Sugar seems to have lost its zing. Last year, it was the darling of confectionery outperforming chocolate and growing 10.1% in value and 5.9% in volume [Kantar Worldpanel 52w/e 12 July 2009]. But not any more.
Despite efforts made by producers to remove artificial colours and flavours and promote the fruit content of their sweets, volume sales of take-home sugar confectionery are virtually static and value has risen just 3.9% to £644.5m [Kantar Worldpanel 52w/e 11 July 2010].
The situation looks even worse when figures for the impulse market are factored in, as the value of the total sugar confectionery category has risen just 0.8% to £861.9m and unit sales have fallen 4% [SymphonyIRI 52w/e 17 July 2010]. So why the slowdown?
Some suppliers suggest the big problem has been a lack of NPD. According to Ian Irvine, product controller at confectionery wholesaler Sugro UK, there has been little in the way of significant innovation with the exception of Rowntree's Randoms, which were launched back in May 2009.
A flow of new products is vital to a market that needs to be seen as fun and exciting, says Jonathan Summerley, purchasing director at wholesaler Hancocks. "The confectionery market needs plenty of NPD to thrive," he says.
Marketing also plays a huge role in keeping the category interesting. The past year has been a tough time for many brands, and those that have fared best are the ones that have made the most noise (also see advertising box-out, p73). Value sales of Haribo sweets, for example, increased 12.8% year-on-year on the back of the company's biggest media spend to date.
The launch of a cherry and passion fruit Tic Tac variant in May and a £5m campaign including TV ads and sampling has helped to boost value sales of the brand by 11.4% [SymphonyIRI].
Rowntree's Randoms, which exploded on to the market last year with an £8m advertising push, is now worth more than £11m, according to brand owner Nestlé, and contributed to a 7.4% year-on-year rise in the value of Rowntree's sugar confectionery brands [SymphonyIRI].
Nestlé added a sharing bag to the Randoms line-up in August. As with chocolate confectionery, the sharing bag has been one of the success stories of the recession. "Sharing bags are the most frequently shopped sugar sector," says Nestlé UK trade communications manager Graham Walker, who adds that sales of sugar sharing bags have risen 2% to £462m [SymphonyIRI 52w/e 14 August 2010].
While they might once have been bought for special occasions or parties, sharing bags are becoming a cupboard staple and are bought for car journeys, taking to the movies and for grazing at work, says Lisa Gawthorne, international marketing manager at liquorice supplier Panda.
The take-up of sharing bags has been partly fuelled by the growing use of round-pound deals. Many suppliers have introduced pack sizes at this price point, including Haribo across many of its top-selling lines; Wrigley on its Starburst and Skittles; and Nestlé, which reduced its Rowntree's Fruit Pastilles and Fruit Gums bags from 200g (rsp: £1.35) to 140g. "More than a third of confectionery shoppers are more likely to buy a product with a rounded price point, over a similar product without one [Him! CTP October 2009]," says Nestlé's Walker.
Price-marking whether on £1 sharing bags or 35p impulse packs, as Rowntree's has introduced for Fruit Pastilles and Randoms has been embraced by suppliers, says Hancocks' Summerley. "While the market used to be a little dubious of the practice, all parties understand its value now," he says.
Haribo managing director Herwig Vennekens says £1 price-marked packs have been particularly successful. "These have supported an increase in incremental sales and have enabled us to reinforce the affordability of our products, as well as capitalise on the sharing occasion."
It's a view echoed by Helen Hartley, marketing manager at Tangerine Confectionery, which has introduced price-marked Henry Goode liquorice and Taveners sweets.
She adds that Tangerine has also benefited from continued interest in traditional sweets and classic products. "Consumers turn to brands they know and love during recessionary periods," she says. "We've been able to capitalise on the trend with our Barratt brand, which includes Sherbet Fountain, Dip Dab and Refreshers."
Pick'n'mix has continued to gather pace since the demise of Woolworths, says Summerley. "Many businesses have set up in confectionery or have significantly expanded their range much of the focus here has been on pick'n'mix," he adds. "Hancocks saw value sales of weighouts [loose sweets] grow by 20% last year."
Starburst tapped into the retro trend in 2008 by reverting to its original name, Opal Fruits, for a limited period. This year, brand owner Wrigley has adopted the classic 'Made to make your mouth water' Opal Fruit jingle for a Starburst radio advertising push.
Starburst is among the major brands that flag up their health credentials on pack, with a flash proclaiming its fruit juice content and the fact it contains no artificial flavours or colours. Its stablemate Skittles, however, does contain artificial ingredients.
"It's about giving a choice and understanding what consumers want they have differing priorities," says Wrigley sales director Duncan McCulloch.
"If a consumer wants a product with nothing artificial, then Starburst offers that. Skittles tend to be bought by young adults and older teens, while Starburst is bought by parents."
Making confectionery permissible is one of the most prominent trends in the market, says Walker at Nestlé, which uses no artificial flavours or colours in its Rowntree's Fruit Pastilles, Fruit Gums, Jelly Tots or Randoms. "It is particularly relevant to mums," he says.
Haribo, which moved away from artificial colours in 2007, this year launched Juicy Goldbears, which contain more than 20% fruit juice.
But few brands have boosted the profile of natural sweets more than The Natural Confectionery Company, which produces eight bagged varieties (rsp: £1.49). Cadbury says it has big plans for the brand, which grew 21% to £12.7m year-on-year [Nielsen 52w/e 21 August 2010] and moved into the impulse market for the first time in August with 29g packs of Ocean Minis jelly sweets.
"The Natural Confectionery Company has been growing very well we have a pipeline of product innovation planned for the brand," says Lynne Vandeveer, Cadbury gum & candy director of marketing.
Tangerine, meanwhile, is in the process of moving its entire portfolio to natural ingredients.
"Healthy eating heavily influences new product development in confectionery these days," says Hartley. "Natural colours and flavours will only continue to grow in importance to consumers." The company says positioning the Henry Goode liquorice brand as a guilt-free, low-fat snack with all-natural ingredients has helped sales hit £1.5m after 12 months on shelf.
Making a product more natural has cost implications, adds Hartley.
"We began converting our branded and private-label products to natural colours and flavours in 2006, at which time being relatively new to the market natural colours and flavours carried an additional cost. As we progress towards 100% natural colours and flavours across our business, economies of scale are helping us redress this balance."
And shoppers are often willing to pay extra should costs have to be passed on, says Gawthorne at Panda, citing a poll conducted by the company that found 92% of consumers would pay a small premium for a brand they trust that does not contain artificial additives, flavourings or colourings.
Targeting customers who are definitely willing to pay a little extra, in August premium brand Jelly Belly introduced Beanaturals, a range of beans free from artificial flavours and colours. Rival bean producer The Jelly Bean Factory removed all artificial ingredients from its beans in February and introduced four 75g packs made using Fairtrade sugar. "Fairtrade is fast gathering momentum in the UK," says UK sales manager Colin Smith.
Smith may be confident consumers will pay more for quality sugar confectionery, but the category's performance over the past year has been less than positive. Chocolate stole the march on sugar this year with launches targeting ladies looking for lighter treats and the booming sharing bag market. Sugar confectionery had the upper hand in 2009 can it tickle tastebuds again in 2011?
Buyer interview: Anthony Watson, sugar confectionery buyer at Sainsbury's
What trends have been driving sales in sugar confectionery over the past 12 months?
Retro is the biggest trend that has had an impact, and continues to do so. The positioning of products aimed at the teenage market has also had a positive impact.
Has the shift towards the use of more natural ingredients helped sales?
Natural ingredients help to make a notoriously unhealthy category permissible for the direct consumer of the product and also for parents or grandparents buying for their children.
What impact does the use of more natural ingredients have on the unit cost of a product?
All Sainsbury's own-label sugar confectionery uses natural flavourings, preservatives and colourings. We have refined the range and logistics to achieve efficiencies that mean we haven't passed any extra cost directly on to the consumer.
What has been the most successful or interesting product launch in the past 12 months?
Our 'quarter of' range, which was developed to appeal to kids and adults using the draw of a retro feel. It includes such favourites as foam shrimps and cola cubes.
What market trends do you believe will be seen in the market in the coming 12 months?
In own label we'll see a shift towards retro, but reinvented for the current market.
Focus On Confectionery