Cash in: Chocolate - Share Value

Today’s cash-conscious consumers are driving demand for Big Night In share packs and products with pricemarks. Sarah Britton reports

Double dip might sound like an indulgent new chocolate treat, but when it’s referring to the threat of recession it leaves something of a bitter taste in the mouth. Thankfully, while many categories are struggling to perform in these difficult economic times, it seems consumers are still chomping at the bit for chocolate. In the convenience sector alone, chocolate is worth a sweet £1.1bn, up 3% year on year (according to IRI MAT value sales 52 weeks ending January 1, 2011).

A major growth driver for the category is Big Night In. “This is becoming a key theme with consumers as a value alternative to a meal out, or trip to the cinema,” states Thornton’s head of commercial sale Peter Lawson. “There are real opportunities in sharing and in novelties, where there have been a number of launches such as Thorntons Melts and Moments.” The firm has also just launched Love Milk a box of 26 chocolates in 13 classic British flavours, which should also appeal to Big Night In consumers.

Retailers can capitalise on the trend by creating their own Big Night In themed area, says Mars trade communications manager Bep Dhaliwal. “Secondary siting merchandising options, such as the Slenda Glenda, are useful as their small footprint means they can be easily sited near other Big Night In products such as savoury snacks or the wine and beer fridge.”

Link deals across complementary products can be effective, too. “To help boost sales of premium dinner party products, such as Ferrero Collection, and encourage the Big Night In experience, retailers can create linked cross-category offers, for example, a box of chocolate and a bottle of wine,” suggests Ferrero UK sales director Jason Sutherland.

Big Night In is helping to fuel sales of share bags and blocks. Up an impressive 11% year on year in the convenience channel, chocolate sharing bags are now worth £128m, while blocks are up 14% to £149m.

“Independent retailers will notice that bitesize and sharing products will sell more frequently in the evening, due to the Big Night In trend,” says Dhaliwal.

Cadbury is making the most of demand for bitesize products with its new Chocos. Launching this month, the product comprises 11 round pieces of milk chocolate. Palmer & Harvey marketing director Richard Hayhoe has high hopes for the new product. “I expect them to be big and we will be supporting the launch with key promotions,” he says.

Mars is also going down the bitesize path with Mars Galaxy Bites new caramel-filled chocolate spheres in 40g packs. The launch forms part of a £14m media investment in the Galaxy brand for 2011, and Galaxy Bites share bags will be rolled out later this year.

Another company jumping on the chocolate sharing phenomenon is Storck. The company has launched the top sellers from its Werther’s Original chocolate range in 100g hanging bag formats, designed especially for the impulse and convenience sector. “We wanted to offer both consumers and retailers greater choice, and so far they have been extremely well received. The convenience channel is key for us and we hope to continue to deliver innovation,” says sales director Richard Drayson.

Nestlé also has plenty to offer those buying into sharing options thanks to a recent revamp of its existing range of sharing bags. The new bags have been redesigned to make the product easier to share while having better resealability.

In February, Nestlé launched top-selling countline Kit Kat in a bitesize sharing format entitled Kit Kat Pop Chocs. Nestlé is currently involved in a linked promotion with Pop Chocs and Lovefilm to further push the product’s Big Night In snacking potential.

The trend for staying in has also been good news for Nestlé’s chocolate blocks, which are growing ahead of the market at a substantial 68%.

An orange variant recently joined existing peppermint and milk chocolate variants in the Aero blocks range. “Sales of our Aero blocks are flying off the shelves, especially the £1 pricemarked packs,” says trade communications manager Graham Walker.

Following the success of pricemarking on blocks, Nestlé is also giving some of its key countlines the priceflash treatment. From April 25, Smarties, medium-sized Milkybars and Milkybar Buttons will be available with a 39p priceflash.

“With 44% of customers saying they would assume pricemarked packs are cheaper, and 48% of customers saying they would encourage sales, pricemarked packs can be a very effective tool to boost sales in the convenience channel,” says Walker.

Cadbury has also seen success with pricemarked packs. “Cadbury Dairy Milk 140g (CDM) £1 rrp, has the highest cash rate of sale of any confectionery product in independent stores ,” says trade communications manager Susan Nash.

Hancocks senior buyer Jonathan Summerley concurs that pricemarked CDM 140g has had a good run. “There have been some very successful examples of pricemarked confectionery; CDM 140g bars would be a recent one to highlight, pricemarked at £1 and selling at a very high level through independent stores.”

Hoping to repeat this triumph, Cadbury has just launched pricemarked versions of its top four countlines. Twirl, Crunchie, Wispa and Cadbury Dairy Milk are available in 50p pricemarked packs ‘while stocks last’. “Pricemarked packs are used to make products sell faster in store,” says Nash. “We hope that their popularity will help to increase distribution within the category, which will in turn drive value sales.”

Ferrero also has confidence in pricemarking and is putting Kinder Bueno’s recent sales growth (up 1% year on year) down to the fact that it has a price flash. “This growth is in part resultant from the recent pricemarked pack activity, which has heightened visibility and driven sales for the brand, growing brand share in the total countline category from 1.9% to 3%,” says Sutherland.

However, Hancocks notes that while in demand from consumers, pricemarked packs are not always a win for retailers. “We feel that independent retailers are becoming more reluctant to stock pricemarked products nowadays as it is creating too strong a restriction on their margin, which has been further limited by recent price rises on branded countlines,” says Summerley.

This concern is disputed by Nash. “Protecting retailer margins while running pricemarked packs is important to Cadbury and the business works with its customers to ensure that retailers can offer recommended retail prices on the most popular chocolate countlines.”

Nevertheless, Hancocks is convinced that independents need to be able to decide their own margins and has launched a 12-strong range of non-pricemarked countlines, including bars entitled Nutymax and Winergy. “While widening the choice and interest for their customers, our value countlines can also give retailers margins in excess of 40%, which is currently unheard of in this area of confectionery,” says Summerley.

Hancocks also offers unmarked block chocolate with generous margins. A selection of 100g bars branded Solo retail at 59p, providing a 34% margin, and a range of 150g filled bars retail at £1, giving a 27% margin. “Sales have been tremendous,” says Summerley. “Quite simply, independent retailers need suppliers to facilitate a better cash margin for them. They should be allowed to decide for themselves the best price level for their particular store.”

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Cash in: Chocolate - Limited Edition’s