Chocolate giants push up prices of key brands

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The humble chocolate bar is in danger of becoming a luxury item rather than an affordable treat as the latest in a series of price hikes hits this month, independent retailers warn.

Cadbury and Nestlé are increasing the recommended retail price by up to 7% across some of their most popular lines including Dairy Milk, Wispa, Kit Kat and Yorkie The Grocer can reveal.

The price hikes began in 2007 when the economic crisis hit, but with commodity prices still soaring, the end appears in sight. The latest 3p price hike for standard Cadbury Dairy Milk, announced yesterday, means the bar has risen by 30% in three years to 56p.

"My worry is that chocolate is becoming a luxury item rather than an affordable treat," one wholesaler said. "We are beginning to reach the point now where people consider small bars to be expensive and we are seeing sales through independents declining."

The price hikes have been exacerbated by the weak pound just as cocoa, sugar and other ingredients are becoming more expensive. Recent speculation on the commodity market has pushed up the price of cocoa to its highest in 10 years, with cocoa butter costing about £3,000 a tonne compared with £2,000 in January 2007, according to Nick Peksa of analysts Mintec.

Cadbury has raised the price of several of its biggest-selling countlines, including Crunchie (up from 51p to 53p), Picnic (52p to 54p), Twirl (55p to 58p), Wispa (52p to 55p) and Double Decker (48p to 50p). Dairy Milk blocks will also be reduced in size from 140g to 120g in February to help maintain a £1 price point continuing an industry-wide trend (see below).

Cadbury denied its increases were a result of being taken over by Kraft in March. "We have taken the decision to increase prices because of economic factors including ingredient costs," said a spokesman.

Cadbury's competitors have taken a similar stance. On Monday, Nestlé will raise the price of several of its bestselling lines its second price hike in nine months. Kit Kat and Kit Kat Chunky bars will rise from 45p to 49p despite having increased prices from 42p in February.

Yorkie bars will rise from 52p to 55p despite reducing in size from 68g to 64.5g in February, while Aero bars are to rise from 51p to 55p despite being cut last November from 46g to 41g.

One retail buying director said: "Chocolate is becoming really bad value for consumers. It will lead to a lack of sales. There appears to be a view that suppliers have sold so much on promotion they need to put their prices up. It's a largely unjustified brand tax."


Four chocolate bars that mysteriously shrunk in size


Fun size Mars bars
Bags of Mars bar Funsize were reduced in size from 320g to 288g at Asda and Sainsbury's in the second half of 2009, while the price initially remained at the same level [BrandView.co.uk].

Snickers
Mars and Snickers bars were reduced in size in the second half of 2008, from 62.5g to 58g (a 7% reduction). The move was claimed to be part of an anti-obesity drive and to ward off a price hike.

Dairy Milk
Cadbury Dairy Milk blocks were reduced in size from 250g to 230g in 2008, while the price at the big four supermarkets increased by an average of 20% to £1.48p (The Grocer 33).

Kit Kat
Kit Kat multipacks shrank from 10 to nine-packs, while increasing 11% in price to £1.36 in the big four supermarkets in 2008, according to data from The Grocer 33 pricing survey.

Focus On Confectionery

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