The market doesn’t look so sweet for sugar confectionery manufacturers. Although the category is enjoying reasonably healthy value growth, volumes are looking a little sickly, down 1.3% in comparison with 2011.
The decline is particularly apparent for own-label products, which make up 17% of the sugar confectionery market. For the majority of the category’s leading brands, volume decline - if it has occurred - has been marginal. And there has been little change in the value sales performance of the top 10 brands this year, with all but Strepsils - likely the victim of a mild winter - posting growth.
Number-one brand Haribo once again put on a strong show, recording value growth of 9.4% and a comparable increase in volumes - but by far and away the most impressive performance of the past 12 months has come from Wrigley’s Skittles. The brand continued its apparently unassailable march up the Top Products table, rocketing from eighth to fourth on the back of strong volume and value sales from the main Skittles brand and extensions such as Crazy Cores and Sours. Its 29.7% value growth, and 21.1% boost to volumes, is incredible considering the challenging market conditions - but, believes Matt Austin, Wrigley’s European confections business unit director, it could have been even better.
“One of the major challenges of looking after Skittles brands has been to get retailers to keep up with the growth of Skittles,” says Austin. He adds that, although the brand is almost twice as big as it was two years ago, its space in the retailers does not reflect that situation.
Skittles’ growth far outstrips that of any other brand in the top 20, although Perfetti Van Melle also has cause to celebrate: its Fruit-tella and Mentos brands have both managed double-digit value and volume growth. But every brand in the top 10 - and most of those in the top 20 - has grown value sales at least a little ahead of volumes, if not by significantly more.
Recent sugar price hikes have forced the brands to adopt a number of different approaches to ensure their sales continue to grow - and one such strategy has been to widen the rollout of price-marked packs. “To continually drive value back into sugar confectionery, £1 price-marked packs are proving a very popular mechanism,” says Leaf Confectionery commercial director Stuart Lane. “Many manufacturers have adapted pack sizes to achieve this price point. Small or ‘pocket money’ treats - at a 20p and 50p price point - are also emerging as a result of the squeeze on consumer purses.”
Sarah Burrows, marketing director at Bazooka Candy Brands, has also detected this trend. “Consumption decisions are heavily based on price, and it’s not just adults who are cost-conscious these days,” she says. “Kids, too, are looking to drive a hard bargain as pocket money allowance has been on the decline since its peak in 2005 of £8.37 per week, falling to below £6 per week in recent years. Many retailers are now stocking pocket money-priced products - under 50p - to capture these savvy young consumers.”
Alongside the growth in PMPs, there’s been investment in NPD over the past year, with most of the leading brands launching entirely new products or variations on existing products - with varying degrees of success. Much of the emphasis has been on tapping into flavour trends, such as the growing demand for sour products like Maynards Sour Patch Kids, launched this autumn by Kraft.
“This addition to the candy portfolio has five colour and flavour offerings of orange, lemon, raspberry, lime and blackcurrant,” explains Kraft marketing manager of gum and candy Elena Germani. “Each character’s unique taste offers a tongue-twisting sour sensation, followed by a mouth-watering fruity flavour, ending on a sweet note.”
Building on the sour theme, Tangerine Confectionery - whose Barratt brand has had a rough year, with volumes slumping 10% - bought and then relaunched the famous Wham bar earlier this year, as well as unveiling a Wham Rocket sherbet dip. “There has been significant growth within the sour confectionery market over the last year and acquiring the Wham brand allowed Tangerine to offer a key product within this sector,” says Tangerine’s group marketing manager Helen Hartley.
When it comes to gum NPD, the leading brands are placing their faith in the growing popularity of fruitier flavours. With even the biggest operators in the category posting mixed results across their portfolios, manufacturers are hoping flavour innovation will help rectify slipping volume sales. Wrigley’s Austin, for one, believes there is a major opportunity for further innovation around fruit flavours if done well. Indeed, the company rolled out a strawberry variant under its bestselling Extra brand earlier this year. However, given the UK has historically struggled to get on board with flavoured gum - and some of Wrigley’s lines suffering the most pronounced sales declines, including Five, rely heavily on flavours - it’s a bold line for the company to take.
Austin concedes it’s been a tough 12-month trading period for gum brands. That’s why, he says, Wrigley will continue to focus its efforts on the brands resonating most with consumers. “While other brands play a role in the portfolio, we want to ensure we’re driving the power brands like Extra and Hubba Bubba so they grow faster to aid the whole category.”
This is likely to be a strategy adopted by many gum and candy brands over the coming months, as commodity price inflation looks set to continue to affect volume sales of ‘affordable treats’.
Having the ability to offer brands consumers know and love - in PMPs and different pack formats to suit all budgets - could make the difference between success and failure, believes Swizzels Matlow head of sales Mark Walker.
”suppliers should be aware that their products need to target the right shopper,” says Walker. “Treats are purchased for a range of reasons - as a snack pack for the shopper or a take-home pack for the family to enjoy. Manufacturers need an in-depth understanding of the consumer to ensure product choices are relevant and targeted.”
TOP LAUNCH 2012
Squashies Swizzels Matlow
Launched in October this year, ‘Squashies’ are based on Swizzels Matlow’s Love Hearts, Double Lollies, New Refreshers and Drumsticks. Featuring the strapline ‘original favourites squashified’, the range includes four 160g bags (rsp: £1.49) and two 45g impulse bags of sweets (rsp: 45p). According to Mark Walker, head of sales at Swizzels Matlow, the company has sold more than 2.3 million bags since launch, helped by a concerted social media and marketing campaign.
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Top products survey 2012: Confectionery: sugar - Sour is sweet but candy can do better