ª Print this Page ª Close this Window

Chocolate Success Demands Savvy

NATIONAL C*TRACK March qtr 2004
	VALUE % SHARE
BLOCKS	100.0
CADBURY DAIRY MILK 150G	7.9
CADBURY DAIRY MILK 250G	7.0
CADBURY DAIRY MILK 55G	4.7
CADBURY DAIRY MILK K/S 75G	4.3
CADBURY FRT & NUT 150G	4.3
CADBURY HAZELNUT 150G	4.1
MILKY BAR MLK&COOKIE 80G	3.6
MILKY BAR PLAIN 50G	3.4
SNACK [CADBURY] SNACK CHOC 150G	3.1
CADBURY HAZELNUT 250G	3.1
CADBURY FRT & NUT 250G	3.0
CADBURY CHOCETTES DAIRY MILK 70G	2.9
SNACK [CADBURY] SNACK CHOC 250G	2.3
CADBURY FRT & NUT K/S 75G	1.9
CADBURY FRT & NUT 55G	1.8
MILKY BAR PLAIN CHC BITES 75G	1.8
CADBURY CARAMELLO 150G	1.8
CADBURY RST ALMOND 150G	1.7
CADBURY TOP DECK 150G	1.5
CADBURY NUT BREAK 55G	1.5

AC Nielsen Closeup

Category Block Chocolate Growth
Market Breakup Grocery	$314.5 million	6.4%
Convenience	$ 4.1 million	2.7%

There is an old saying that everything has its price; in convenience stores, it would seem that everything has its price point. Block chocolate would seem to be suffering as a result – but the message is, don’t give up just yet.

If you’ve noticed a slight downturn in interest in block chocolate of late, it’s not just from the consumers.

It would seem some manufacturers have been investing in building grocery sales of blocks at the expense of route. At least, that has been the case over the last few years, but it appears that things may be about to change for the better this year.

In the meantime, the experts suggest that if you want to maintain sales of block chocolate, it may be time to re-evaluate where you place them and how you sell them, in order to get a good return.

“In convenience stores, people are after convenience above price but they are still interested in buying blocks,” says Michele Phillips, Nestlé’s marketing manager, chocolate.

Nestlé is so committed to block chocolate that it has just launched a new range, including the flagship ‘Double Blend’ which replaces Smooth ‘n’ Creamy. The new range includes 50g bars and 200g blocks, both sizes aimed squarely at the C-Store consumer.

“The trick is to offer a narrower range, picking brands that are continuously and heavily advertised such as our Milky Bar, or offer a difference that consumers value such as our Mint Slice which is a block with a biscuit layer.

“Nestlé is committed to driving P&C sales and block growth. We have committed P&C shopper-specific research which we will use with our trade partners to drive P&C sales,” Ms Phillips says.
Stock a Niche Range

“For block sales to work, retailers do need to stock a niche range,” says Cadbury’s corporate communications manager, Karina O’Meara.

“Pick the best performers that consumers love. They still want to buy 250g blocks so it makes sense to stock a selection - but make sure it represents the leading performers. That would include our Dairy Milk, Fruit & Nut and so forth - the proven profitable sellers,” Ms O’Meara says.

Masterfoods (Mars) has a very similar commitment to P&C and has some major plans for its Dove product that will kick in later this year. Marketing category manager, Trish Evans, agrees that price point – and therefore block size – can be a sticking point, unless the retailer plans well.

“Blocks can work in route but at the moment it is predominantly bars and small blocks – it’s the price point that is the key. Family blocks are just getting too expensive at P&C level to be attractive to many impulse buyers. Additionally, supermarkets are open longer hours and their pricing offers better value for larger blocks.

“The big blocks are generally not an impulse item unless consumers are looking to satisfy a specific sharing occasion, such as a video night. Most of the time, if they want that type of product, they will add it to the supermarket shopping list,” Ms Evans says.

The market share in block chocolate has been stable for 20 years or so, with Cadbury the undisputed leader (82 per cent in route), followed at some distance by Nestlé, and even further back, Mars.

According to Cadbury’s figures, Cadbury was driving value in convenience in 2003, growing almost seven per cent and increasing market share to 76 per cent. However, the market leader’s figures also confirm the drop in block chocolate in the segment, with the total block chocolate category reducing in value by around three per cent.

The experts agree it is the consumers who regulate the type of purchases they make and emphasise that the smart retailer will range to suit their regular clientele.

“We still see potential in 200g, but not much bigger, which is why our new range stops at 200g. You have to maintain value for money and that’s still a reasonable price point,” says Nestle’s Ms Phillips.

Nestlé offers Milky Bar as 180g and Nestlé Club, Mint Slice and the new range, all in 200g.

Smaller Size Gives Better Value

“BP has deleted all blocks because they see it as a dead market but others shouldn’t follow suit, especially the independent retailers. They should take it as an opportunity to provide a supply because they’ll have better sales as a result – there is still a demand there,” Ms Phillips says.

Like Nestlé, Cadbury advocates the smaller sizes as best value in route and continues to invest in media promoting its range.
“All our leading brands come in a range of sizes including 250g, 150g, 75g and 55g formats,” says Cadbury’s Karina O'Meara.
“Retailers can capitalise on consumers’ love for Cadbury by stocking those sizes and particularly the leading brands. Dairy Milk, Fruit & Nut, Hazelnut, Snack, Top Deck and Caramello in both 55g and 150g should be readily available and on prominent display.”

However, Masterfoods’ Trish Evans believes sales are not just limited to the smaller blocks and that there is scope for the bigger blocks, providing the retailer ranges them intelligently.
“ We would suggest they stock a range of the favourite products, the proven ones. You do need to have some family blocks available because people need to have an option for larger, sharing type products, but limit the range to best sellers.
“ It’s important to understand the different dynamics of P&C and grocery. Whilst it is impossible to stock everything, you should still keep some family blocks on hand, without committing too much space or investment.“
The experts suggest the smart retailer won’t give up on block sales but will work out the best way of displaying and promoting them to maximise sales.

Know your Demographic

It’s suggested, where possible, that the retailer decides what range to stock and how to display it, rather than following a given plan. That’s because each store and its demographic (and demand) are different, so it is yet another case where a little bit of homework pays dividends.

Focus on the core SKUs. There’s no argument that blocks take up a lot of space, so make sure that what you do give space to is a proven seller. It’s important to get the SKUs right - so they are selling.

Take advantage of point of sale material that’s available and use it wisely, both outside the store to advertise what’s available, and inside the store at the actual location of the range, if it’s away from the counter area. If people don’t know where to find it, they may not ask – if they can see there is a wider range available than what is at the counter, it will tempt them to look and buy.

There are other ways of raising visibility such as price incentive deals (eg two blocks for $5) or combo bundling such as a Coca-Cola and a chocolate block, or coffee and chocolate. There’s also upselling - if you pay $2 for 50g and $5 for 200g, the block is obviously better value, so make the offer and convey that message.

One of the keys to sales of any type of chocolate, obviously, is weather. Unless it’s in the fridge – in which case, bars work better – chocolate is not usually a hot weather choice for consumers.

However, the colder months are upon us and the chance is there to make block chocolate work for you and your bottom line.

“Block sales peak in cold weather,” says Nestle’s Ms Phillips. “It’s comfort food with loads of emotional appeal, so get it out, make it visible and it will sell.”

Some Points to Ponder

Despite what the industry is saying, the 2003 ACNielsen figures suggest all is not well with block chocolate. Consider these statistics:
• Blocks make up 21.7 per cent of chocolate sales, or 0.7 per cent of total non-fuel C-Store business, down from 28.3 per cent for the previous year.
• Block chocolate sales shrank by 3.7 per cent per annum at C-Stores, while chocolate bars grew 8 per cent.
• Not one single chocolate or confectionery product made it into the Top 10 growth categories.

Block chocolate shares are as follows, with the previous year in brackets:
• Cadbury, 74.5 per cent (71.2 per cent)
• Nestle, 17.2 per cent (17.5 per cent)
• Mars, 3.9 per cent (4.2 per cent)
• Kraft, 3.1 per cent (5.6 per cent) (Toblerone, Jacobs Suchard)
• Others, 1.3 per cent (1.5 per cent)

ª Print this Page ª Close this Window