KN15185

Keynote Market Report Plus : Confectionery : January 2005

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This report covers: confectionery, cholcolate, boxed chocolate, blocks and moulded cholcolate, bite-sized chocolate, other chocolate confectionery, sugar confectionery, fruit sweets, mints, other sugar confectionery, chewing gum,

Companies covered include: Bendicks (Mayfair), Cadbury Schweppes, Ferrero UK, Kinnerton Group, Kraft Foods, Mars UK, Nestlé Holdings, Swizzels Matlow, Thorntons, The Wrigley Company, Ashbury Confectionery, Chupa Chups UK, Fox's Confectionery, Glisten, Green & Black's, Leaf, Lindt & Sprungli UK, The Lion Confectionery, McCowan's, Toms Confectionery, Perfetti Van Melle, Bassetts, Dairy Milk, Double Decker, Dream, Flake, Freddo, Roses, Snaps, Halls, Jameson's, Cremosa, The Day Chocolate Company, Divine, Elizabeth Shaw, Ferrero UK, Kinder, Happy Hippos, Fox's Confectionery, Cubs, Glacier, Poppets, Guylian UK, Haribo Dunhills, Kraft Foods,Terry's Chocolate Orange, Lindt, Excellence, Lindor, AquaDrops, Mars Delight, Maltesers, Tunes, McCowan's, After Eight, Baci, Blue Label, Christmas 2004 Products, Double Cream KitKat, Lion Bar, Milky Bar & Smarties, Tesco, Walker's Nonsuch, Woolworths Group,

EXECUTIVE SUMMARY

Key Note estimates that, in 2004, the total UK confectionery market was worth £5.32bn at retail selling prices (rsp), a rise of 3% on 2003. Between 2000 and 2004, the market grew by an estimated 12%. In 2004, the largest sector of the market was chocolate confectionery, whereas the remainder of the market was accounted for by sugar confectionery, which includes fruits, mints and chewing gum.

Although the confectionery market is long established, new product development (NPD) continues to be a major feature. In 2003/2004, major influences on the market included healthy eating, with groups such as Nestlé and Guylian introducing low-carbohydrate bars that would appeal to followers of the Atkins and South Beach weight loss regimes. In addition, sugar-free chewing gums, mints and medicated confectionery were developed. There was also a rise in the number of Fairtrade products available in the market, with Tesco adding its own-brand chocolate to a small, but developing, sector.

Much NPD continues to be based around established brands and the relatively low risk attached to this strategy has encouraged its use. In 2003, Cadbury rebranded established brands under the Dairy Milk masterbrand; for example, Wispa became Dairy Milk Bubbly. In addition, a similar plan was pursued for the Bassetts label. Nestlé centred considerable activity around the KitKat brand, with the introduction of limited edition flavours and KitKat Kubes, as well as the Editions premium range. Mars overhauled its Twix range and added Mars Delight to its Mars portfolio in order to target more female consumers. Other activity included the arrival of limited edition White Maltesers, which made the transition into a permanent line.

Although brand advertising continues to be a feature of the confectionery market, the level of expenditure declined in 2004. Instead, suppliers began to concentrate their resources on less scattered communications, such as sponsorship, websites and direct marketing.

Christmas and Easter continue to provide a focus for activity, with many of the major brands adding seasonal products to boost on-shelf presence. Premium products traditionally perform well in the gift market, but these are now being developed for year-round ranges as companies seek to add value to their brands.

Confectionery products have a relatively high level of market penetration. Consumer research commissioned specially for this report indicates that households with children are considerably more involved in the market. The promotion of confectionery to children continues to be a controversial issue, with some groups calling for a ban on advertising to children. However, confectionery companies argue that their products are an acceptable part of a balanced diet.

Key Note forecasts that the confectionery market will continue to show growth to 2009, although this will largely be inflation driven. Suppliers will continue to seek to add value to the market through brand building, particularly in the adult and premium markets.

TABLE OF CONTENTS

Text © 2005 Key Note

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Last updated by Amanda Porteous February 2005