Australian Convenience Store News

The Australian confectionery market is worth $1,856 million per year and route-type outlets are responsible for more than 44% of this business. Although no current figures are available, the bar segment is thought to be the fastest growing. In a rapidly changing market, convenience outlets are in an excellent position to build their chocolate bar business.

Chocolate coated bars are now the biggest selling confectionery category at service stations, convenience stores and other route outlets, where they make up 40% of total confectionery sales. This compares favourably with bar sales at supermarkets, where chocolate bars comprise just 23% of their confectionery business.*

In fact, Australians munch their way through almost $570 million per year in chocolate bars and $329 million of this goes through route outlets. In the last few years, growth has been driven largely by larger pack sizes rather than product innovation.

Other figures suggest that king size grew by 6% last year as a category, while medium bars grew 10.5%.. This growth was largely driven by Nestleís Kit Kat Chunky, which, at least for a time, challenged Mars as market leader after its launch in March last year. This, combined with larger advertising expenditure in the past year, generated this solid market growth in bars.

Prasan Kumar, who is Cabduryís Senior Brand manager for Bars, says that 2001 will be very much a year of consolidation in the bar market.

"Bars are by far the most important part of the confectionery market", said Mr Kumar, "especially for convenience stores. The King Size bar market is a uniquely Australian phenomenon, which does not exist in any overseas market. This market is bringing the male consumer back to chocolate.

"We saw ënutritious barsí make some inroads into the bar market in 1999, but the consumer has since returned to chocolate. And it is the leading brands that are carrying the growth.

"Our best performers have been Turkish Delight and Picnic, which are up 26% and 6% respectively, said Mr Kumar. "Our launch of Cheery Ripe in a milk variant last year was also well received and did not affect sales of the popular dark chocolate Cherry Ripe.

"The chocolate bar market is perhaps the most difficult to operate in," Mr Kumar said. "Itís not easy to innovate because just about every flavour combination that can be done HAS been done. Innovation has largely been confined to pack size.

"A number of new products launched in the last few years have not sustained their early market shares and consumers have returned to more familiar products. Successful new brands are few and far between in the chocolate bar market. Thatís why retailers should never lose their focus on those robust core brands that continue to drive chocolate bar sales."

"The launch of Kit Kat Chunky in February 2000 set a new benchmark for the previously stagnant chocolate medium bar category," said Nestle marketing Manager, Martin Brown. "Kit Kat Chunky outsold Mars Bar by four to one during the initial launch period and grew the category by over 8%.

"For future success in the bar market, manufacturers must ensure that brands remain relevant to the changing needs of todayís consumers. Continual brand renovation and innovation are needed to ensure that consumption frequency is maintained. Stock weight, innovative point of sale and visibility in the store will continue to ensure strong sales of Kit Kat Chunky in 2001."

Peter Paice is Australian Manager for Hershey, a brand little known in Australia, but a major player in the USA, with over 39% of the US confectionery market. Most Americans grew up with Hershey Bars, but the bitter-sweet taste of the chocolate and a perceived granular texture of the product have not been popular outside the USA.

Now Hershey is attacking the local market with a product with an "international formula", which is said to be sweeter and smoother and is currently selling in 90 countries outside the USA.

"There have been a couple of attempts to get Hershey onto the Australian market over the years," said Hersheyís Australian Manager, Mr Peter Paice. "but with American product, rather than the international range which has a huge track record outside the USA. 7-Eleven has ranged the product, along with most of the other majors, and weíre now looking to do some promotion to further stimulate demand."

Hershey has quite a variety of bar products and says it is looking to increase the ranging at convenience stores to better address the 15 to 39 age group, which it says is its core market. Hershey is distributed by Network foods, which also distributes Fishermanís Friend and Smint.

Confectionery buyers tend to experiment with new brands, mostly from known makers, and the manufacturers are constantly trying to have one of their brands added to the customerís repertoire. Some succeed; most donít.

"Novelty and innovation are drivers of the confectionery market, and consumers

enjoy trying new brands, packs and flavours," said Trish Evans, Marsí Senior Franchise Manager for Bars. "However although people try new products, usually most people return to the tried, tested and much loved brands.

The key drivers of bar sales are promotions, displays and advertising on popular brands as these activities remind consumers of their favourites and encourage them to purchase.

"We need to remember that most confectionery sales are made on impulse," added Ms Evans. "Across all outlets, between seventy and eighty-three per cent of sales are impulse sales.

"Just over half of these impulse buyers are undecided as to which product theyíll buy and the balance have no intention to buy when they enter the store. This means that the retailersí point of sale presentation will have a big influence on the buying behaviour of seventy per cent of their confectionery customers.

According to research supplied by Mars, most customers devote no more than thirty seconds to browse the confectionery area and have usually made their buying decision in the first ten seconds. These decisions are mostly driven by brand loyalty and display quality.

"Stores will differ by location, like proximity to schools and so on, and the time, day and season of maximum traffic flow," said Mr Brown. "But every store must ensure that the major brands are present at points of impulse purchase and that those brands are appropriate for the traffic in the store."

"We need to take maximum advantage in-store of the investment that is going into the major brands. We do that by providing maximum exposure to the customer and using promotional material in-store for 4-6 weeks for launches as well as products on promotion."

ASS&CSN wishes to thank Cadbury, Hershey, Mars, Nestle, and ACNielsen C*Track for market data supplied for this article. The Top 50 ranking was not available at the time of publication and will be included in the next issue of ASS&CSN. Ed.

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Sales breakdown at route and supermarket outlets. Percentages of total confectionery sales by value for Y/E Dec 2000*.
(Gum & Medicated not included)*

Route Grocery
Enrobed bars	40%	23.1%
Bitesize	8.6%	7.8%
Block	14.6%	22.0%
Moulded	5.4%	5.2%
Sugar	29.2%	28.6%
Other assorted	2.2%	13.2%
*Source: Mars Confectionery of Australia

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Did you know?
Three facings instead of one can increase sales by 40%.
Double facing increases sales by 23%.
The top 29 products account for 83% of sales.
83% of confectionery sales are made on impulse,
Bars make up43% of all confectionery sales.