Developments in the confectionery category give one of the clearest examples of the diverging trends in food products generally. On the one hand consumers are seeking healthier options and being offered bars with reduced calories and low sugar content, but they are also increasing their spend on premium products designed to provide an indulgent treat.
The health issue in particular has been thrown into sharp focus in the confectionery sector following the decision by the advertising watchdog Ofcom to ban TV advertising of foods high in salt, fat and sugar to children.
Trading manager of confectionery for Palmer Harvey McLane Wilf Slee says: “Obesity, adverse media publicity, consumer apprehension and lack of impulse initiatives create issues for the confectionery category. There is a general need to challenge other product groups in the market place.”
He adds that premium chocolate is developing nicely as well as organic and that the category has been affected by a minimal amount of NPD in 2006.
Regarding Cadbury Trebor Bassett’s product recall last year he says: “Clearly sales have been affected, but with a significant increase in marketing spend this year there is anticipation that the situation will show a marked improvement. The introduction of Trident has every chance to produce growth in the gum market. With two major manufacturers focusing closely on this category there is great optimism in the trade.
“In general terms it is difficult to single out any strong players, but we recognise that suppliers like Cadbury, Ferrero, Haribo, Kraft and Monkhill put a lot of emphasis on the impulse sector in their presentations to us.”
Mintel estimates the total chocolate market to be worth pound;3.16bn in 2006 with chocolate confectionery being the biggest sector, accounting for 62% of the total market.
Mintel says a major influence on the UK chocolate market is that consumers are seeking indulgent taste experiences, leading to a trade-up on price.
Nestl eacute; Rowntree has taken notice of this with the launch of its new ‘connoisseur’ chocolate brand Heaven. The brand fits into the premium segment of the confectionery market which, Nestl eacute; Rowntree says, is growing at 5% year on year and worth pound;208m.
Heaven is authentic Swiss chocolate in 100g filled blocks in five flavours Dark Truffle, Milk Truffle, Milk Orange Truffle, Caf eacute; Latte and Hazelnut Cr eacute;me
Graham Walker, Nestl eacute; UK trade communication manager, says: “Heaven is a fantastic proposition for Nestl eacute; Rowntree and our retail partners. Our target consumers are the core buyers of indulgent chocolate – women aged between 25 and 45. With consumer trends showing increasing numbers of people already buying premium chocolate, we believe the broad appeal of the Heaven brand will attract even more consumers into the category.”
Elsewhere in its brands 2006 saw the launch of Peanut KitKat in March and KitKat Dark in September. And in January, Nestl eacute; also highlighted the low calorie content of KitKat by publishing the ‘only 107 calories’ message on the front of all standard 2 Finger packs, with KitKat 2 Finger Dark having 105 calories and KitKat 2 Finger White having 111.
Nestl eacute; Rowntree has also introduced a range of 12 sharing bags, designed to meet the needs of different consumers. The range comprises Milk Chocolate Aero Bubbles, Quality Street, Peppermint Aero Bubbles, Munchies Munchies, Rowntree’s Pick Mix bag, Rowntree’s Fruit Pastilles, Rowntree’s Fruit Pastilles Blackcurrant Strawberry, Rowntree’s Fruit Gums, Milkybar, Smarties, Polo Original and Polo Sugar Free.
Walker says: “Confectionery to share is a growing consumer trend, and retailers looking to capitalise should ensure they stock a range of sharing bags from big brands which suit a variety of consumers’ needs. Plus, to maximise sales, ensure they are displayed in a high traffic area so shoppers can’t miss them.”
Walker says that wholesalers are getting better and better at understanding it is not only about price, that it is important to display the products clearly. “When a big brand product is supported by media then the product can be sold at full price.”
Nestl eacute; has a dedicated sales force who go into the depots to give advice to wholesalers and the company has thought about the wholesale channel in its launch of Heaven, with counter top displays.
George McLearie, trade marketing manager of Bendicks, says: “It is essential that retailers stock recognisable premium brands which their customers know and trust. Bendicks enjoys a brand heritage going back over many years which gives consumers absolute confidence in its unrivalled expertise in the manufacturing of an extensive range of premium products.”
Bendicks entered into the premium chocolate bar sector with the Bendicks Chocolate Bars in Milk and Dark in 125g bar size. The 125g bar format is made up of five individually wrapped pieces, for easy self treat and both variants are available in shelf ready display trays.
McLearie says: “The Bendicks brand is known and trusted by our customers and consumers across the UK. Over 80% of UK consumers are aware of the Bendicks brand and the quality and value it represents. It is a logical step for us to move into premium chocolate bars. The powerful combination of our quality chocolate credentials and brand recognition makes the new Bendicks Chocolate Bars a very attractive proposition for both consumers and trade customers alike.
“In offering our current Bendicks consumers a new way to enjoy their favourite chocolate – and by broadening the choice available for premium bar consumers – we believe that the launch of new Bendicks Chocolate Bars will add to the growth of the premium chocolate bar sector and, very importantly, generate additional profitable sales for our trade customers.”
Other products in the Bendicks gifting range include Bendicks Gorgeous, Bendicks Mingles, Bendicks Mint collection, Bittermints, Chocolate Mint Crisps, Chocolate Classics collection and Bendicks Chocolate Ginger.
McLearie says: “The wholesale channel is extremely important to Bendicks. It continues to be a key route to us gaining distribution in independents, forecourts and foodservice.”
Mike Tipping, head of customer relations of Cadbury Trebor Bassett, says: “Few markets match confectionery for excitement, innovation and indulgence. New products keep customers and retailers engaged, while big seasonal events like Christmas and Easter ensure that there is always an excuse to enjoy the category.”
Tipping comments that there have been a number of significant trends across the category including the growth of the everyday treat, the rise of premium indulgent products, consumers switching to healthier alternatives and reducing individual consumption.
In response to the growing indulgent confectionery sector CTB launched Cadbury Dairy Milk Melts in September. The two segment bars are individually wrapped in a re-closeable box, to reflect the treat nature of the product. While at the other end of the spectrum CTB has also launched Cadbury Highlights, which contains no added sugar and is low in calories.
According to CTB, Cadbury Creme Egg outsells its nearest competitor by more than nine to one. So it is no surprise that CTB decided to launch Cadbury Dairy Milk with Creme Egg.
This month sees the return of the Cadbury Flake Girl advert on cinema and TV. The advert is supported by a pound;5m marketing spend.
Tipping says: “The wholesale channel forms a vital link between the independent retailer and CTB, facilitating the flow of information, creating excitement around new products and showcasing exclusive deals and special packs which help the independent retailer differentiate themselves from the multiples.”
According to Masterfoods the confectionery market is worth pound;4.5bn. Andrea Taylor, trade relations manager of Masterfoods, says: “The wholesale channel is a vital link in the retail chain. Masterfoods is committed to helping cash and carries prosper in an increasingly competitive business environment. As part of our desire to deliver long-term sustainable growth in the total confectionery category, we are always keen to share our insights to allow our company and the wholesale channel to thrive.”
Galaxy Promises impulse bars were launched last year in Caramel Crunch and Roast Hazelnut. The bars were designed to bridge the gap between everyday and luxury block chocolate and Masterfoods says the launch helped the chocolate segment grow by 4.8%.
Masterfoods also has pouch packaging for Maltesers White, Maltesers, Minstrels, Revels and M Ms sharing bags.
Taylor says: “The portfolio of the new packaging is striking and has taken the bitesize product range from strength to strength in the market.”
Sarah Petts, channel and communications manager of Kraft Foods, says: “As consumer tastes are becoming more sophisticated, with many looking to the confectionery category to provide a moment of pleasure and indulgence, retailers should stock a varied confectionery selection to cater for a range of taste preferences.”
Last year Kraft Foods launched a premium confectionery range under the Cote d’Or brand. Petts says: “Research shows that an increasing number of consumers are trading-up from mainstream confectionery products to those that offer a premium treat. This trend has moved the premium tablet market into massive growth.”
Ferrero is investing pound;5m in a campaign that includes TV, press and sampling for Kinder Bueno that will be supported by a merchandising drive in the convenience channel. Kinder Bueno is a wafer combined with hazelnut and milk chocolate, designed as a light treat.
Mark Joules, customer marketing manager of Ferrero, says: “We have developed two eye-catching secondary display solutions, a counter top display and a free-standing floor unit that can be sited in high traffic locations.”
Cadbury Trebor Bassett has introduced the gum brand Trident to the UK market.
Tipping says: “Returning the UK gum category to profitable growth will have significant benefits for all retailers. Offering a new proposition, improving product quality, adding excitement to the category and enabling the gum market to offer the consumer a new taste sensation, will significantly extend the usage from the current and traditional mouthfresh offering.”
According to CTB the UK is one of the top 10 gum markets in the world, currently worth pound;241m. Globally, Trident is the number two brand and is currently growing at a rate of 30% year on year.
The launch features two new products, Trident Splash and Trident Soft. Trident Splash has a juicy centre and comes in two flavours Strawberry Lime and Vanilla Mint. Trident Soft is available in Peppermint and Tropical Twist.
Tipping adds: “By driving in-store visibility with high-impact merchandising displays, retailers will be able to create significant impulse sales and generate much needed interest and enthusiasm at the gum fixture.”
Alexandra MacHutchon, communications manager of CTB’s major competitor in the gum market, The Wrigley Company, says: “Innovation is vital in any category, but particularly in confectionery. The Wrigley Company is at the forefront of product innovation, and has a well proven track record, with 35% of sales coming from products that were introduced in the last five years.”
To celebrate its 30th birthday Orbit has undergone a brand makeover with Orbit Complete, new Extra Ice and new Hubba Bubba Glob.
Regarding the wholesale channel, MacHutchon says: “Currently 49% of our sales are through independents, so to provide the best possible service and latest products to independents, Wrigley also ensures that the best possible service and advice is offered. We will continue to work closely with wholesalers to help them make the most out of the gum and mint category.”
She adds that Wrigley provides merchandising systems and solutions for both gum and mints in depot and that reducing out of stocks will increase sales.
Alison Newton, trading marketing manager of Leaf, says: “The prospects for the confectionery market will continue to be tough. The obesity debate has definitely started to make an impact and shoppers are voting with their feet and not visiting the confectionery aisle as much as they used to.”
Leaf is looking at ways of making further improvements to its recipes. Chewits have no artificial colours, no hydrogenated fats and no gelatine in them. The fruit juice content has also been increased and there is less than 1g of fat per stickpack.
Leaf has also launched a healthier sweets range called Red Band, which offers consumers a range of healthier confectionery, including sugar free, reduced sugar, high fruit juice, added vitamins and added calcium options in chew, gum, jelly and hard-boiled formats.
Newton says: “Chewits Stickpack remains very strong in the wholesale sector and the introduction of Orange has aided its performance. The re-branding of Malaco to Chewits Sweetshop on the gums and jellies range has been a huge success, with sales in double digit growth year on year.”
Leaf provides POS and tailor-made promotions to support the branding on the fixtures. Red Band is launching two new sugar free variants in a flip top box format and will also see the introduction of Strawberry Soft Gums and Orange Lemon hard boiled sweets from March.
Speaking about the Ofcom regulations on TV advertising that will be introduced during 2007, Rory Goodwin, sales director of Haribo Dunhills, says: “We have the benefit of Haribo already being an established brand. The inability to use TV advertising to establish a new brand among younger consumers, will make it much more difficult for new products to gain a foothold in the market place and as a result the existing big brands will continue to grow and get bigger.”
Haribo has removed all artificial colouring from its Starmix and has also increased the amount of fruit juice in Strawbs and Goldbears. Haribo Lite was also launched last month, it contains a selection of lower calorie, lower sugar fruit flavour gums which have a fat content of less than 0.1%.
Goodwin says: “It goes without saying, the wholesale sector is hugely important to Haribo, some 45% of our business goes through wholesale which is a significant share for a confectionery company.
“Our success in wholesale is down to a number of factors. We have a very focused approach to supporting wholesalers and all of our activity is geared up to ensuring pull through from retailers as well consumers.”
He adds: “The wholesale sector has become more professional and standards have improved. I think businesses have realised that unless they get their act together they won’t survive in what has become a tough market place.”
Walkers’ Nonsuch has recently relaunched the hammer toffee packs under a new name of ‘Toffee Break’ and it has also launched Walkers’ English Crocante, a combination of nuts or seeds, sugar and Belgian chocolate. It is available in Toasted Sesame Seed, Roasted Peanut and Brazil.
Tony Rogers, national sales executive, says: “The wholesale market is Walkers’ major route to market in the UK. The majority of wholesalers do an excellent job at selling our products. We must be one of the few confectionery manufacturers who ask for the bottom shelf in a cash and carry for our tray toffee, so it is more visible.”
=== Buyer’s viewpoint ===
Hancocks Cash and Carry continues to perform well, maintaining its trend for year on year growth in a competitive market place.
At Hancocks we are quite excited about the potential NPD for 2007. Brand extensions are being quite rightly ignored in favour of brand new products.
The premium and dark chocolate trend continues to develop but I believe that there are now too many 100g bars on the market.
Hancocks has a close working relationship with most of its suppliers. With regard to the top three, Mars has always provided consistently good service with very few availability problems. Nestl eacute; has worked hard with us to develop in-store theatre and we are now looking to pass this on to our retailers. The Cadburys supply chain has let Hancocks down in recent times but I am sure that 2007 will see a significant improvement.
All of our suppliers must look to understand the independent market better, offering products that will help the retailers to build strong sales in such a competitive climate. High levels of availability and competitive pricing goes without saying, so that we can offer our customers what they want when they need it.
There were a number of promotions during 2006 that let our customers down due to poor availability. This is not acceptable bearing in mind that promotions are often planned months in advance.