High levels of promotion, comfort eating and mini-makeovers boosted biscuit sales values, but volumes were flat

As consumers look for little pick-me-ups, the biscuit is on a deal-fuelled high: the volume gains were modest, at 0.2%, but it’s all relative: “Biscuits have outgrown other impulse categories, including confectionery and soft drinks, and are just behind bagged snacks’ growth,” says Nielsen. The big issue, for Nielsen, is how sustainable category growth can be. “The levels of promotions have increased to 40% of volume sold, up from 35.9% in 2008. 

Not that retailers are complaining. “Biscuits have seen good growth considering the tough times, as consumers have come home to trusted brands and still see biscuits as an affordable treat,” says Peter Connell, trading manager for Musgrave Retail Partners GB. “Half-price, better-than-half-price and round-pound deals have driven sales this year, with value promotions, including price-marked packs, the key trends.”

But most of the value growth – up 5.3% in the past year to £2.17bn – is the result of inflation from high raw material costs.  Nielsen believes continued high levels of promotions may prove risky. NPD is vital, it adds. Unfortunately, with such heavy emphasis on promotions, the scope for NPD has been limited.

So thank goodness for Kraft! It added £13.4m to the category through the launch of Mikado and the growth of its Oreo brand – the former accounting for 25% of all NPD value in the category. However, despite adding £6.6m to Oreo’s sales this year, backed by a £4.3m ad campaign and the launch of a chocolate cream variant in July, the Kraft brand still fails to replicate its worldwide success as the global number one biscuit brand, not even breaking into the Top 20 UK products.

For Kellogg’s it has been an even more mixed year. Its leading cereal-based biscuit brand, Nutri-Grain, suffered the biggest year-on-year loss in the category, down 10.1% to £44.8m. However, sales of its Special K brand rose 9.8% to £39.2m and Rice Krispies Squares grew even more specutacularly, up 46.1% to £33.4m, and rising eight places up the ranking to number 12. Rice Krispies Squares has quadrupled sales in the past four years, says Kellogg’s marketing and innovation controller Sanjay Panchal.

“We launched a Totally Chocolatey variant this year and increased our spend for the brand,” he says. “We see Rice Krispies Squares as ripe for opportunity, particularly in impulse, which accounts for 40% of its sales. If a product like this is placed with impulse confectionery, in some cases we have seen sales go up 100%.”

Inflation-busting growth also came from Fox’s Creams, where sales soared 35.8% to £32.8m. The Northern Foods brand benefited from the category growth in the everyday treats and everyday biscuits sub-sectors, up 13% and 10% respectively.

Behind Fox’s strong performance, says Rachel Moffatt, Fox’s brands sector director, was a move by consumers to save money by staying in while spending a bit more on treats to eat at home. But it also owed something to the enduring appeal of Vinnie, the mafioso panda who has fronted the Fox’s range since spring 2008.

Promotions have also played a part, adds Moffatt, but unlike a number of other categories, they have not been limited to brands and, as a result, the own-label sector of the fixture continues to grow ahead of branded, with sales up 6% and volumes up 1.4% compared with a slight volume decline in brands [Nielsen]. As shoppers become more promiscuous, making choices based on the best deals across own-label and branded, rather than loyalty, there will always be losers.

One of the biggest losers was Cadbury Fingers. Sales rose 20% in 2008, but fell 6.7% to £32.6m this year, with Burton’s Foods – which makes Cadbury Fingers under licence – cutting back on promotions after volume sold on deal hit a record 65% last year. Although this has meant its ranking slumped from ninth to 14th, Burton’s says it is now building back base sales and the brand “is in the right place” ahead of planned NPD for 2010.

Cadbury Fingers – and Burton’s stablemates Maryland and Jammie Dodgers – have already received a mini makeover this year. Tapping into the trends for bitesize and sharing, the three biscuits are now available as mini versions in pouches under the brand Snack Bites, which Burton’s hopes will grow out-of-home eating occasions – a newly identified growth area.

Also hoping for a bite of the emerging minis market, in August, UB launched McVitie’s Mini Pouches, a three-strong range of mini Chocolate Chip Cookies, Milk Chocolate Digestives and Hobnobs, each in 125g bags.

Although much of this year’s new product development has centred around everyday treats, healthier biscuits remain the biggest segment with sales of £393m. Market leader Go Ahead! grew 7.3% to £55.6m, thanks to a £2m campaign, new launch Oat Squares and helped by an 18%-50% cut in satfats across many lines.

Having also halved satfats last year in its McVitie’s plain biscuit range of Digestives, Hobnobs and Rich Tea, brand owner UB followed it up with a further 50% cut in November, flashing the reformulation on new-look packs.

UB will be hoping to gain an advantage by striking early, as the government looks to cut satfats across the category. The Food Standards Agency launched a consultation in July, recommending a 10% cut in the satfats in biscuits by 2012. Its idea is that public health will improve irrespective of whether people gorge themselves on triple choc biccies as opposed to healthier options, on the basis that these things are relative.

McVitie’s latest satfat cuts were too late to influence sales this year, but last year’s reductions, promoted on TV and on-pack, helped keep the range relevant, and sales of both market leader Digestives, up 5.4% to £109.8m, and Hobnobs, up 10% to £37.5m, were healthy in every sense.

Top launch: Mikado, Kraft
Chocolate-coated pretzel Mikado is the fastest-selling everyday treat in the impulse sector, amassing sales of £6.8m since its February launch [Nielsen].

“There has been limited NPD this year but Mikado is an exception and is now one of our top lines in Londis,” says Musgrave trading manager Peter Connell.

A saucy £3m TV campaign featuring the strapline ‘More than a little bit tempting’ helped launch Mikado on to the UK stage.

Top Products Survey 2009