Although the recession is impacting life in a multitude of ways, confectionery remains a growing market. Confectionery is seen as an affordable treat, a way that customers can still spoil themselves, as they rein in the spending elsewhere. There are also certain occasions which are now synonymous with confectionery. Easter in particular provides a key selling time.
Andrew Hancock CEO of Hancocks, says: “2008 proved to be a very successful year for Hancocks and its customers, proving that if the category is given the right attention, it truly is recession proof and there is still plenty of profit to be made by independent business.”
Year on year Hancock sales grew by 6% and the Christmas trading season saw sales grow by 14% on 2007 performance.
Hancock adds: “We do expect 2009 to be a tough year but we are ready to face it head on and will continue to provide the independent market with many opportunities for profit. In a recession all sizes of business should take a close look at the confectionery category due to its ability to provide a good return in hard times.”
Jonathan Summerley, Hancocks senior buyer, says: “Historically, the confectionery category stands up well in times of economic slowdown. Everyone still needs a treat and confectionery is a most affordable one. Shoppers are however getting smarter and seeking value from every pound. Coupled with this, many are now using their local stores for some of their shopping in order to minimise fuel use. Independent retailers that can provide something different to the supermarkets in addition to interest and value, stand to do well out of the forthcoming spring season.”
He continues, “Easter falls three weeks later in 2009, allowing the three spring occasions to be more evenly spaced. This should allow for a much longer selling period as well as giving cautious consumers the chance to spread the spend.
“Mother’s Day is a huge occasion in the confectionery calendar and a real opportunity for independents as much of the purchasing is done at the last minute. As Easter is still to follow Mother’s Day, retailers can be confident of maintaining a strong gifting display in order to maximise their sales during the spring season.
“Hancocks would recommend offering an interesting selection of gifting items to suit a variety of price points. There are a great number of gifting options to consider, both branded and lesser known products.
“One common theme for 2009 is the reduction of packaging and this has to be good news. Both Nestl eacute; and Cadbury are saying that they have achieved an approximate 25% reduction coupled with the increased use of biodegradable packaging and RPET, which is a recyclable plastic. Those consumers that were put off by excess card and plastic in previous years should be more positive towards the situation in 2009.”
“Lindt has been prominent within the market of hollow shapes and grown sales significantly. Now it is the turn of Nestl eacute; to get on board with its Milky Bar Cow. Cadbury will also be redesigning its Chick this year. Hollow shapes sell extremely well and make for an attractive display. This is definitely an opportunity for all types of independent retailer.”
Hancocks suggests that the return of ‘insider eggs’ where the sweets are contained within the egg should be a popular choice this year. Summerly says: “This was always the favourite way to purchase an Easter egg, having to break open the egg in order to find the sweets or chocolates. Just as the retro trend has grown sales of old favourites, shoppers will be pleased to see old formats such as these and also mug eggs.”
Hancocks is again offering its buy any two cases of Nestl eacute; countlines and get a free KitKat medium egg and buy any two cases of Cadburys countlines and get a free Creme Egg medium egg. This can allow retailers to gather together quite a number of eggs from their regular shops as the season approaches and make 100% profit on them at whatever price they choose to sell at.
For the third year running, Hancocks is offering customers an exclusive Creme Egg counter top display unit that initially comes with 72 eggs.
Summerly adds: “Suppliers need to work proactively with us to provide the independent market with a profitable and competitive playing field. We focus on helping the smaller retailer carve out a real point of difference in what he can offer with his confectionery range, in the type of product, the level of promotional activity and the general pricing. All this has to be achieved with a satisfactory level of margin for the retailer. We want to work with suppliers who can help us to do this.”
According to Nestl eacute; the UK confectionery market is worth pound;4.5bn and in the latest full year, the confectionery category is up in value by 1%. Nestl eacute; reports that its sales are up 3% in value last year, out performing the whole category.
Graham Walker, trade communication manager of Nestl eacute; UK, says: “The KitKat range continues to grow at a tremendous pace with the brand up 20% outperforming the total confectionery market.”
The recent launch of the KitKat Perfect Break promotion offering a range or prizes in a variety of tiers is building on this. Two other promotions are planned for the rest of the year.
Walkers says that KitKat will be on TV in 10 of the 12 months of the year in 2009 and the adverts will be seen by 99.9% of the target consumer audience 53 times each.
Walker says: “KitKat has long been champion of the ‘break’ but the promotion reflects how consumer attitudes towards taking a ‘break’ have changed.
“In today’s hectic lifestyles, where Britons work longer hours than anywhere else in Western Europe, the idea of a break has evolved from sitting down with a cuppa to people doing something that they really enjoy during their break. Consumers today want choice in what they do and this is reflected in the on-pack Perfect Break promotion.”
Aero will also be benefiting from marketing spend and a new advert campaign for 2009 aimed at involving the men who make up 40% of Aero eaters.
An area of growth is sharing. According to Nestl eacute; the category is worth pound;618m with its growth ahead of the total confectionery category at 5.2%.
Nestl eacute; has recently launched Toffee Crisp Clusters into a sharing bag format.
Nestl eacute; has also been working to provide wholesalers with merchandising information as its research reveals retailers want to get this information from their wholesaler. Merchandising can also help retailers find what they want easier as they will have created a shopping list of items to buy.
Walker suggests that wholesalers place all sharing bags together to help retailers shop easier. “When this idea is used, all the bags in the same area, it can result in an uplift of 7%.”
Bep Sandhu, trade relations manager of Mars Chocolate, says: “The impulse market as a whole is extremely important to us. It represents pound;2.1bn of the total confectionery market. We work closely with all our wholesalers to ensure we can drive excellence in availability and support them to deliver strong execution for their customers.
“The confectionery market is still performing well. Confectionery is a low cost ‘feel good’ product, an affordable treat and therefore remains relatively recession proof.”
Mars has recently announced that its Mars bar, Twix, Milky Way and Snickers are all becoming free from artificial colours, flavourings and preservatives. The funsize Milky Way, Maltesers, Mars and Twix will contain less than 100 calories each.
Sandhu continues: “By getting the right range in place, wholesalers can substantially increase sales. In fact, a recent trial by an independent group reported category sales growth of over 10% due to ‘range rationalisation’.
“Wholesalers could be losing sales if they are not selective about the products they choose to stock and if their customers cannot find what they want, they may not return. Retailers have higher expectations than ever and there are some products that they always expect to be available. These are often the lines they know and trust, that have a strong heritage and that continue to be well supported.
“We work very closely with our wholesalers to execute our key activities. We have plans in place to drive strong execution of our activities in 2009. Our Pouch Collector promotion is in depot now, followed by a Snickers activity, and other major campaigns throughout the year.”
Kate Harding, trade communications manager at Cadbury, says: “Cadbury is the UK’s number one confectionery manufacturer with a 27.6% share of the total confectionery category. All sectors are in growth, with the main drivers being chocolate singles, bags and block.”
In 2008 Cadbury re-launched its Crunchie Rollercoster advert and launched the Creme Egg Twisted bar. It has also re-launched the Wispa bar, brought back following popular demand.
Harding says: “Wispa was one of the most successful chocolate bar launches of the 1980s and was brought back as a limited edition in October 2007. When Wispa came back for a short time in 2007, 20 million bars flew off the shelves in only seven weeks. Since its re-launch on October 6, it has been supported by activity including its own website and over 15 million bars have already been sold, (Nielsen MAT week ending November 1 2008).
“Wispa is expected to be a key confectionery line this year and should be double faced for maximum on-shelf standout.”
In January 2007 Cadbury launched Trident and reports that it is now the world’s number one gum brand.
Harding says: “Fruit gum has achieved phenomenal growth of +37%. Trident has a huge 61% share of the fruit gum market and with this new campaign we are hoping to create the Trident effect within mint gum. Trident has brought two million new users to the gum category since its launch and we are committed to sustaining the positive impact its launch has made. Mint is hugely important within the gum category and we want to ensure that consumers are not only fully aware of our range, but also try for themselves the longer lasting flavour benefits that Trident mint gum offers.”
According to Wrigley the gum category is worth pound;269m and Wrigley has a 87.3% share of it.
Alexandra MacHutchon, communications manager of The Wrigley Company, says: “Providing consumers with innovative new products is key and Wrigley is constantly investing in research and development to ensure that NPD continues to meet the evolving needs of the consumer.
“With demand for healthier and better for you products at an all time high, the growth of sugar-free is buoyant across a number of categories. The Wrigley Company was the first to introduce sugar-free gum and these products now make up 87% of Wrigley sales.”
Wrigley has teamed up with the Premier League and the Sun Online to launch the Extra 90+ campaign. For every goal scored in added time this season, Wrigley’s Extra will donate pound;1,000 to the Football Aid charity – up to a maximum of pound;60,000. MacHutchon adds: “Wrigley recognises the importance of the wholesale channel as an excellent medium for reaching independent retailers. In fact, over 28% of Wrigley sales are through the independent channel via wholesalers and cash and carries, underlining the success of Wrigley brand through this channel.”
In 2008 Wrigley held the Wrigley Caf eacute; at three cash and carries around the UK, with representatives from Wrigley holding discussions with independent retailers on the latest NPD and offering advice on growing the chewing gum and mints sales.
MacHutchon says: “Following the success of the tour in 2008, a similar tour format will be exercised this year on a larger scale in selected cash and carries across the UK called the ‘Wrigley rendezvous let’s talk shop’.”
Levi Boorer, customer development controller of Ferrero, says: “At Ferrero we understand the key role that wholesale and cash and carry play in growing brands and as such will continue to work with our retail partners to grab the massive opportunity that exists in this sector. Wholesale represents a significant part of our business and we will be dedicating resource to develop throughout 2009. We anticipate this growth coming from a number of range, display, price and promotion initiatives. This will be backed up by brands which enjoy industry leading TV support.”
Kinder Bueno is back on screen this year with TV support playing a key part in the pound;9m marketing campaign. The brand will also be sponsoring Desperate Housewives starting this month.
For spring 2009 Ferrero has two new products: Ferrero Rocher Bunny and Ferrero Rocher Boxed Egg.
Craig Barket, sales director of Ferrero UK, says: “Looking at the data from Spring 2008 we can see that during the Mother’s Day week, both premium gifting and indulgent sharing categories saw a significant increase, growing at 10.2% and 16.2% respectively. This clearly demonstrates that, when it comes to their mother, consumers are willing to pay a higher price for a high-quality boxed chocolates such as Ferrero Collection or Raffaello. During this period, Ferrero Collection and Raffaello delivered over a quarter of NPD value growth so these two brands are clearly must-stock items.”
Simon Foster, marketing director at Lindt, says: “The wholesale channel is extremely important to Lindt, which is why we’re putting more focus behind it for 2009. At Lindt we treat wholesalers every bit as importantly as we do the big retail operators, as they are the key to ensuring availability of our range in the independent channel. We also treat the wholesalers as an important method of communication to the independent channel; ensuring important sales messages on what to stock are effectively delivered.”
According to Lindt the Easter confectionery market is currently worth pound;237.7m in annual sales and the Lindt Gold Bunny in 200g and 50g varieties are the number one and number two in the Easter novelty segment. A Trader Pack of eight 100g Gold Bunnies has also been developed specifically for the wholesale channel. The tray has a clear PET hood so retailers and consumers can see what they are buying.
Foster says: “Our Easter range is the same for every channel, whether wholesale, forecourt, independent or grocery. We believe our premium products for Easter are perfectly positioned in any environment and will sell strongly for any retailer.
“Our products have performed well during the Easter period in the last couple of years, but like any manufacturer we are always looking for areas of potential development and believe that the wholesale channel will deliver this. As such we have forecast projected growth over the Easter selling period of 23% this year against last year in the wholesale channel alone.”
Lindt suggests wholesalers should be aware of what the independent retailers want by stocking relevant impulse channel lines, stock the best selling brands and can educate retailers.
=== buyer’s viewpoint ===
MIKE SONIA, HEAD OF BUYING AT SUGRO DISTRIBUTION
Trading in 2008 has been very good. In the year to come, it will be tough, but independents are likely to be more resilient than the high street. People will shop more locally, and because there will be less spent on going out, treats such as chocolates and sweets will become important. I think the confectionery category will benefit. The countline sector is doing well, but the real star performer is block chocolate. There have been amazing increases in sales on Cadbury’s Dairy Milk and Mars’ Galaxy bars. We are very happy at Sugro with the support we get from the major confectionery suppliers. There is a concern that major manufacturers will reduce investment in promotions, which would not be good. Currently promotions are working well, and there’s no sign of a change. We are looking for belief in Sugro and its ethos. We expect our suppliers to understand that we need a partnership approach with joint aspirations towards driving sales. This is crucial. We are also aiming to keep a unique selling point by providing promotional packages to our customers, and we look to the suppliers to help us with this.