Despite the challenges presented by the ongoing health and wellness trend, Australia’s enduring love affair with chocolate has ensured the segment remains a critical part of convenience store success.
According to the most recent state of the industry report from the Australasian Association of Convenience Stores (AACS), chocolate – which represented a 59% dollar share of the confectionery category – enjoyed growth of 1.6% through the channel last year. Both chocolate bars and blocks performed strongly.
Convenience has also had to contend with the near continuous discounting of chocolate in grocery, with the big supermarkets commonly offering medium bars for $1 on special. While convenience operators can run price promotions of their own to at least narrow the price differential between the channels, the channel’s key advantage is its sheer convenience.
On-the-move consumers 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. The channel is well used by chocolate lovers buying an impulse treat or doing a quick top-up shop.
The AACS said that confectionery as a whole remains the most impulsive category, with 28% of shoppers buying more than they planned. It says the main mission for the confectionery shopper is mostly fuel rather than snacking.
Australians love chocolate so everyone is a potential buyer. Bars perform particularly well in convenience as they are bought by busy people on the go, or drivers stopping at service stations. Buying in convenience is driven by the want for immediate consumption, generally to fill a hunger need or that chocolate craving.
Chocolate bars and blocks sell well throughout the year but enjoy stronger seasonal sales in the cooler months. Blocks and bars actually represent two differing occasions for customers. Blocks are treated as a destination purchase whereas bars are more highly impulsive, especially when positioned on or near the counter. Chocolate bars are skewed towards a younger shopper, with the majority of consumers purchasing for themselves as a treat/indulgence. In contrast, the block chocolate shopper is skewed towards a slightly older demographic, with a high proportion of them buying blocks to share with their family.
The challenge for convenience operators is to effectively capture the customer’s attention, within a short window of time and amongst significant competition. With chocolate bars representing approximately 36% of all confectionery sales, it is critical to ensure they are visible and available. Using front of store display bins and counter displays are highly effective in generating ‘grab and go’ sales.
It is also very important that stores offer a variety of chocolate brands as there will be customers who know exactly which product they are after, and others who are looking for inspiration. 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 need states, such as portion control, indulgent treating, on-the-go consumption or a ‘less-guilty’ treat with some health benefits, and stores need to cater to the varied customer repertoires.
Similarly, there will be a demand for share bars, medium bars and small bars, all serving to meet a variety of consumption need states. While share bars have been seen as the most important sub-segment of chocolate bars in convenience, medium bars are now playing an increasingly important role.
The chocolate landscape is dominated by players such as Nestlé with brands like Kit Kat and Milky Bar, and Mondelez International, which owns the Cadbury brand, and boasts the likes of Cherry Ripe, Marvellous Creations, Twirl, Cadbury Dairy Milk, Turkish Delight, Crunchie and Boost.
Market research company Euromonitor International says rising health consciousness has had a major influence on product innovation as brand owners have focussed on delivering consumers ‘permissible indulgences’.
While there has been increasing trend towards ‘premiumisation’ as shoppers look for greater flavour and textural variety in chocolate bars and blocks, this does not mean customers are deserting ‘core’ variants. They are often looking for a ‘premium’ offer alongside more mainstream offers so a balanced portfolio offer will remain an important part of the retail offer.
Traditional big hitters like Nestlé’s KitKat are then still seeing strong sales growth due to impressive performance of the KitKat 45g four finger medium bar, and the KitKat four finger 65g share bar. KitKat’s highly successful flavour rotation strategy is also continuing to deliver incremental growth to the category, with the 2019 Red Velvet & Mint Whirl variants adding close to $1m in sales in the channel.
As well as ensuring consistent availability of the big-selling established favourites, operators need to make the most of innovative new products from manufacturers as they seek to keep chocolate consumers engaged and excited.
Biscuit giant Arnott’s has recently entered the chocolate fray, re-imagining some of Australia’s favourite classic biscuits to inspire a completely new format – chocolate blocks and bars. Arnott’s chocolate is now available in five classic biscuit-inspired flavours; Iced VoVo, Scotch Finger, Wagon Wheel, Ginger Nut and Jatz.
An Arnotts spokesperson said: “With over 150 years of biscuit baking expertise, and more than 50 years of chocolate knowledge, making chocolate blocks and bars was an exciting but natural innovation for our business”.
“Arnott’s has spent the last few years developing this concept; perfect smooth and creamy chocolate, blended with real biscuit pieces to create an exciting new chocolate experience,” the spokesperson said.
The company said that with Australians loving Arnott’s biscuits and chocolate, it was keen to combine the two in order to give people the best of both worlds.
“To date, we’ve seen above forecast trial rates for our Arnott’s chocolate blocks, with strong consumer sentiment,” the spokesperson said.
“We are confident that our blocks and bars will be extremely well received, not just because they are Arnott’s but because they taste great.”
Robern Menz, which owns the Violet Crumble brand, said its 50g bar has had limited distribution in convenience in recent years, but its efforts to re-introduce the bar and additional SKU’s to the channel has been well received.
A Robern Menz spokesperson said: “We have just launched our new 100g Violet Crumble bites convenience pack into petrol and convenience and initial sales have been really solid”.
“Our flagship brand, FruChocs is still doing very well in South Australia…it’s the number one in the Choc Bite category in the state, which is virtually unheard of for a brand that is independently owned and has limited distribution out of its home state.”
Robern Menz said changes in the public’s dietary requirements are also becoming an increasing issue, and confectionery brands and retailers need to be on the front foot.
“Australia is the third fastest growing vegan market in the world, so it’s important not to discount this as a passing fad…we have recently introduced a vegan version of our iconic Menz FruChocs,” the spokesperson said.
“Gluten free products have also hugely grown in popularity, not exclusive to those who are Coeliac and all of our Robern Menz and FruChocs products are gluten free as we want as many people as possible to be able to enjoy them.”
The company believes share formats will also continue to grow in popularity.
“Eating well and being healthy is fixed in the public consciousness, so we anticipate more people exercising portion control with bag, bite-size formats that they can share with family, friends and colleagues, or that just allow them to eat over time, not in one go.”
“We’ve also just launched our 45g sample bags which not only ensure portion control but offer the opportunity to sample and reach new customers.”
Re-sealability and portion control will then play a growing role in the packaging for chocolate bars, blocks and bags; and at some stage it is expected that reduced or non-sugar offers will also emerge as key category trend.
While ensuring chocolate blocks and bars are highly visible is an important way that operators can capitalise on the impulsive nature of the segment, a variety of promotional mechanics can also be used to attract different shoppers in different ways. Bundling can be a great tool to encourage shoppers to add a chocolate bar or block to their basket, even if they weren’t initially planning to do so.
Robern Menz said all retailers need to consider sampling, trial packs, and introductory offers. The company says while it is worth operators experimenting with bundling, it can be a bit ‘hit and miss’ depending on the product selection.
“If possible, operators should utilise data to establish which products are purchased together to maximise success,” the company spokesperson said. “Consider seasonal trends and maximise the opportunity here – maybe a complimentary or discounted coffee with a multiple chocolate bar purchase.”
Associating chocolate with beverages such as hot coffee and water can definitely play an important role in boosting shopper conversion and value. Similarly rounding out a meal deal with a meal, drink and chocolate bar is also attractive to some shoppers.
Two-for-one deals can be highly effective in boosting promoted sales, as indeed can single price points. Other retail opportunities include aligning a chocolate bar offer with a fuel deal and attracting shoppers with deals advertised through a range of social media platforms. Upselling by store staff will always remain a great means of communicating a promotion to shoppers.
Despite the challenges then, a continued in-store focus on range, presentation, promotional activity, and on capitalising on the excitement surrounding new product innovations, will ensure chocolate bars and blocks help drive convenience traffic – and profits – for many years to come.
- Convenience and Impulse Retailing would like to thank Robern Menz, Arnott’s, and the Australasian Association of Convenience Stores for supplying information for this article.
AT A GLANCE
- Chocolate enjoyed sales growth of 1.6% through the convenience channel last year, with both chocolate bars and blocks performed strongly
- Confectionery as a whole remains the most impulsive category, with 28% of shoppers buying more than they planned
- Making chocolate available at front of store display bins and counter displays is highly effective in lifting sales.
- Having a breadth of bar and block offerings enables stores to satisfy consumers’ different need states