looking to innovate further to ensure consumers remain interested and engaged by the offering. This innovation will no doubt extend across the flavour and format as witnessed by the launch of Trident Splash Raspberry Peach and the innovative Trident Splash Gum Ball in July last year.”
Soft drinks and confectionery company Unibev, says the prospects for the overall market are generally positive with growth showing in both the Halal sector and in candy floss.
The Sweetzone range of confectionery includes a range of marshmallows, candy floss, lollipops, gummy sweets, jelly sweets and compressed candy.
Ron Smith, wholesale manager of Unibev says: “Although Halal has been more for the retail market there has been an increasing interest from wholesalers in Halal with a number of them being pleased with the performance of the products.”
He continues: “The wholesale channel is a worthwhile market to serve without a doubt. However, more attention is placed on larger retailers and multiples as higher prices can be obtained and the product is directly available to the consumer and does not need to be pushed by the wholesalers. Wholesalers increasingly face competition from retailers and van sales operators on many items – we have found that where items are bulky or heavy wholesalers tend to do better on these as the van sales operators are more reluctant to stock heavy and bulky items.”
Walkers Nonsuch has re-launched its slab toffee range with a ‘retro’ feel for its 2008 gifting.
The toffee is free from artificial colours, preservatives and hydrogenated vegetable oils and comes in three designs: Family Slab, Original Creamy Slab and Nutty Brazil.
The toffee comes with a hammer to break it, with breaking instructions on the back and in a re-sealable bag so that it does not have to be consumed all in one go.
Emma Walker, export sales and marketing manager of Walkers Nonsuch, says: “We need the support in all sectors of distribution – wholesale, cash and carries and more importantly the retailer by way of good positioning on the shelves.
“2008 will be challenging for manufacturers and retailers with raw material costs going through the roof. Retail prices will have to go up but you have to be realistic about what the market can stand.”
Stuart Hancock, UK sales manager of Sweet Cred, says: “Within children’s confectionery, it’s vital to continue to excite and surprise the consumer with an ever changing range of new quality products – this will result is satisfied consumers, and increased sales for retailers, wholesalers and manufacturers alike.”
This year Sweet Cred will be introducing sugar confectionery that is free from artificial flavours and colours. There will be new lines in the Jackpot Bag range and the Moveables toy and sweet combination. Sweet Cred is also introducing no artificial colourings or flavourings into its range of Jackpot Bags.
Hancock says: “The wholesale channel is vital for Sweet Cred, in gaining wider distribution for our products, and wholesalers play a key role in helping us achieve this. The ongoing challenge for retailers, wholesalers and manufacturers is to ensure that products are delivered both in full and on time. Our products perform particularly well for retailers who are supplied though delivered wholesalers and it is up to us as a manufacturer to continue to deliver the focus to their sales forces, to maximise our sales and widen our distribution to independent retailers.
“The wholesalers are only as good as the focus provided by the manufacturers. Understandably, they have thousands of other products to sell out every day, and it’s therefore important for manufacturers such as ourselves to provide a clear and structured plan for the year to the wholesaler to help them focus their sales teams on the set campaign.”
Herwing Vennekens, managing director of Haribo Dunhills, says: “The latest data indicates that confectionery sales are starting to pick up and growth is beginning to accelerate. The category has been flat for a fairly sustained period, but over the last year we have seen the total confectionery market grow from pound;3.9bn for pound;4.1bn.
From a Haribo perspective we’ve seen excellent performance from our top three selling 175g bag lines – Starmix, Tangfastics and Kiddie’s Super Mix.”
Last year Haribo launched Haribo Lite, fruit flavoured, fruit shaped gums, which contain no artificial colours. Haribo says they have 30% fewer calories, 40% less sugar and less than 0.1% fat per 100g.
Vennekens says: “Haribo Lite has essentially been developed for people who enjoy confectionery but want to enjoy it will less guilt. It is a brand that diet conscious consumers will readily relate to – and buy into – but we believe it can have more than just niche potential.”
=== Buyer’s viewpoint ===
We have had an excellent year on confectionery with chocolate at just under 12% growth and sugar at +8%.
We have seen a growth in adult and indulgent confectionery at the expense of children’s confectionery which is under more pressure because of the healthy eating debate. Trends in NPD have been towards indulgent product.
The growth this year has been driven by suppliers getting the quality of their core brands right, tackling the problem of grey stocks and innovative promotions and NPD.
We have had equal support from all suppliers this year and our excellent figures reflect this.
Continuity of account managers that understand the business has also helped.
=== Buyer’s viewpoint ===
Trading in the category has been very good, against all expectations and up on last year. Mars has been doing very well, Planets are very good. Cadburys has made a valiant rally since their flood and other problems last year and come back very strongly. Their gum has done very well.
Sugar products are in decline but chocolate is doing much better. Monk Hill has bought all the Basset brands and the sugar products and the lower cost items sector.
All the suppliers have all been pretty good this past year. There are no strong promotions at the moment, as it is recovering since Christmas.
From suppliers we are looking for more independent friendly packaging and more NPD. We value their support and can always do with more.