Foodservice outlets represent huge potential for sales says Sian Harrington
If the confectionery giants get their way it won't be long before the lad propping up the local bar orders: "Two pints of lager and a packet of Twix, please."
Pubs, like hotels, leisure venues, modes of transport, workplace canteens, the health service and many more operations, are the latest targets for confectionery companies. They are part of the burgeoning foodservice market, estimated to include over 280,000 outlets of which 30,000 have opened in the past five years.
According to Richard Maude-Roxby, managing director of foodservice consultancy Maude-Roxby Associates, foodservice is set to overtake the retail market in size 2020.He says the opportunity for confectionery companies is huge. "There are 6,500 grocery outlets with a purchase frequency of one a week, 106,000 impulse outlets with a daily purchase opportunity and 283,000 other out-of-home outlets with a potential purchase frequency of two or more a day."
What makes foodservice so attractive is not only is it the UK's fastest growing industry, but confectionery has low penetration and high relevance. "Consumers expect anytime/anyplace eat availability," says Maude-Roxby, who is an advisor to Cadbury Trebor Bassett.
It also gives confectionery companies a new channel to replace the loss of impulse sales in retail. According to Cadbury Trebor Bassett, confectionery is the fastest growing sector in the foodservice market. Its research shows a 13% year-on-year growth in terms of caterers' purchases of confectionery at wholesale selling prices. In 2001 confectionery in foodservice was worth £435m.
One of the major problems for confectionery companies is that the market is highly fragmented. What's right for a school is not right for a nightclub. "The products have to be appropriate for the occasion and environment," says Maude-Roxby. "The solution is greater customisation, in products, production, pricing and processes."
Keith Williams, account director business development at Cadbury Trebor Bassett, says this is contrary to previous confectionery messages advising choice restriction, variety control and less is more. "You need to tailor your offer to delight your customers," he says.
Cadbury Trebor Bassett is focusing its foodservice efforts in two distinct areas: new business development, which is predominantly the cost sector, and new market development, basically the profit sector. In the former the main thrust is in education, workplace, travel and health and welfare ­ all underpinned by vending ­ while in the latter the primary focus is pubs and clubs, catering, quick service restaurants, leisure and events. There is a dedicated 100 strong out-of-home team.
Masterfoods has just increased its out-of-home sales force to 130 people. According to Sam McElligott, trade relations at Masterfoods, the company has a 46% market share in this sector.
"We sell our traditional formats through this sector but are always looking for product formats specifically suited to the sector ­ right range in the right channel," she says.
Masterfoods says foodservice providers can reap an extra £10,000 in leisure centres and £30,000 in stadiums through vending machines, while leisure operators who multiface their top sellers side-by-side can increase sales 23%.
Vending plays an important role in Cadbury Trebor Bassett's foodservice plans and was in evidence as part of the company's recent sponsorship of the Commonwealth Games. It used the Games to develop relationships with foodservice operators such as hotel groups and venue operators. It estimates it will make up to £2m in extra business as a legacy of the Games.
Overall Matt Baker, account director market development, says Cadbury Trebor Bassett has gained 60 million incremental purchases through 9,000 new outlets thanks to its strategy.
But he emphasises the right choice of product is essential. "You are not going to buy a Crunchie with a pint of lager," he says.
So what should you stock in a sports centre? Hunger busting bars like Snickers. In a theme park? Family brands like Dairy Milk and Galaxy. At a car manufacturing plant? Macho products like Yorkie, Double Decker or Mars.
And what about in an office? Perhaps Jelly Babies or Maltesers? And, on behalf of those who dance the night away in clubs, how about the new Boost Guarana and Glucose?