Keynote Confectionery 2011 report: Nestle, Kraft Food, Mars

SUMMARY

From 2006 to 2010:

• Sales of confectionery increased by 14% to £5.03bn.

• Chocolate sales rose by 17%.

• New product development (NPD) has been limited in recent years. Brands have produced their

existing products in different formats, for example, as miniatures, or improved and modified the

recipes of existing products. For example Nestlé and Cadbury used more organic and fair-trade

ingredients.

• The market value is predicted to rise as the input costs are raising (price of cocoa and sugar + added

tax: VAT).

• Even is the level of UK market penetration is increasing, the potential for growth is limited.

• The confectionary industry reacted quickly to the economic downturn by meliorating the value

proposition and the number of promotions and discounts in order to attract cash-strapped

consumers = the industry is unscathed.

CONTENT

I MARKET DEFINITION

1. Market Size:

2. Market Trends:

3. UK Chocolate Confectionery Sector:

4. UK Sugar Confectionery sector:

II INDUSTRY BACKGROUND

1. Employment

2. Distribution

3. Consumption

4. Key associations:

III COMPETITORS

1. Brand strategy

2. Cadbury Ltd (Owned by Kraft since 2010)

Brands selection:

• Flake: http://www.youtube.com/watch?v=o72M-Z6qhJg

• Green & Black’s: http://www.youtube.com/watch?v=up06rdUurg4&feature=related

• Halls Soothers: http://www.tellyads.com/show_movie.php?filename=TA12342

• Wishes: http://www.cadburymakeawish.org/

• Wispa: http://vimeo.com/31499750

3. Kraft Foods UK Ltd

Main Brands:

• Milka

• Terry’s Chocolate Orange

4. Mars/Wrigley

Main Brands:

• Bite-size: http://www.talkingretail.com/products/product-news/mars-launches-biggest-

ever-bitesize-promotion

• Galaxy: http://www.youtube.com/watch?v=Old1KN9qYuM

• Wrigley Extra: http://www.youtube.com/watch?v=lRDfkAkQTEo

5. Nestle

Brands selection:

• Aero: http://www.youtube.com/watch?v=K0Gr0_taK-k

• Polo: http://www2.cbsoutdoor.ie/Our-Media/Excite/Polo---Sucker-or-Cruncher/

• Rowntree: http://vimeo.com/23154594

IV SWOT

1. Strengths

2. Weakness

3. Opportunities

4. Threats

V Buying Behaviour

VI Future trends

I MARKET DEFINITION

In the Keynote report, the confectionary market is defined as follow:

Confectionery market= chocolate + sugar confectioneries

Chocolate confectionaries are defined as Count

biscuits and cereal bars. (I think Keynote s

confectionary including the cereal bars

The UK has one of the world’s largest confectionery markets. Brands that are manufactured in the UK, such

as Cadbury, are international bestsellers.

The population of the UK reached 62.2 million in 2010, up b

positively encourage wider demand for

The amount spent on confectionery has risen at a relatively steady rate since 2006 and its share of the food

market has increased in size over the s

market increased its share of the overall food market to 10.4%.

Since confectionery products are generally considered to be treats or luxuries, the first

countries tend to have the highest level of consumption. Despite this, Nestlé announced plans to establish

a research and development (R&D) centre in India

order to better understand and target developing markets.

I.1 Market Size:

UK sales of confectionery rose by an estimated 14%, reaching the £5bn mark for the first time in 2010 due

to higher prices of ingredients, as well as significant developments and innovations in the fruit sweets

category following market trends.

I.2 Market Trends:

Sharing

Recession = save money= stay home

towards ‘nights in’ over ‘nights out’

Cadbury released Crunchie Rocks and Nestlé released sharing formats of its Smarties and Rolos

In the Keynote report, the confectionary market is defined as follow:

+ sugar confectioneries.

Chocolate confectionaries are defined as Count-lines, Sharing bags, Blocks and Other,

I think Keynote should have defined the market as SNACK rather than

cereal bars because they are direct substitutes to chocolate count

The UK has one of the world’s largest confectionery markets. Brands that are manufactured in the UK, such

as Cadbury, are international bestsellers.

The population of the UK reached 62.2 million in 2010, up by 0.7% from 61.8 million in 2009. This should

positively encourage wider demand for confectionery products.

The amount spent on confectionery has risen at a relatively steady rate since 2006 and its share of the food

market has increased in size over the same period. In 2010, Key Note has estimated that the confectionery

market increased its share of the overall food market to 10.4%.

Since confectionery products are generally considered to be treats or luxuries, the first

ave the highest level of consumption. Despite this, Nestlé announced plans to establish

a research and development (R&D) centre in India — one of the world’s fastest-growing economies

order to better understand and target developing markets.

UK sales of confectionery rose by an estimated 14%, reaching the £5bn mark for the first time in 2010 due

to higher prices of ingredients, as well as significant developments and innovations in the fruit sweets

Recession = save money= stay home = in-home entertainment (DVDs, iPods or computer games) =

towards ‘nights in’ over ‘nights out’ which, in turn, has increased occasions for sharing

and Nestlé released sharing formats of its Smarties and Rolos

lines, Sharing bags, Blocks and Other, excluding chocolate

the market as SNACK rather than

e direct substitutes to chocolate count-lines.)

The UK has one of the world’s largest confectionery markets. Brands that are manufactured in the UK, such

y 0.7% from 61.8 million in 2009. This should

The amount spent on confectionery has risen at a relatively steady rate since 2006 and its share of the food

ame period. In 2010, Key Note has estimated that the confectionery

Since confectionery products are generally considered to be treats or luxuries, the first-world, western

ave the highest level of consumption. Despite this, Nestlé announced plans to establish

growing economies — in

UK sales of confectionery rose by an estimated 14%, reaching the £5bn mark for the first time in 2010 due

to higher prices of ingredients, as well as significant developments and innovations in the fruit sweets

home entertainment (DVDs, iPods or computer games) = Shift

which, in turn, has increased occasions for sharing. For example

and Nestlé released sharing formats of its Smarties and Rolos.

Healthier Eating

Due to information published recently by the Food Standards Agency (FSA) that recommended voluntary

targets for manufacturers to follow in order to reduce the am

options are becoming increasingly popular leading

For example Cadbury’s took over the Natural Confectionery Company

artificial colourings or flavourings.

Input Cost Rises

The price of cocoa increased by 369.9% from $774

$3,637 per tonne in December 2009 according to t

sugar and palm oil also increased in 2010

To delay passing price increases onto customers Cadbur

(removing two squares), but kept the price the same.

Ethical Sourcing

After an intense campaign against it (KiKat Killer

sustainable sources by 2015. Cadbury had already converted its Dairy Milk bars to 100%

Mars pledged that its entire range of products would be made using sustainably

Due to information published recently by the Food Standards Agency (FSA) that recommended voluntary

targets for manufacturers to follow in order to reduce the amount of unhealthy ingredients, h

options are becoming increasingly popular leading to increased investment in this particular area.

Natural Confectionery Company which manufactures sweets without

369.9% from $774 per tonne at the beginning of the 2000

according to the International Cocoa Organisation (ICCO). The cost of

also increased in 2010.

To delay passing price increases onto customers Cadbury reduced its 140 gram (g) bar of Dairy Milk to 120g

(removing two squares), but kept the price the same.

KiKat Killer), Nestlé promised that it will source all of its palm oil from

Cadbury had already converted its Dairy Milk bars to 100%

Mars pledged that its entire range of products would be made using sustainably-sourced cocoa by 2020.

Due to information published recently by the Food Standards Agency (FSA) that recommended voluntary

ount of unhealthy ingredients, healthy eating

to increased investment in this particular area.

which manufactures sweets without

2000-2001 season to

Organisation (ICCO). The cost of

y reduced its 140 gram (g) bar of Dairy Milk to 120g

), Nestlé promised that it will source all of its palm oil from

Cadbury had already converted its Dairy Milk bars to 100% fair-trade in 2009.

sourced cocoa by 2020.

I.3 UK Chocolate Confectionery Sector:

Count-lines such as Mars’s Snickers and Cadbury’s Crunchie:

Key Note estimates that the count-lines subsector was worth £1.62bn in 2010, giving it a sector share of

43.3%.

The rising production costs observed in recent years have affected this subsector in particular.

In October 2010, The Grocer revealed that Cadbury and Nestlé were to increase their recommended retail

prices by up to 7% across some of their most popular lines, including Dairy Milk, Wispa and Yorkie.

New product development (NPD) in this subsector has been fairly limited in recent years, with most new

products being extensions of established brands or formats. Entirely new products are expensive to

develop and promote. Less risk is therefore involved in producing reformulations of existing products,

particularly in times of financial instability.

Sharing Bags such as Cadbury’s Heroes and Nestlé’s Quality Street:

Key Note has estimated that the boxed chocolates and sharing bags subsector was worth £1.09bn,

accounting for 29.3% of total chocolate confectionery sales in 2010.

The majority of boxed chocolates are bought as formal gifts and come in a layered format, examples of

which include Cadbury’s Milk Tray and Lindt’s Swiss Tradition range. These gifts tend to be bought for

seasonal occasions, such as Christmas, Valentine’s Day or Mother’s Day, as well as on other special

occasions, such as birthdays or for parties.

Blocks and moulded bars such as Cadbury Dairy Milk or Galaxy chocolate:

Key Note’s predicts that this subsector increased in value by 2.7% from £711m in 2009 to £730m in 2010,

accounting for 19.6% of the chocolate confectionery sector in the latter year.

Much of the value growth in this subsector has been down to the increasing popularity of premium

products with higher cocoa content or organic ingredients. The sharing qualities of large chocolate bars

have been overshadowed by the popularity of sharing bags

I.4 UK Sugar Confectionery sector:

The sugar confectionery market increased in value by 1.1% from £268m in 2009 to an estimated £271m in

2010.

In 2010, leading suppliers, Haribo and Rowntree, substantially invested in their product portfolios, with

both companies introducing natural flavours and ingredients, such as fruit juices, while also replacing

artificial additives with natural colourings. These changes have improved the health credentials of such

products, thus appealing to parents who are concerned about the level of unhealthy ingredients used in

sweet confectionery, particularly since children are the major consumers of these types of products.

Fruit Sweets such as Fruitella and Haribo products.

This subsector experienced an estimated growth of 6.6% in 2010 to £518m, up from £486m in 2009.

Chewing and Bubblegum such as Trident and Extra:

Key Note estimated that the chewing and bubblegum sector decreased by approximately 1.4% in 2010 to

£340m, due to poorer than average sales.

The focus has returned to mint-flavoured gums more recently, which are seen as simpler and more

effective products. Wrigley has reverted to marketing its Extra brand as a breath freshener

Mints

Key Note has estimated that the mints market was worth approximately £168m in 2010, giving it a market

share of 13%.

Although still popular among older age groups, penetration in the under-24s category is in decline in favour

of other options, such as chewing gum.

II INDUSTRY BACKGROUND

Since the UK exited recession in late 2009, however, a renewed interest in premium branded chocolate

confectionery has been seen as consumer confidence has improved, while household expenditure on food

has consistently increased at a higher rate than inflation.

The UK confectionery market comprises a relatively small number of companies (290). Although only 22.4%

of the companies operating in the UK confectionery market are large enterprises (reporting a turnover £1m

or more in 2010), these companies are likely to be major global players which dominate industry.

II.1 Employment

Of the 290 enterprises engaged in the manufacture of cocoa, chocolate and sugar confectionery, half (50%)

employed four people or less, while more than two-thirds (69%) employed fewer than 10 people. This

suggests that most businesses in the industry are smaller in size, in terms of both turnover and workforce.

The majority of manufacturing operations in the industry relies heavily on plant machinery, which means

that manual labour is now almost non-existent, keeping employee numbers low.

II.2 Distribution

The four leading supermarket chains in the UK dominate the retail distribution of all groceries, including

confectionery. In the week ending 28th November 2010, Tesco, ASDA, Sainsbury’s and Morrisons

accounted for over three-quarters (76.1%) of all UK grocery sales, with Tesco representing 30.7% alone.

Data from the 2010 edition of the National Statistics publication Family Spending revealed that 61.8% of

chocolate and confectionery purchases were made in large supermarket chains, while purchases transacted

in other outlets accounted for 38.2%.

II.3 Consumption

Data collated by Kantar Media data revealed that 17.9% of UK adults consumed chocolate bars three to six

times a week in the year ending September 2010, indicating that the chocolate confectionery market has a

very large and loyal consumer base. Given the recession and the subsequent slow recovery, this

demonstrates an incredibly robust market.

II.4 Key associations:

CAOBISCO

The Association of Chocolate, Biscuit and Confectionery Industries of the EU represents over 2,000

companies engaged in the manufacture of chocolate, biscuits and confectionery.

FPA

The Food Processors Association is part of the FDF and was formed as an umbrella group for four separate

sector associations in 2008, including:

1. Pickles and Sauces Association (PSA)

2. Soup, Gravy and Produce Processors Association (SGPPA)

3. UK Sweet Spreads Association (UKSSA)

4. Deserts and Cake Mixes Association

ICCO

The International Cocoa Organisation is a global organisation, which represents both cocoa-producing and

cocoa-consuming nations as members.

ICA

The International Confectionery Association claims to bring together the interests of the global

confectionery industry and represents and promotes these interests internationally.

III COMPETITORS

Cadbury (owned by Kraft), Nestlé and Mars are currently the major players dominating the UK

confectionery market.

An article published in The Grocer in October 2010, hinted at the acquisition of the US Hershey brand by

Nestlé was in response to the newly-formed Kraft/ Cadbury conglomerate, as well as the Mars/Wrigley

alliance, which left Nestlé with a vastly reduced market share.

III.1 Brand strategy

Advertising plays a major role in supporting confectionery brands and maintaining brand loyalty. A

multitude of confectionery products are launched on the market every year, making the industry

increasingly competitive.

In 2010, advertising expenditure rose dramatically, with all sectors reporting increases over the 2 years.

Expenditure on sugar confectionery increased by 128% and recorded the second-highest media spend in

2010, after being fifth in 2009. The chocolate bars and count-lines sector registered the greatest level of

media expenditure, after increasing by 30.8% to reach £66.7m in 2010.

After observing poor sales in 2009, chewing gum manufacturers appeared willing to spend more on

advertising in order to bolster sales; after a media spend of £9.3m was reported in 2010, up by 14.7% on

2009.

Confectionery is an industry in which marketing is among the most sophisticated in the world and serves to

throw consumer focus away from price and towards product quality and brand loyalty.

III.2 Cadbury Ltd (Owned by Kraft since 2010)

Company Structure:

Cadbury Ltd operates in both the chocolate and sugar confectionery markets.

It manufactures branded confectionery and beverages, including the internationally-successful Cadbury

chocolate brand. The company also manufactures dark chocolate under the Bourneville name, as well as

supplying Maynards, Trebor and Basset sugar confectionery. The company owns the chewing gum brand

Trident and manufactures the medicated sweet, Halls Soothers.

Developments:

Cadbury reduced its packaging by 35% for its 2010 Easter egg range in order to improve its ‘green’

credentials.

Cadbury also launched a £50m advertising plan in 2010 as part of its official sponsorship of the London

2012 Olympic Games and new product innovations, such as Caramel Bunnies.

On 28th February 2011, the company began its ‘Fairtrade Fortnight’, after Cadbury announced that it

planned to donate 20% of total sales from its fairtrade products to charity in order to fund a program that

would give Ghanaian cocoa farmers solar panels.

Brands:

Cadbury’s Spots v Stripes 2-year promotional campaign for the London 2012 Olympic and Paralympic

Games have dominated the company’s brand strategy since 2010. The packaging of Cadbury’s Dairy Milk,

Crunchie, Wispa, Dairy Milk Caramel, Twirl and Double Decker products has been turned either spotted or

striped, so that consumers can chose a particular ’team.

1. Big Race Bar: limited-edition product part of the company’s 2-year Olympics Spots v Stripes

promotional campaign and replaces the limited-edition Challenge Bars

2. Bliss Bar: vanilla mousse centre bar targeted women ‘the perfect treat for the ladies’.

3. Caramel Nibbles: (small Dairy Milk chocolate buttons filled with caramel)

4. Challenge Bar: (Three striped chunks, three spotted chunks and one plain chunk in the middle)

5. Creme Eggs: Cadbury’s longest build-up to Easter since the Second World War. Cadbury hoped that

the flurry of early promotional activity would allow them to beat 2010 sales of Creme Egg, which

grew by 6.2% on 2009 levels to £48.9m, according to Symphony IRI.

6. Crunchie Rocks: new sharing bag format which included bite-sized pieces of the popular count-line

7. Dairy Milk : Cadbury price-marked its range of single Dairy Milk bars, including Cadbury Dairy Milk,

Cadbury Dairy Milk Caramel, Cadbury Dairy Milk Fruit & Nut, and Cadbury Dairy Milk Whole Nut at

45p. Cadbury’s new advertisements feature the singer Paolo Nutini. Nutini leant his voice to the

debut album of Cadbury Dairy Milk’s Fairtrade-supporting label, Glass and a Half Full Records, for

the 2010 ‘Fairtrade Fortnight’ scheme Big Swap Songs.

8. Flake: Red lipstick kisses were featured on packs and consumers were offered the chance to win one

of a million Benefit lipsticks. Cadbury replaced its previous ‘Only the Crumbliest, Flakiest’ campaign

with a television advert that featured a girl in a yellow Anthony Price-designed dress, an analogy for

the Flake bar.

http://www.youtube.com/watch?v=o72M-Z6qhJg

9. Fry’s Cream: For the first time in two decades, Cadbury gave its Fry’s Cream chocolate bar range a

new packaging featuring the brands 1761 launch date.

10. Green & Black’s: Green & Black’s announced that it intended to switch its full range of chocolate

products to fairtrade, a move which is due to be completed by the end of 2011.

In September 2010, Green & Black’s chocolate was named the coolest food brand in the UK for the

fourth year in a row by Cool Brands, which ranks thousands of brands each year according to style,

innovation, desirability and originality.

http://www.youtube.com/watch?v=up06rdUurg4&feature=related

11. Halls Soothers: In January 2011, Cadbury launched a £1m marketing campaign for its Halls Soothers

sore throat sweets.

http://www.tellyads.com/show_movie.php?filename=TA12342

12. Heroes: “Lifting the lid on a cardboard box just doesn’t have the same emotive symbolism as the tin,

which often takes pride of place in the front room. Even the ‘light green’ consumer turns to tend a

blind eye towards sustainability at Christmas.”

13. Koko: Cadbury introduced a range of Koko Assorted Truffles with a more traditional packaging

update for the Koko selection box.

14. Maynards: Cadbury’s sharing product range includes a number of Maynards confectioneries, such

as Maynards’ Wine Gums, Sports Mix and Midget Gems.

15. Mini Eggs: Cadbury’s Mini Egg twin pots returned as a limited-edition item, which was available

until April. The product also received a new look for its re-launch.

16. The Natural Confectionery Company: The brand expanded into the miniature impulse market for

the first time in August 2010 after launching 29g packs of Ocean Minis jelly sweets.

17. Picnic: Cadbury gave its Picnic brand a packaging design in 2010 which featured a new bold

lettering design and was inspired by the 1980s.

18. Trebor: Cadbury claims that the original Trebor Extra Strong mints brand is still the main market

leader in the mints subsector. In July 2010, Trebor extended its Extra Strong range with the launch

of a multipack format.

19. Trident: Cadbury’s other gum brand, Trident, has been in decline for some time. Trident now focuses

largely on fruit flavoured gum, with the two bestselling varieties comprising Trident Splash

Strawberry & Lime and Trident Tropical Twist. In 2011, it was announced that Cadbury’s Stride and

Trident chewing gum brands were to include vitamins and ginseng.

20. Wishes: Cadbury introduced Cadbury Wishes — star-shaped milk chocolate with aerated centres

celebrating Cadbury’s new partnership with the Make-A-Wish Foundation.

http://www.cadburymakeawish.org/

21. Wispa: Cadbury introduced the Wispa Duo in June 2010 — two smaller bars in one Pack.

http://vimeo.com/31499750

III.3 Kraft Foods UK Ltd

Company Structure:

Kraft added Cadbury to its portfolio of other well-known confectionery brands, such as Toblerone, Côte

D’or and Terry’s Chocolate Orange. Kraft also owns the Milka chocolate brand which, despite success in

Europe, has not received anywhere near the level of penetration in the UK, partly because of the unfailing

popularity of the Cadbury brand.

Kraft claims to be the largest buyer in the world of fairtrade and Rainforest Alliance cocoa.

Developments:

In September 2010, Kraft’s Chairman and Chief Executive (CE), Irene Rosenfeld, presented the company’s

global growth strategy in New York, which revealed that the addition of Cadbury was expected to deliver an

extra $1bn of sales as the brand grows and is distributed to new markets.

Brands:

1. Milka: Kraft announced that it would be introducing a new smaller, count-line Milka chocolate bar,

which would be supported by a £4.7m media spend.

2. Terry’s Chocolate Orange: http://www.youtube.com/watch?v=8ZDTVmvE6Rs

III.4 Mars/Wrigley

Company Structure:

Mars sells a wide range of food and food-related products in the UK, including the major confectionery

brands Mars and Snickers. In October 2008, Mars Inc acquired Wrigley in a $23bn deal. Despite the

takeover, however, Wrigley has continued to operate independently from its Chicago headquarters.

The Wrigley Company Ltd manufactures and supplies chewing gum and bubblegum under the brand names

Extra, Orbit, Juicy Fruit and Hubba Bubba. Wrigley’s sugar confectionery brands include its own-brand

chewy mints, Wrigley’s Extra Chewy Mints, and the fruit-flavoured candy, Starburst.

Developments:

From summer 2010, Mars, Snickers, Milky Way, Topic and Flyte all had their saturated fat content reduced

by 15%. Mars also claimed that its products contained 40% to 45% less saturated fat per 100g than the

current average of the top 25 UK chocolate brands. Mars opened its first European M&Ms World store in

Leicester Square, London. This was in addition to other similar outlets based in Orlando, Las Vegas and New

York. In February 2011, Mars teamed up with the Football Association (FA) in an attempt to persuade

150,000 adults to start playing football for the first time by 2013.

Brands:

1. Bite-size: Mars’s Milky Way Magic Stars and Galaxy Counters were introduced in sharing bag

formats in 2010. Mars’ entire bite-size range, which also includes miniature Mars and Snickers

sweets, was promoted in Blockbuster from July 2010 as part of Mars’ ‘Big Night In’ promotional

campaign. http://www.talkingretail.com/products/product-news/mars-launches-biggest-ever-

bitesize-promotion

2. Galaxy: Mars’ launched Galaxy Bubbles, which was supported by a £2.5m media spend. It was

Galaxy’s biggest brand launch to date according to the company and the product is available in

single format or multipacks of four.

http://www.youtube.com/watch?v=Old1KN9qYuM

3. M&M’s: Mars released limited-edition M&M’s in a new pastel-coloured packaging for the Easter

season.

4. Mars Bar: as an official sponsor of the 2010 football World Cup, Mars changed its packaging from

black for the first time in its 78-year history.

5. Skittles: Mars released a mystery blue flavour in the first quarter of 2011 and asked consumers to

‘guess the flavour’.

6. Snicker: The limited-edition Snickers Maximus bar was launched in January 2011, with Mars

building on and extending its Mr T campaign to launch the countline, which included more nuts and

caramel instead of nougat.

7. Starburst: Starburst is Mars’ major brands and is often marketed as a healthier confectionery

option via on-pack information that highlights the product’s fruit juice content and the fact that it

contains no artificial flavours or colourings.

8. Wrigley Extra: Wrigley expanded its Extra Ice range in early 2011 with a number of new products

including Extra Ice Peppermint and Extra Ice White. The peppermint flavour joined the existing Extra

Ice Spearmint, which contains microgranules and xylitol — ingredients which help to stop the

formation of plaque. Meanwhile, Extra Ice White contains sodium bicarbonate which helps teeth

maintain their natural whiteness. Both products are accredited by the British Dental Health

Foundation (BDHF).

http://www.youtube.com/watch?v=lRDfkAkQTEo

III.5 Nestlé UK Ltd

Company Structure:

Nestlé is a subsidiary of Nestlé SA and employs 3,000 people at 23 sites across the UK and the Republic of

Ireland. Nestlé sells a wide range of products and well-known brands including Nescafé coffee; Nesquik,

Aero and Skinny Cow hot chocolate; Carnation condensed milk; FAB ice lollies; Buxton mineral water and a

range of confectionery products such as Aero, Milkybar and Yorkie.

Developments:

Nestlé announced plans to close its After Eight and Toffee Crisp factory in Castleford by 2012 and move the

manufacturing facilities to its Halifax site.

In May 2010, Greenpeace dropped its campaign against Nestlé’s Kit Kat, which had been using

unsustainable sources of palm oil, following the company’s announcement of a deal with The Forest Trust

to source the oil only from sustainable sources by 2015.

In 2010, the company announced ambitious targets to decrease its CO2 emissions by 20% and increase its

energy from renewable sources by 10% by 2015.

Brands:

Nestlé launched some of its best-selling brands in price-marked packs in 2010.

Toffee Crisp, Aero Peppermint, Kit Kat four-finger milk, Kit Kat Chunky milk and Yorkie milk were all made

available with a 45p flash on the pack, appealing to impulse-purchase consumers.

1. Aero: Nestlé announced that it planned to make a ‘huge’ investment in its Aero brand. This began

with the re-introduction of the Aero Caramel (originally launched in 2004) with a £5m, 4-month

media campaign — a record spends for the brand. The product’s tagline was ‘irresistibubble’ and

Nestlé were keen to highlight that it contained only 189 calories, in order to appeal to the health-

conscious consumer.

http://www.youtube.com/watch?v=K0Gr0_taK-k

2. Animal Bar: Animal Bars generally appeal to the health-conscious consumer, particularly parents,

as each bar contains only 98 calories and has no artificial flavourings.

3. Polo: Nestlé launched a media campaign which asked consumers whether they were suckers or

crunchers of the well-known Polo brand.

http://www2.cbsoutdoor.ie/Our-Media/Excite/Polo---Sucker-or-Cruncher/

4. Quality Street: for Mothering Sunday 2011, 400g boxes of Quality Street were rebranded ‘Quality

Treats’.

5. Rowntree: In order to price its sharing bags at £1, Rowntree’s reduced its Fruit Pastilles and Fruit

Gums from 200g to 140g in January. The 185g Pick ‘n’ Mix pack also reduced in size to 130g for the

same reason.

http://vimeo.com/23154594

IV SWOT

STRENGTHS

1. Wide variety of products = high degree of segmentation (price and flavour) =robust market

2. High level of penetration

3. Strong brands = customers’ loyalty and receptivity to NPD

4. Large players= wide diversification

5. Seasonal market: Christmas, Easter, Mothering... = sales booster

6. Large popularity among children=sustainability

7. Chocolate + gums = everyday treat/breath-fresheners

WEAKNESSES

1. Large amount of investment required

2. Risk launching new brands to stay in the competition

3. Stringent legislation (http://www.guardian.co.uk/society/2007/apr/24/health.business)

4. Wide variety of products= complicated relationship between manufacturer and retailer

5. Mature market = difficulty to launch new product

6. Awareness of health, ecological and ethical issues due to obesity, palm oil and fair-trade

OPPORTUNITIES

1. Seasonal or limited-edition products easily implementable

2. Healthy eating is an area which has not yet been fully developed: Dark chocolate is becoming more

popular thanks for health benefits

3. Use of social networking to exploit the popularity of this medium for marketing purposes

4. Increasing demand for miniature and sharing products

THREATS

1. New entrants: supermarkets brand.

2. Sharing bags start to compete directly with similar confectionery products.

3. Health lobbies (FSA)= direct response to the rising levels of obesity

4. Rising input costs

5. Reduction of products size to keep prices the same

V BUYING BEHAVIOUR

• Chocolate bars and other chocolate items had the highest level of penetration in 2010, with 89% of

adults consuming such products in the 12 months ending

• September 2010. Nearly three-fifths of all adults (58%) consumed mints during the same period,

while 45% consumed chewing gum.

• Women were the most likely to consume chocolate and sweet confectionery compared to men.

Indeed, many chocolate bars are specifically targeted at women, e.g. Cadbury’s Flake and Bliss Bar;

and Mars’ lower-calorie count-line, Twix Fino. Penetration of mints and chewing gum was relatively

indistinguishable between genders.

• Chocolate bars particularly appeal to the ‘on-the-go’ eating habit, as they provide a convenient

snack for those who have a busy lifestyle. This is reflected in the results compiled in Table 7.3,

which shows that adults aged between 35 and 44 registering the highest consumption of such

products, at 92.3%.

• Although people are less concerned with the levels of unhealthy ingredients in confectionery, the

rising number of people cutting back on chocolate for health reasons could indicate that more

people are now maintaining a healthier diet, which is further reflected in the decreasing level of

people who see chocolate as a harmless and affordable treat.

• Men were more likely to buy chocolate in multipacks then women, at 34% compared to 32%, while

women were more likely to buy individual chocolate bars than men, at 68.8% compared to 66%.

This reveals that women are more likely to buy chocolate on impulse and on-the-go. More men

than women believed chocolate to be a harmless treat, at 52.1% compared to 47.1%, reaffirming

that women are more likely to take the health risks involved in consuming chocolate seriously.

VI FUTURE TRENDS

• Brand Extensions replace new product developments based on customers’ loyalty due to recession.

• Sharing Bags of confectionery remain popular due to ‘on-the go’ and ‘night-in’ behaviours.

• Social networking sites are becoming the main medium to influence younger consumers.

• Demand for Ethical, Sustainable and Organic Products set to rise due to recession, global warming

and the quest of a more sustainable model of development.

• Growth of high-cocoa chocolates (Dark chocolate) due to healthy benefits.

• Premium-end chocolate improves alongside economy

• Kraft announces plans to expand the Cadbury brand overseas (Introduction of Cadbury’s Caramel

Bunny in the Republic of China (PRC))