KN55003

KEY NOTE CONTRACT CATERING - FOOD SERVICE MANAGEMENT : OCTOBER 2003

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This report covers: contract catering, food services management, education, healthcare, business, industry, catering for the public, number of outlets, number of meals, average weekly expenditure on meals,

Companies covered include: Aramark, Avenance, Compass Group, Initial Catering Services, Sodexho, Baxter Smith, Catering Alliance, Charlton House Catering Services, Eaton Fine Dining, Just Deli, Lindley Catering, Massarella Catering Group, Wilson Storey Halliday,

EXECUTIVE SUMMARY

The UK confectionery market is a significant sector of the UK food industry and was estimated to be worth £5.96bn in 2002. Sales of confectionery products have risen in the past 5 years and, in 2002, grew by 5.5 percent in value at current prices from 2001.

Although confectionery is not an essential food item, it is purchased by the majority of the UK population. The key growth drivers of the market are a snacking and grazing culture, ease of access and availability of confectionery products. The need for quick and easy food to match busy lifestyles has fuelled the increase in the market. The confectionery market comprises two main sectors: chocolate confectionery and sugar confectionery.

The chocolate confectionery sector includes products that contain cocoa in proportions prescribed by legislation. Sugar confectionery includes boiled sweets and other confectionery products that include sugar, but excludes any products made with cocoa. In 2002, the chocolate confectionery sector was worth more than double the sugar confectionery market.

Confectionery sales are driven by impulse purchases and, the market is therefore, highly dependent on branding — especially in the chocolate confectionery sector. The maturity of the market leaves limited scope for innovation, hence the industry often disguises new product activity in the form of brand extensions, repackaging, repositioning, etc. to recreate interest and attract new consumers. Promotional activities in the chocolate confectionery sector are mainly relaunches to maintain and increase the limited growth potential of the market, which requires relatively high levels of investment for new product launches. The UK confectionery market is governed by the same stringent legislation as the food industry overall.

As a reaction to expansion in the boxed chocolates sector and in seasonal sales, the UK confectionery industry is moving towards functional and nutraceutical confectionery as an area for product innovation. For example, there has been an increase in launches of sugar-free gums and energy bars. Other product developments include The Lord of the Rings chocolate assortments by Cadbury Schweppes and Wrigley's Extra Thin Ice sugar-free gum. The sweets sector has attracted more new entrants than the chocolate sector as it requires less investment.

Cadbury, Mars and Nestlé dominate the UK market. These multinational companies trade globally, with strong brand images and a wide portfolio of confectionery products. Other companies have a strong national and local presence, although they do not have international operations. The major players invest heavily in branding and promotional activities every year, while smaller brands rely on availability and appropriate pricing for retail sales.

Key Note forecasts that the confectionery market will increase slowly over the next 5 years to 2007 at current prices. Health issues are expected to affect the industry, while strong promotions are likely to boost volume sales. The confectionery market will be influenced by the growth of other food sectors, such as snacks, savouries and ice cream.

TABLE OF CONTENTS

Text © 2004 Key Note

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Last updated by Amanda Porteous February 2004