Growth in chocolate is being driven by sharing and innovative NPD, while value is playing an increasingly important role, meaning retailers must be on top of all aspects to ensure that their sales grow in line with the category.
Chocolate is one of those sterling performers in convenience that retailers can continually rely on. However, as with any other category, while simply having stock on shelf is enough to generate sales, it is through clever merchandising, dual sitings and keeping on top of new product development that retailers can really maximise the potential of one of the heaviest categories in-store for impulse purchasing – remember that category penetration is a huge 99%.
Trends currently influencing the category include the ongoing uncertainty in the economy. As people spend increasing amounts of leisure time at home, savvy shoppers are purchasing special products to make their nights in as appealing as nights out. Purchases for special sharing and gifting on nights-in with friends or family create lucrative sales opportunities for retailers. These purchases have 89% higher value sales on average than everyday confectionery.
As the leaders in ‘special’ and the only brand of scale that caters for all ‘special’ shopper missions, Ferrero is one of just two manufacturers driving double digit growth in Boxed Confectionery. For these shoppers, value is therefore not just about price it’s about product quality, and they refuse to compromise on their favourites, with taste remaining a key category driver. Shoppers have therefore been trading up into more premium boxed chocolates like Ferrero Rocher and Ferrero Collection, which is driving value into the category. “2013 has been a very successful year for Ferrero, as we have continued to invest heavily in our brands to drive value and growth into the category,” says Levi Boorer, Customer Development Director. “With new premium ‘gold standard’ POS to showcase the special nature of the range and capture impulse sales opportunities, we outperformed the category over the crucial Christmas period, with 16.1% growth vs. a category rate of 1.6%.”
With some of the best-selling products in the country, Mars is another company that has a strong foothold in the chocolate sector. Brands such as Mars, Snickers, Galaxy and Twix are staples of the sector and of primary importance to retailers. Such is the power of these brands that Mars has been able to launch brand extensions and its successful hanging bag range has help pile on sales. Following a rebranding on the Galaxy range recently, one of Mars’ most recent ventures was the launch of Mars Chocolate announces the launch of Twix Mix in a new single format. Each 37g bag of Twix Mix is packed with caramel and crunchy biscuit balls, covered in milk chocolate.
The product is being backed by an overall spend of £9m on Twix this year. Mars’ Central Sales Director Nicola Lacey offers the following advice: “Store space is often limited for independent retailers, making it vital that every fixture and fitting drives return. Retailers should look to implement secondary confectionery sites throughout the store to drive those impulse sales. This is another great way of highlighting promotional activity and maximising the sales potential of other key categories and the store as a whole. Stimulating shoppers’ imagination and suggesting linked purchases is also a great way to boost confectionery sales.” Price marked packs Again, following an overarching industry trend, price marked packs are vitally important in the chocolate category. According to Ferrero, rate of sale on a price marked pack can be 200-300% more than a standard variant in chocolate confectionery so can have a significant impact on sales and research shows 44% of consumers are encouraged to switch from a preferred brand to a different one as a result of a price-mark making them very effective for driving trial. Ferrero regularly makes PMPs available on Kinder Bueno and Kinder Chocolate single bars allowing retailers to communicate value to shoppers. According to Nestlé, 53% of shoppers say they would be more likely to try NPD if it was price marked while 48% of shoppers say price marked packs encourages them to switch from a preferred brand.
Nestlé has identified three key elements retailers must consider in order to maximise sales: Variety, Visibility and Value. Variety is about stocking the right range: In a market that continues to evolve and with shopper habits changing, your confectionery range needs to be reviewed on a regular basis to ensure you’re offering what shoppers are looking for. There are three key points to remember when offering variety: Stocking the right range for your store, making that range as broad as space allows and capitalising on new products. Visibility is about making the fixture easy to shop: With more than 80% of sales coming from the main fixture, this is the first place a retailer should focus on.
By understanding shoppers’ needs, using your best sellers and double facing, you could increase your confectionery sales by 8%. Value is about focusing on price and offering a range of promotions: Price and promotions are the key decision drivers for shoppers in store and therefore play a vital role in any convenience store. Sharing soaring Sharing bags, chocolate blocks and multipacks have been the key driver of the growth in the total confectionery market, with ‘home-stock’ growing at +52% between 2009 to 2013. Over this time home-stock shoppers have also been buying more packs (+20% to an average 81 packs) and spending more on them (+28% to an average £85).
What’s more, the ‘in home’ snacking occasion has been in steady growth with 86m more occasions in 2012 versus 2010. Most snacking occasions take place in the evening so retailers should ensure stocks don’t run down during the day. Within the convenience channel sharing bags are worth £322m and growing at +4.2% while sharing bags are worth £116m, growing at +2%. Nestlé sharing bags, including Milkybar Buttons and Aero Peppermint Bubbles are growing +3.5%, with chocolate bags growing ahead of the market +5.4%.
More marvellous creations
Following the initial success of Cadbury Dairy Milk Marvellous Creations, the brand is bringing even more crazy concoctions to the category with the launch of Banana Caramel Crisp, and Marvellous Mix Ups – its first product in the bitesize segment. Banana Caramel Crisp features an amalgamation of banana candy, caramel cubes and crispy pieces in a 200g tablet and 47g countline. And in the latest cross-category innovation for Cadbury Dairy Milk, Marvellous Mix Ups bags bring together amazing combinations of family favourites in two variants – Oreo and Maynard’s, combined with Cadbury Buttons. The launch follow huge success for the Cadbury Dairy Milk Marvellous Creations range, now worth £49.7m and generating 49% incremental sales in the category. Matthew Williams, Marketing Director at Mondelez International, said: “We believe we’ve got a unique concept in the market – there’s nothing else like it in the chocolate aisle – and that’s why customers have been inspired by our offer. These new products are a great opportunity for retailers to get shoppers excited about the category and drive impulse sales across the range.”
Lion works for peanuts
Nestlé Confectionery’s Lion brand recently launched a new Peanut Lion chocolate bar exclusively for the wholesale and convenience channel. The new bar is the combination of wafer, chewy caramel, crispy cereals and peanuts enrobed in smooth milk chocolate and will contain no artificial colours, flavours or preservatives. Each bar has an rrp of 41p and comes packed in a 24 count outer. The low price point of the product is specifically designed to encourage trial and repeat purchase within the channel.
