Crossover marketing gathering pace

- Last updated on GMT

Related tags: Ice cream, Milk

Confectionery manufacturers are increasingly turning to other food
categories to drive growth, building on the strong brand awareness
of their products to garner additional profits, suggest market
analysts Euromonitor.

In the UK, Mars has been the most active in this area, according to Euromonitor's Sin Hui Chew, launching products as diverse as drinks, dairy desserts and ice cream under its confectionery brands. But arch rivals Nestlé and Cadbury Schweppes have been quick to follow, and the crossover market continues to grow apace.

The benefits of extending known brand names into other markets are clear, according to Chew. " In the first instance, it builds brand awareness, making the confectionery product more likely to be the subject of an impulse purchase. Secondly, use of known brands is a higher guarantee for the success of the new product, where a totally new brand might fail."

But there are more timely reasons why confectionery brand names are appearing on an increasingly wide range of other products. "Manufacturers have realised that confectionery brands are increasingly under competition from snack bars and individually packaged cakes and biscuits, as well as impulse ice creams in hot weather. They are therefore keen to enter and profit from these sectors, which are also less mature and saturated compared to confectionery,"​ Chew said.

According to Euromonitor's data, the sheer size of the global confectionery market means that growth prospects are likely to be limited. Worldwide confectionery sales in 2003 were around US$104 billion, up some 6 per cent from the US$98 billion or so in 1998. In contrast, biscuit sales were just US$44 billion in 2003, but showed 10 per cent growth since 1998, while snack bar sales were around US$4 billion in 2003, double the figure in 1998.

Taking the biscuit

Much of the growth in biscuit sales has come from snack biscuit packs, which are increasingly being positioned against chocolate countlines and bagged confectionery products. Mini-biscuit packs are also gaining in popularity: the UK's United Biscuits launched a range of its biscuits in this format over the course of 2001-2002, while in the US Kraft Foods rolled out Mini Oreo "bites" in 2000 and Kellog launched its Mini Keebler Cookies in 2001. This format specifically competes against bagged selflines/softlines (such a bags of toffees).

"While individually wrapped biscuits in multipacks have long been a key competitor of countline multipacks, particularly in the lunchbox market, the number of wrapped single- or double-pack biscuits is on the increase in highly developed markets such as the UK,"​ said Chew.

Sweet biscuits have also benefited from a perception among consumers that biscuit-based products are somehow healthier than pure confectionery products. For example, in Italy some people regard a chocolate covered biscuit as being a more balanced snack than a chocolate bar.

Nestlé and Lindt are among the top confectionery players trying to blur the distinction between chocolate and biscuits by launching biscuit products of their own. For example, Nestlé has recently sought to expand its Smarties brand, giving it a boost by launching Smarties cookies. Ferrero also launched its first non-chocolate-based snack under the Kinder brand in the form of Kinder Happy Hippo in 2002 - a hippo-shaped wafer shell which is filled with hazelnut and milk cream.

Another product which has come onto the market, competing in sweet biscuits but leveraging well-known confectionery brands is Mars's Bisc& range. This product is available in four varieties: Bisc& Mars, Bisc& Twix, Bisc& M&M's and Bisc& Bounty.

Chilling out

Ice cream is another sector which has been targeted by the major confectionery players, and Mars is the undisputed leader. Indeed, Mars' ice cream portfolio mirrors that of its confectionery business, with almost all of its leading chocolate brands (Mars, Galaxy/Dove, Snickers, Bounty and Twix) commonly found in the ice cream cabinet, as well as sugar brand Starburst. Furthermore, in 2002 the company extended Maltesers into impulse ice cream - which means that Milky Way is virtually the only one of its top brands not found in the freezer cabinet.

This policy has also offered Mars significant potential economies of scale, according to Chew, particularly in relation to advertising and promotional investment. There is a major emphasis on encouraging impulse purchase, which ideally suits the promotion of the Mars range, although 2001 witnessed a shift in focus with the launch of several bulk brands, most notably Mars and Bounty.

Cadbury has also extended many of its confectionery products such as Flake, Bourneville, Crunchie and Refreshers into impulse ice cream. Nestlé, on the other hand, which has been aggressively developing its overall ice cream business, has been slower at promoting its confectionery brands, although KitKat does appear in an impulse ice cream format.

Driving growth in cakes

The cake market as a whole has shown little in the way of growth in recent years, with the product often suffering from a somewhat old-fashioned image. But this general picture masks the fact that certain sub-segments of the cake market have shown excellent growth: premium and speciality products, for example, including branded cakes.

Much of the growth in this market has come from licensing deals which have seen the major confectionery brands move into the cake market. For example, in the UK Mars has teamed up with United Biscuits to develop its Galaxy and Milky Way brands into individually wrapped cake brands, while Cadbury Schweppes offers its Fudge brand as a cake, and builds on the equity of the Dairy Milk brand for its Mini-Rolls. Nestlé also recently clinched a deal with the Finsbury Food Group to roll out its major chocolate brands in the cake sector, while Ferrero uses the Kinder brand in cakes.

Nestlé's move into the cake market has perhaps been influenced by the success of its brand extension in dairy desserts, one of the few areas where it was ahead of rival Mars in seeking crossover potential (not least because of its own extensive experience as a dairy product maker). Nestlé's Milkybar and Rolo desserts were on the market long before Mars' tie-up with the UK's Eden Vale group to develop Galaxy, Milky Way and Bounty, and continue to perform well.

Related topics: Ingredients

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