KitKat growth boosted by innovation

Related tags Nestle rowntree Chocolate Kitkat

KitKat may have lost its crown as the UK's biggest chocolate
countline brand to Cadbury's Dairy Milk last year, but brand owner
Nestlé Rowntree has wasted no time in its bid to regain the top
spot. Extensions of the core brand have come thick and fast over
the past few months, and consumer interest has been high, writes
Chris Jones.

KitKat is Nestlé Rowntree's flagship brand in the UK - and has been since 1937 - and the company has always reacted quickly to defend its market position. As competition in the market began to heat up in the 1990s, for example, a number of KitKat extensions were launched - limited-edition flavour variants, bite-size KitKat Kubes and the highly popular KitKat Chunky, launched in 1999 and the company's most successful new product to date.

But Cadbury's decision to concentrate on its Dairy Milk brand over the last year, switching a number of brands such as Wispa and Caramel to the Dairy Milk name and even launching a KitKat clone, Dairy Milk Wafer, has propelled it ahead of its arch rival, sparking a new wave of innovation by York-based Nestlé Rowntree which, it claims, has already borne fruit.

"The strategy of inspiring consumers through new variants is accelerating the growth of our flagship brand,"​ said Graham Walker, Nestlé Rowntree's sales communications manager. "Over the last 12 weeks (to 25 September 2004) the [KitKat] brand is up by 19 per cent, with the singles running at 19 per cent growth and the CBBs (chocolate biscuit bars) at 21 per cent growth."

Graced with a new tagline ('Make the most of your break', replacing the iconic 'Have a break…have a KitKat' slogan which had run since 1957), said to make the product more relevant to today's chocolate-eating public, KitKat has seen its sales surge ahead in recent months - with line extensions fuelling most of the improvements.

For example, a new two-finger white chocolate KitKat has exceeded all the company's expectations and achieved value sales in excess of £1 million since July - in turn taking the two-finger bars' market share for the last five months from 19 per cent in 2003 to 23.2 per cent this year, Walker said.

And the growth is unlikely to stop there. Launched last month, two new limited edition variants of the brand are already performing very well. The Golden Caramel and Seville Orange single finger variants show a distinct move upmarket from earlier flavour variants, and the decision to offer a premium product within the KitKat range has clearly paid off.

Golden Caramel is the third best-selling countline bar in the UK (according to ROS Impulse Choc - Impulse Channel data for the week ending 25 September), while the Seville Orange variety is at number 11 - even though the advertising campaign for the products has barely begun.

The company will run adverts on national UK TV from 18 October for three weeks, targeting the core 16-34 age group, while a billboard campaign will run on some 2,000 sites across the country, and Nestlé Rowntree is clearly confident of driving sales even further as a result of the campaign.

Nestlé Rowntree clearly has the bit between its teeth, and British chocoholics - the most voracious in Europe with annual per capita consumption of 10 kilos on average - are likely to be even more spoiled for choice in the future as the erstwhile market leader seeks to regain its former glory.

"KitKat is back, make no mistake,"​ said Walker. "The sales performance is quite fantastic, but there's more to come. We are on a roll, and plan to continue this excellent performance."

But Nestlé Rowntree's combative stance - and the equally aggressive expansion plans of Cadbury - has at least kept chocolate sales growing in the UK (by 5.3 per cent last year to £2.5 billion, according to the Biscuit, Cake, Chocolate and Confectionery Alliance) at a time when growing concerns about obesity levels should have curbed growth.

How long this innovation can be sustained remains to be seen, especially in the light of renewed attacks from the health lobby, but with the two leading players seemingly determined to outdo one another, there is little sign of any slowdown appearing in the immediate future.

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