Considering both Christmas and Easter are times when chocolate consumption rockets, manufacturers are increasingly being forced to explore other avenues to move away from the heavy discounting of the retailers.
Andy Morrison, trade marketing manager at Bendicks, says: “The frustration for confectionery manufacturers is the same for beer companies. The time of year when people consume the most product is also the time when the retailers take the most money out of it.”
Graham Walker, Nestlé Rowntree sales communications manager, says that, as value is being driven out of the market at the lower end to increase footfall during the Christmas and Easter periods, companies are switching their focus to higher price point seasonal goods.
While boxed chocolates and assortments and seasonal novelties have grown in value by 10.6% and 11.7% respectively over the past year, according to TNS (52 w/e June 19, 2005), much of this growth has come from premium lines.
For this Christmas Nestlé has launched Pizazz, a premium range of chocolates aimed at a younger consumer that will sit alongside its Quality Street brand. It has also created After Eight variants Lemon Sorbet and Irish Cream to move the product away from being regarded as something to eat at a dinner party, as well as After Eight straws.
“The issue is still there in terms of discounting so we have to provide options for consumers to trade up,” says Walker.
For this reason, Cadbury Trebor Bassett is pushing its premium Flake Moments and Roses Luxury Collection of boxed chocolates, which it suggests retailers merchandise next to wine, greetings cards and flowers, as well as in the confectionery aisles.
Morrison adds that the biggest growth opportunity lies in speciality gifting areas. He says: “The industry is all under price pressures, but people are prepared to pay for a nice gift.”
This Christmas will see the first year that all Bendicks products come under the one banner. It also marks Bendicks’ further push into non-mint with its premium brand Chocolate Confections and Gorgeous, a twist-wrapped chocolate assortment.
Gorgeous targets women and, in particular, the informal gifting side of the market - an area which it says has been neglected by manufacturers.
“The majority of consumers who buy boxed chocolates are women. However, research has shown that within chocolate there is not a lot of suitable products to say thank you,” says Morrison.
Cadbury Trebor Bassett is following a similar tack with mini variants of its Roses and Roses Luxury Collection that have been created for more
informal gifting occasions. Its share boxes, in Dairy Milk, Crunchie and Dairy Milk Variety of twist-wrap chocolates also act as informal sharing gifts. “Everyday sharing is a big part of consumers’ lives today, with the appeal and frequency of occasion increasing,” says Mike Tipping, head of customer relations at Cadbury Trebor Bassett.
Twist-wrap will continue to be invested in heavily by the other players. Masterfoods, which owns Celebrations, has revamped the packaging for this Christmas, with a new twist-top design. Celebrations Champagne Bottle returns after first year sales of £1.2m last year. Also new this year is its Santa Cups, filled with either funsize Mars or Milky Way bars.
Guylian, meanwhile, is entering into twist-wraps with Guylian Twists, a selection of bite-size chocolates in hazelnut praline, orange cream, crispy caramel, mild cappuccino, smooth truffle and creamy strawberry flavours. Kraft, on the other hand, is ringing the changes with its Terry’s brand. This Christmas Terry’s Chocolate Orange has a mint variant in order to attract more consumers to the product.
Easter is also set to see heavy discounting across low margin lines. According to Walker, in 2004 the Easter egg market was down 6% in value on the previous year, and had dropped to 2003 levels. Unlike Christmas, which falls on the same date every year, Easter presents manufacturers with problems of timing. “When we have an early Easter we don’t sell as many eggs - there are fewer selling days and people are buying eggs later than they used to. This means even deeper price cuts and much reduced coverage of ranges from the multiples.”
Walker says in the standard egg range there is little growth opportunity. Everyday treats, speciality eggs and novelties are where the growth will come from this year. As a result, next Easter will see the
launch of 15p chocolate filled Easter bars for everyday treats, in Hop O Late, Chick Choc and Quak Snack variants, as well as speciality novelty eggs for children such as Milkybar Buckaroo, which comes with its own mini Buckaroo game, and Yorkie Subbuteo, which comes with a mini Subbuteo football game.
The company is also targeting mid-priced confectionery consumers.
“You pay £1.35 for a standard egg and £4.99-£6.99 for a speciality egg. We’ve created a huge gap in the middle. We are forcing shoppers into price extremes and we have to provide something to help them go through that gap.” A £3.99 egg range, including a Smarties Egg Hunt egg and a Milky Bar refillable chicken which lays eggs, will do this, Walker says.
Fox’s Confectionery, which produces Just Brazils, has also stepped up its NPD. This year sees the introduction of an
Amaretto variant to its Just Brazils, exclusive to Woolworths, as well as the national roll out of the Orange variant. New packaging has also been introduced.
Smaller players are also making their mark this Christmas. Green & Black’s is concerned with trading people up above the £5 mark, says Jamie Milner, senior brand manager. While the company says its buyout in May this year by Cadbury Schweppes has not influenced its Christmas lines as the range was planned before the deal, it is still upping innovation and launching its Dark Collection of handmade chocolates as well as dark fudges and a Praline Collection.
According to Milner, while speciality treats is one of the smallest categories, shelf presence is growing as standard shell egg lines make way for higher margin premium products. “We are the profit providers in the Easter
market. The majority of the multiples have decreased their listings and increased premium lines as they see that’s where they are making the money. We expect to see that continue next year.”
“Independents can benefit from having a good Christmas display in place by the end of September,” says Hancocks purchasing director Richard Brittle. “Products such as advent calendars, tree decorations and gifts for work colleagues are often snapped up early.”
Brittle says both manufacturers and retailers should target wider gifting areas, such as presents for teachers and colleagues and rewards for staff. “If the retailer is able to have a strong display of different product ideas to suit these needs, and even construct some basic promotional material to highlight the message, it can profit well from additional sales volume.”