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Volume sales of UK chocolate confectionery hit, report

By Jane Byrne , 21-Dec-2009
Last updated on 21-Dec-2009 at 13:57 GMT

Brands such as Kit Kat and Wispa are performing well but new data shows the UK chocolate confectionery market appears to be taking a hit from the economic downturn

Our sister publication, The Grocer, reports that data from market analyst Nielsen show a decline in volume sales of 2.6 per cent for the UK chocolate market, with leading bars including Snickers, Aero, Twix, and Milky Way all seeing a fall in 2009.

And The Grocer notes that value sales growth was propped up by substantial cost inflation, principally from rocketing cocoa prices caused by supply chaos on the Ivory Coast.

Chewing gum sales were also affected by the economic gloom, according to the data with Wrigley’s Extra recording a drop of £21.4m (€24m).

But, according to the report, two bars have bucked this trend, with Cadbury’s Wispa increasing five-fold to £58m (€65m), and Kit Kat rising by 10.9 per cent to more than £100m (€112m).

Chris Brockman, market research manager at Leatherhead Food Research, told ConfectioneryNews.com the decline in sales data for brands like Aero and Twix was somewhat unexpected as the trend for comfort eating coupled with indulgence factors had hitherto led industry experts to declare the chocolate sector relatively recession proof.

Data period

However, Brockman cautions that this type of market analysis reporting on a Moving Annual Total (MAT) figure for a sector can yield different results depending on when the period starts and ends.

He said that the figures from Nielsen for the UK chocolate market are for the year up to 3 October, and, he added that the data includes Christmas 2008 but not Christmas 2009 sales figures.

“Chocolate is a highly seasonal sector and so sales at Easter and Christmas are very important – a bad Easter and Christmas generally means a bad year. Christmas 2008 was the height of the recession with consumer spending severely curtailed.

“I would expect Christmas 2009 sales generally to be better and so a full year picture for the UK chocolate confectionery market for 2009 may not be so negative,” added Brockman.

He maintains that TNS data reported in the Grocer for the MAT period the year to 12 June 2009 showed chocolate sales to be up 3.3 per cent in volume terms, which is a very different picture from the Nielsen data and less than four months between this and the Nielsen ending period.

“Nothing catastrophic went wrong in that four month period – it is just that it is a different data set,” argues Brockman.

Less indulgence time

Moreover, the Leatherhead researcher said that the TNS data suggested that consumers were actually eating confectionery less frequently as a result of the downturn in spending, rather than fewer people buying into the category.

“Affordable treats are still the winners (in relative terms) of this recession but people are just treating themselves less generally,” said Brockman.

Moreover, he said, while Wispa has done exceptionally well for Cadbury this year it is not a new product and the lack of successful new products generally could be dampening down consumer interest in the sector: “Indeed, a lot of launches this year have been resurrecting old brands to tap into the nostalgia trend and in recent years many new chocolate launches have failed.”

Rising costs

According to Brockman, manufacturers have also been very preoccupied with the soaring cost of cocoa and so a lot of focus has been on the input end rather than the marketing of the products:

“Hence the waves of rumours around consolidation in the industry, which is likely to be the obvious outcome from continued hikes in raw material cost,” he added.

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