Within the all-important confectionery category in convenience, chocolate remains the undisputed king. According to Convenience Measures Australia, chocolate bars are number one in confectionery for penetration, and are represented in 51% of all confectionery baskets.
The size of the chocolate bar opportunity is then immense. Recent Roy Morgan research reveals that 68.4% of the population (or just over 13.5 million people aged 14+) eats some kind of chocolate in an average four weeks, and 53.2% of them eat a chocolate bar.
While grocery may be responsible for some 75% of chocolate bar sales, that still leaves convenience with 25% of a very sizeable and profitable pie.
The challenge for convenience in recent years has been fighting off the market share threat posed by the major supermarkets and their heavy discounting of chocolate. C-Stores simply cannot match the likes of Coles and Woolworths when they offer medium bars for less than $1 on special.
Nonetheless, on-the-move consumers who are looking for a quick snack or treat are often prepared to pay that little bit more for the convenience of buying in a C-store.
So, other than perhaps running their own price promotions to at least narrow the price differential between the channels, how can C-stores ensure they make the most of the chocolate bar opportunity?
The channel is well used by chocolate lovers buying an impulse treat or doing a quick top-up shop, and visibility is key if it is to continue to generate ‘grab and go’ sales. Mondelez International, which owns the Cadbury brand, said that in some stores bars are losing visibility to less impulsive items such as gums, mints, and health bars.
A Mondelez spokesperson said: “Bars should be prominently displayed on top of and below the counter as the typical shopper mission in petrol and convenience is fuel, with most shoppers heading directly to the counter to pay”.
“It is at this point that they engage with other categories and it makes sense that this is where the most impulsive category should be positioned,” the spokesperson said.
Nestlé, which is responsible for leading brands such as Kit Kat, agreed that correct positioning of bars is critical to customer conversion and sales. It says that, as well as being positioned at the checkout, multiple points of disruption can increase penetration.
Nestlé’s Head of Marketing (Confectionery) Anna Stewart said: “Generating incremental store value can be achieved through off-location displays, bundling with associated purchases and disrupting with multiple points of interruption on the path to purchase”.
The effective of use of promotions in convenience can be a vitally important tool for driving chocolate sales in the channel. Indeed, according to Brett Barclay, director of Convenience Measures Australia, the promotional penetration on chocolate bars is more than double the channel average and that, when chocolate bars are noticed on promotion, 75% purchase versus the channel average of 46%.
Running combo deals across soft drink and bars has proved hugely successful in boosting sales, and other promotional mechanics such a meal or coffee deals have also had a major impact when trialled. Retailers can pair sampling with high velocity products such as coffee and sandwiches to ensure trial and hopefully establish habit-creating behaviour.
Mr Barclay said the average basket size with confectionery included is 47% higher than the average.
Fuel discount offers have also proved successful in the past. Petrol and convenience shoppers are sensitive to the price of fuel, and providing a discount for buying one of their favourite products is an added incentive.
Stores should also ensure they make the most of their point of sale material. Good displays with clear messaging and strong imagery of products will entice the shopper to purchase. Stocking a large range of chocolate bars is also vital. Having a breadth of offerings enables stores to satisfy different tastes and capture the breadth of the market. There are a broad range of consumer needs, such as portion control, indulgent treating, on-the-go consumption or a ‘less-guilty’ treat with some health benefits, and stores that seek to satisfy the varied customer repertoires will do well.
Cadbury bars such as Cherry Ripe, Marvellous Creations, Twirl, Cadbury Dairy Milk, Turkish Delight, Crunchie and Boost continue to be strong performers in convenience, Mondelez International said continued new product development is vital for driving category growth.
A Mondelez spokesperson said: “Consumers want truly new, products that offer different sensory experiences, indulgence, nostalgia, and functional benefit such as protein”.
Market research company Euromonitor International said that one of the key trends in chocolate in recent years has been a greater demand for premium products, and manufacturers have diversified their range in response.
Euromonitor International research analyst Fatima Marquez said: “Enthusiasm for higher quality products has been at the forefront of value growth in this category particularly as consumer appetites demand more experience from ingredients, flavours and presentation of products”.
“This has not only given scope for leading brands to innovate but it has also created a landscape for smaller players to enter the industry.”
Lindt & Sprungli is a brand synonymous with premium products and it said there was an overall trend towards dark chocolate.
Lindt & Sprungli’s Marketing Director Nick Brock said: “Convenience stores should ensure they have a range of premium chocolate bar products which will broaden the overall appeal of the category and can drive category value”.
“Many people are conscious of their health and wellness but will continue to enjoy an occasion treat and, if that trend continues to grow, our expectation will be that people will increasingly look to more premium chocolate brands,” Mr Brock said.
The company’s major recent innovation in bars is the launch of the Lindor Milk Chocolate Orange 38g bar. It is also launching Lindt Fruit Sensation in the Choc bites pouch category to drive incremental category sales and meet what it sees as an unmet demand for a premium chocolate snack for adults.
Nestlé has also been busy in the innovation department. The company said its new Kit Kat Chunky flavour rotation, ‘Choc Fudge Sundae’, provides a new opportunity to attract differentiated shoppers to the Kit Kat bars range. It has also launched ‘Milkybar Nutty & Crunchy’ to the Milkybar portfolio. It says the addition of nuts will add a textural experience not currently seen in the white chocolate segment.
Anna Stewart from Nestlé said: “Consumers continue to influence trends; with passion for experiences generated through visual elements, flavours and textures as well as an ongoing desire for customisation”.
“If brands can continue to inspire a passion for confectionery through textual and flavour innovation, coupled with the latest technology; chocolate will remain a signature treat for Australians,” Ms Stewart said.
Despite the challenges of aggressive supermarket discounting and the rise of the health and wellness trend, chocolate bars are then still driving convenience traffic and boosting profits. Stores that continue to focus on range, presentation, promotional activity, and on maximising the opportunities presented by new product innovations will no doubt continue to reap sweet rewards for many years to come.
* Convenience & Impulse Retailing magazine would like to thank Mondelez International, Nestlé, Lindt & Sprungli, Euromonitor International, and Convenience Measures Australia for supplying information for this article.
Quick off the Blocks
While the majority of chocolate bar consumers are younger and are purchasing for themselves as an indulgence, the block chocolate shopper is skewed towards a slightly older demographic, with a high proportion buying blocks to share with family members.
According to recent Roy Morgan research, of the 13.5 million Australians over the age of 14 who had eaten some kind of chocolate in an average four weeks, 41.8%, had eaten at least part of a chocolate block.
Blocks and bars then represent two differing occasions for customers in store. Blocks are treated as a destination purchase whereas bars are highly impulsive, especially when positioned on or beneath the counter. While blocks are clearly going to sell well in grocery, major manufacturers such as Nestlé said increased block distribution can represent an opportunity for convenience to capitalise on future growth and sales.
Nestlé’s Head of Marketing (Confectionery) Anna Stewart said: “Blocks continue to display strong momentum across the channel, indicative of consumer’s desire for sharing experiences. Blocks provide various opportunities for occasions, therefore are highly valuable in increasing customer penetration”.
The company said that a lot of recent innovation has seen an unprecedented portfolio of blocks brought to market, which has helped to drive strong sub-segment growth.
Cadbury is also well aware of the sales potential of chocolate block sales through all channels. It recently launched a number of new Cadbury Dairy Milk branded products, including the ‘Packed with Yum!’ range of family-sized blocks. The range, which is initially available in supermarkets, features textures and flavours inspired by favourite Cadbury chocolate bars such as Picnic (180g block), Boost (180g block), Moro (180g block) and Crunchie (200g block).
Cadbury Dairy Milk is also generating interest with its ‘Share the Taste’ campaign which runs until July. A promotional tour will see the company giving away large amount of milk chocolate blocks in towns and cities across the country.
Mondelez International Associate Director Chocolate Paul Chatfield said: “The campaign will help us to create a movement of real, genuine human connections around the country, encouraging moments of sharing”.
For its part, Lindt & Sprungli’s said that blocks complement the bars segment as they deliver on different occasions ie sharing and evening vs. bars individual, daytime.
The company, whose main block brands are Lindt Excellence, Creation and Lindor, said 100g-200g blocks designed for sharing or for eating over a number of days work best.
Lindt & Sprungli’s Marketing Director Nick Brock said: “In blocks, we recently launched a 78% cocoa block to further complement our successful range of high-cocoa products and we see this range performing particularly well as consumer interest in high cocoa chocolate grows”.
AT A GLANCE
- Chocolate bars are represented in 51% of all confectionery baskets.
- The block chocolate shopper is skewed towards a slightly older demographic, with a high proportion buying to share with family members.
- Convenience is well used by chocolate lovers buying an impulse treat or doing a quick top-up shop
- Visibility is key if convenience stores are to continue to generate ‘grab and go’ sales.