UK confectionery market outlook 'positive'

By Anthony Fletcher

- Last updated on GMT

Related tags Cadbury dairy milk Cadbury plc Chocolate

The UK is unlikely to lose its place as one of the world's major
consumers of confectionery despite coming under increasing pressure
as a relatively `unhealthy' food.

Indeed, according to Research & Markets, the UK confectionery market achieved year-on-year growth between 2001 and 2005 to reach a value of 4.53bn.

The outlook, says the analyst, is therefore largely positive.

The analyst says that the market can be divided into two broad sectors: chocolate confectionery (including countlines, blocks, boxed chocolates and bite-size products), and sugar confectionery (including fruit sweets, mints and chewing gum).

Chocolate confectionery accounts for nearly three-quarters of sales by value. Countlines continue to account for the largest share of the sector but boxed assortments are showing the fastest growth.

This is being driven by the development of more brands targeting everyday sharing occasions, such as Cadbury Dairy Milk share boxes, which were introduced in 2005. This in turn has stimulated innovation in a slightly more premium tier for more special occasions, which is also helping to add value to the market.

The sugar confectionery sector has traditionally been more child-focused and has, as a result, been struggling in the face of a falling under-15 population. However, suppliers have looked elsewhere for inspiration and have developed ranges that target demand for oral-health products, including teeth-whitening and breath-freshening in the mint and gum subsectors.

In addition, to give the market a healthier profile, many products are being overhauled, with artificial colours and flavours being replaced with fruit juices and other natural alternatives.

The market continues to be dominated by three major players: Cadbury Trebor Bassett (part of Cadbury Schweppes PLC), Masterfoods (the confectionery division of Mars UK Ltd) and Nestle Rowntree. The best-selling brands are long established and the sector has now all but given up on introducing new brands.

Instead, the tendency has been to extend existing brands with new flavours and/or into new product areas, taking advantage of established names by turning them into umbrella brands. For example, during 2005, the celebration of the centenary of the Cadbury Dairy Milk brand offered a strong opportunity for new products and formats for the label.

Licensed products also continue to perform well. However, the focus now tends to be more on shorter-term tie-ins related to film and digital versatile disc (DVD) releases.

Major events in 2005 were headlined by the release of Charlie and the Chocolate Factory. Nestle Rowntree's licensing agreement allowed the introduction of a successful range of new products under the Wonka brand, as well as an ideal focus for promotions.

As in other food sectors, confectionery continues to come under pressure as a relatively `unhealthy' food. Recent government legislation, such as banning fatty foods from vending machines, is likely to have an adverse effect on confectionery sales through some channels.

However, Research & Markets said that the UK is unlikely to lose its place as one of the world's major per-capita consumers of confectionery and the outlook for the market remains encouraging.

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