The UK’s love of chocolate means that sales have been largely unaffected by the country’s economic situation. It seems cash-strapped consumers can always find money for their favourite choccy bar.
According to Mintel, since 2006 the UK chocolate confectionery market has grown by 21%, with steady year-on-year growth of between 4% and 6%. Sales reached £3.98bn in 2011, and the research company expects the market to rise to £5.25bn by 2016.
Countlines remain the largest segment of the market, with much of the sales growth driven by the steadily increasing prices of bars. Mintel breaks the market down as follows: countlines accounting for 44% of sales; tablets/blocks 20%; seasonal 13%; non-individually wrapped 13%; individually wrapped 7%; and others 3%.
A real star performer is the ’unwrapped chocolate’ segment, where sharing bags continue to appeal to consumers as a cost-effective and convenient way of enjoying their favourite treat. Indeed Mintel expects the total chocolate market to continue benefiting from its position as a "regular and affordable treat" eaten by nine in 10 (89%) of the UK’s population, with four in five (81%) weekly users and one in five (21%) eating it every day.
Mintel reports: "It continues to be seen as a treat by the majority of users, with seven in 10 people eating it as a treat/to lift their mood and 56% doing so to satisfy a sweet craving". Chocolate is most commonly eaten after midday, with 18% of consumers tucking in between 2-5pm and 23% doing so after 8pm.
The research company also notes that the market has benefited from the trend for consumers looking to save money and staying at home, with over half of users (51%) eating chocolate in the evening at home.
The chocolate confectionery market benefits from a wide variety of formats and types, which in turn encourages consumers to adopt a "wide repertoire". Mintel found that over two in five adults (43%) eat five or more types of chocolate.
Interestingly, in stark contrast to other food and drink categories, low prices and promotions do not hold the same level of influence for chocolate. Instead, the market is more habit-oriented with users preferring to stick to their favourite type/flavour (81%) and brand name (65%). Mintel reports that while this is of benefit to the ’big three’ companies in the market, it has made it more difficult for smaller operators and the own-labels to gain a significant foothold.
But the price of chocolate has become an emotive subject, with many consumers believing that chocolate bars have got smaller as prices have gone up.
Mintel found that prices are at the ’tipping point’, with half of users stating that they would cut back on their favourite chocolate if the price continues to increase.
Jonathan Summerly, purchasing director at specialist confectionery cash and carry Hancocks, says discounted multi-packs sold in supermarkets and discount stores are really dampening the sales of countlines through independents. "The manufacturers really need to take some action here otherwise this side of their market could suffer. While price-marked packs have helped in some instances, they have done little to boost the margins of independent stores."
Convenience sales
According to IRI and Kantar Worldpanel data, the chocolate sector within convenience stores has seen good growth year-on-year, up 6.1% in value. This has been driven by multipack formats, which are up 20.3%, sharing bags up 2.3% and blocks up 8.7%. Chocolate singles saw a slight decline down 2.6%.
Nestlé UK trade communications manager, Graham Walker, says effective merchandising can help grow the confectionery category by as much as 8%. He adds that as 76% of all confectionery sales come from the main fixture, it is essential that retailers make this their first priority. Retailers can maximise their sales by taking the following steps:
Merchandise by ’need state’. Need state merchandising works by grouping similar products together, making it easier for shoppers to find what they are looking for. Need states include: chewing gum, mint refreshment, hunger, snack, pleasure, fruit refreshment, playful and everyday treat.
Place best sellers in the best positions. Within each need state, the best-selling products should be merchandised in the best position. This ensures a good range of products and therefore maximises choice for the shopper/consumer.
Allocate space according to sales. Multi-face the best sellers in each need state to ensure shoppers can’t miss them. This also helps prevent shoppers’ favourite treats from running out of stock on the fixture.
After the main fixture, Walker recommends that retailers next focus on additional locations for confectionery around the store also known as ’multiple points of interruption’ which generate the remaining 24% of total confectionery sales.
"Confectionery is a highly impulsive and expandable category, therefore dual-siting confectionery in high footfall areas in store, linked to shopper missions, can drive incremental basket spend," he says.
"The newsagent mission is the largest ’one need’ mission in convenience so siting a permanent unit near the newspapers/magazines will drive increased basket spend.
Dual-siting confectionery near the till point will also capture impulse purchases."
Mondelez International home of the Cadbury brand leads the UK chocolate market, accounting for 37% of value sales (Nielsen data).
Cadbury brands account for a 27.8% share of the chocolate sharing bag category, and Mondelez International expects sharing bags to be every bit as important to the success of the chocolate category this year as they have been to date. Cadbury is also seeing an increase in tablets with growth of 20.4% in value sales, which Mondelez puts down to the launch of innovative new products such as Cadbury Dairy Milk Bubbly.
Susan Nash, trade communications manager at Mondelez International, comments: "The launch of CDM Bubbly has injected excitement into the category by introducing a dynamic and quirky new way to eat tablet chocolate, and the results speak for themselves it was the biggest block launch in five years, generating over £18.3m in its first 10 months (Nielsen)."
Last year also saw the launch of a new multi-textured tablet combining the UK’s favourite chocolate brand with the world’s best-selling biscuit brand to create Cadbury Dairy Milk with Oreo.
Says Nash: "With both Oreo and CDM currently in growth, the new product aimed to boost sales for treat occasions, and is already worth more than £3.5m."
Seasonality is a big influence in the market, with Easter and Christmas of particular importance. And chocolate has become increasingly acceptable as a gift.
Ferrero customer development director, Levi Boorer, says forecourts are a prime destination for last-minute gift purchases throughout the year, so it’s essential that retailers maximise this sales opportunity by stocking products which consumers can quickly identify from brands they love.
According to Nielsen data, Ferrero is the number one classic boxed brand, outperforming the rest of the boxed chocolate segment with 5.8% year-on-year growth, while Ferrero Collection is hot on its heels as the number three ’special giving’ brand. Boorer says these lines attract distinct shopper sets and should therefore be stocked together to maximise the different gifting occasions all year round, as well as the growing big night in trend.
Boorer comments: "Our latest research shows that there is a real sales opportunity for premium chocolate beyond gifting, as consumers are seeing special treats as a must-have for informal nights in.
"With 68% of consumers now dining in more often, and open-plan kitchens becoming increasingly popular for entertaining at home, the ’new special occasion’ is emerging. This is about taste, appeal and sharing as consumers create precious but relaxed moments with friends and family."
Ferrero claims to be the "leader in special" and the only brand with scale across all special need states. "By stocking a range of Ferrero’s best sellers, forecourt retailers can capitalise on special sales opportunities all year round and drive category value," says Boorer.
The Ferrero Collection 16-pack, growing by 52.6% annually (Nielsen), is a great premium gift for a loved one, and now includes Raffaello, to appeal to the more mature, upmarket shopper. Finally, Ferrero Rocher 16-pack is a top seller and is popular all year round.
Brand news
Cadbury’s first new countline brand since the 1990s is already worth almost £3m (Kantar Worldpanel). Cadbury Crispello comprises three crispy wafer shells, filled with a light creamy centre and covered in Cadbury milk chocolate.
Mars has launched Galaxy Counters in a singles format as a permanent addition to its range.
Toffifee the hazelnut in a caramel cup with a hazelnut chocolate filling, topped with chocolate will be backed by TV advertising this year.
Kit Kat Chunky is currently supported by the Choose a Chunky Champion campaign where consumers vote for their favourite new Chunky variety, either mint, coconut, hazelnut or choc fudge.
Don’t forget the mints
Bendicks is a premium selection of dark mint chocolates designed to impress. Its brand owner Storck says its stamp of royal patronage is the guarantee of authenticity and quality sought by discerning consumers.
The brand is worth over £5.4m and continues to grow (Nielsen).
Mint Collection, described as a "must for all sharing occasions" is an assortment of dark mint chocolates including the famous Bendicks Bittermint. It is the UK’s number one mint selection, worth over £3m, with sales growth of 6%.
Meanwhile, Bittermints combine an intense mint fondant with chocolate made from 95% cocoa solids. The brand is worth over £2.2m and is growing 16% year-on-year, which is 12% ahead of the category. And Bendicks Mint Crisps are dark chocolates packed with crisp honeycomb pieces infused with peppermint oil.
Bendicks-branded taxis will continue to support the brand in London throughout the year. In addition, Bendicks will be participating in the Coronation festival in July 2013. This is a showcase of the best of British excellence and tradition, and will be held in the gardens of Buckingham Palace.
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