UK confectionery supplier makes £385m loan deal Woolworths has staved off a potential credit crunch by making a deal with Burdale Financial and GMAC Commercial Finance, who will underwrite a four-year £385m ($764m) lending facility secured against the debts of subsidiary Entertainment UK (EUK), the company said this week. The Woolworths subsidiary, one of the largest suppliers of confectionery products in the country, said earlier this month that poor sales over Christmas are likely to result in 'depressed profitability' during 2008. Trevor Bish-Jones, chief executive of Woolworths, said that company "would have got to the point of stress" under existing unsecured facilities, as rents threatened to breach lending terms. Finance firm Burdale said that the prospect of a demerger is now on the cards.
Earlier this week, EUK announced the resignation of managing director Lloyd Wigglesworth, who will be replaced with Steve Lewis, currently the managing director for retail and distribution at Woolworths. "EUK is now entering a different stage of its development, where the focus turns toward further improving customer service and enhancing operational efficiency," Bish-Jones said. Confectionery leads autumn product launches Global launches of non-chocolate candies increased a massive 41 per cent last autumn, far outstripping those of other food products, according to market analysts Datamonitor.
The market researcher this week released the figures from its Productscan Online database, demonstrating the high growth was far ahead of product launches of sauces and gravies, which increased 18 per cent, vegetables, up 5.9 per cent, and cookies, up 14 per cent. For the three months leading up to November 2007, chocolate confectionery also experienced relatively good growth of nine per cent, the analysts said. The industry has benefited in recent months in particular from the trends for functional foods, and analysts estimate that the market for functional or health boosting sweets and chocolate to be worth at $7.4bn (€5bn), 24 per cent of the total functional food market. By contrast, food categories that do not or cannot embrace the functional trend declined in terms of autumn product launches.
According to Productscan data, new launches of meat products declined 11 per cent, pizzas and sandwiches by 4.5 per cent, and spices and seasonings by 44 per cent. Premium chocolate still a US favourite Two companies have this week launched new ranges of cocoa rich, expensive treats, aiming to target the US consumers who crave luxury when choosing a confectionery product. The US-based Ghirardelli Chocolate Company has launched a range of filled bars, aiming to put a gourmet twist on popular flavours, ranging from milk chocolate with caramel, to dark chocolate with raspberry and 60 per cent cacoa dark chocolate with caramel.
"By 'gourmetizing' these favorite flavors in an affordable and convenient way, Ghirardelli offers chocolate lovers the perfect motivation to trade up to gourmet chocolate," said Fabrizio Parini, senior vice president of marketing. New York-based Vere is also this month promoting a new dark chocolate line, although these are all made from single-varietal cocoa beans grown in the Ecuadorian rainforest. The bars are handmade at the source and flavoured with local organic sugar, the company said.
According to Datamonitor, the popularity of dark chocolate, aided in part by its healthy image, has boosted sales to now account for 25 per cent of the market.