One of the most impulsive purchases in the P&C channel, how does chocolate stay front of mind for consumers, asks Thomas Oakley-Newell.
A long-time staple in the petrol and convenience (P&C) channel, chocolate continues to deliver sales growth for many companies in the segment and is one of the most impulsive products in the market. Available in a variety of forms – blocks, bags, and bars – consumers have consistently enjoyed the category.
The AACS State of the Industry Report 2021 revealed that while chocolate growth wasn’t as strong as in 2020, the category still delivered 1.9 per cent growth, delivering +$6 million in value to retain the largest share of the confectionery category overall.
Anna Matheson, Channel Manager from Nestlé, said during the pandemic sharing formats were positively impacted as consumers were looking for new ways to indulge.
“Chocolate bags and chocolate blocks experienced significant growth and expanded their presence in-store. Blocks have maintained momentum as we transition post-Covid, with Nestlé blocks +2.4 per cent in the quarter, growing ahead of the segment1.”
Tom Wild and David Walpole, spokespersons from Mondelēz, said the company had noted a 15 per cent increase in basket penetration in the P&C channel and bars remain a growth focus.
“We’ve seen strong sales value growth in the channel, which outperformed the likes of hot dispensed beverages and grocery items.
“Along with beverages (inc. coffee), bars are one of the most impulsive and expandable products within the channel and deliver on multiple missions and occasions throughout the day – we also see bars being the anchor for us to unlock additional activation points both in-store and online.”
Another growing consumer trend noted by Sheri Juchau, Category and Trade Marketing Director for Ferrero Australia, was the desire for sustainably created products.
“We are seeing steadily-increasing consumer demand for chocolates with more sustainable ingredients, so we are proud of the ongoing progress of our sustainability initiatives; for example, since January 2021, Ferrero has sourced 100 per cent certified-as-sustainable cocoa for all our products through independently managed standards including Fairtrade and Rainforest Alliance.”
Juchau spoke of the importance of the P&C channel to Ferrero, saying that given P&C is a high impact channel where consumers actively seek out new products, it is able to deliver increased awareness and the trial of new products, such as Kinder Happy Hippo and Tic Tac Watermelon Mix, which both launched to market in the second half of 2021.
“The P&C environment also allows for broader demographic reach (compared to the grocery channel) and caters to a different need state – perfect for Ferrero’s impulse products, such as Kinder Bueno, Kinder Surprise and Tic Tac.”
Juchau said that both Kinder Bueno and Kinder Surprise are stand-out performers within the channel.
“Kinder Surprise is ranked second in the Kids Novelty brand category, with exciting new toy ranges throughout the year helping to support these results.
“Kinder Bueno continues to deliver consistently strong outcomes across P&C retailers to achieve a number eight brand ranking in Chocolate Bars category, with Classic and White flavours returning +1.7 per cent value growth on last year.”
Matheson identified three main performers for Nestlé – KitKat, Milkybar, and Aero – as the drivers for Nestlé’s chocolate category, with the trio delivering 83 per cent of total Nestlé chocolate value sales and each brand delivering differentiated offers and targeting unique shoppers.
“KitKat continues to hold the number one medium bar rank in total convenience, with its core KitKat 45g, with total brand driving upwards of $22.5m annually. The brand continues to resonate well across multiple formats (medium bars, share bars, and blocks), with strong performance in medium bars in particular.
“While the medium bars segment is growing +2.2 per cent in the quarter, KitKat medium bars are growing well ahead of the channel at +13.3 per cent, fuelled by innovation and momentum across core lines2.”
Andrew Antoniou, National Account Manager at Menz, said that Violet Crumble 100g bag, Violet Crumble Nuggets 135g bag, and Violet Crumble 50g bar are the best performing products, mainly due to these three lines having the greatest distribution.
“The data we get shows a positive story for Menz within P&C. There is no doubt that our products have certainly grown in the last two to three years in the channel. This includes both our distribution and sales.”
Perhaps more so than other categories, for chocolate, innovation and NPD are critical in driving frequency and conversion.
Matheson spoke of the need to inject new news and excitement into the category and mentioned Nestlé’s recent launch of KitKat Chunky with Lotus® Biscoff®, featuring the iconic crisp over-baked wafer finger combined with the caramelised biscuit spread of Lotus® Biscoff®.
“The recent KitKat Chunky with Lotus® Biscoff® launch has been a huge success, driving incremental value to Nestlé’s portfolio and the segment, attracting significant buzz with consumers and having a positive impact on core KitKat Chunky 50g.”
Joyce Tan, Head of Marketing at Nestlé, said that Lotus® Biscoff® is one of the most requested and searched-for items on the KitKat website.
“We’ve seen an undeniable love for both KitKat and Lotus® Biscoff® and are so thrilled to combine them and introduce such a delicious addition to the KitKat Chunky range in Australia. We wanted to excite KitKat fans with a flavour and texture combination that would leave them longing for their next break,” said Tan.
Mondelēz, producer of Cadbury, is another company developing new products, its latest is a range called Cadbury More, which features three new blocks with a twist on some of its most loved flavours and includes a mixed roast nut flavour, a nuts and salted toffee flavour, and an Old Gold and Fruit ‘n Nut combo block.
Paul Chatfield, Vice President of Marketing at Cadbury, said they are excited to introduce Cadbury More, some of the chunkiest and most generous blocks ever produced.
“Our Cadbury More range is a fresh take on some familiar favourites that have been loved by Cadbury fans for generations. We can’t wait to see what our chocoholics think, particularly those who love the crunch and variety of nuts, fruit, and Cadbury chocolate.”
Convenience is king
Positioning chocolate in key impulse purchase areas is paramount and can help P&C retailers boost sales through unplanned purchases.
Juchau said specifically towards the front of store and within arm’s reach of the till is ideal.
“Confectionery can ‘build the basket’ as an add-on to the shopper’s primary mission – for example buying food to go or coffee – so positioning confectionery products close to these items and/or creating promotional bundles can be effective in increasing shopper spend.
“The consistently strong performance of the Kinder Bueno range demonstrates the incremental value to retailers in offering variants of popular products, particularly at the register where as many as 50 per cent of purchase decisions occur3.”
Juchau said multiple locations and displays drive up to 33 per cent higher purchases3 by offering additional opportunities for consumer consideration, which is why Ferrero’s POS displays are designed to attract attention in a range of spaces.
Mondelēz agrees that keeping chocolate “within arm’s reach” is critical due to the highly impulsive nature of the category but also identified the use of technology to drive sales in the future.
“Successful retailers are generally the ones embracing technology. There is an impending demand for online services to extend to convenience consumers who want a personalised, streamlined service.
“We will see consumers paying for fuel or convenience products through an app or even vehicle plate recognition. It is technology like this that reinforces what the P&C channel is known for – convenience and reliability.
“Tech also gives retailers access to valuable data insights. From this, retailers can invest in the right innovation for their business.”
Antoniou said that obviously every supplier wants the best position in-store, but due to Menz’s recent growth it shows consumers are looking for their products and therefore are warranted in being given key selling positions.
“The other benefit for Menz is the fact we are local, Australian-owned and manufactured, and this can certainly be a leverage for retailers.”
Matheson also offered advice for retailers regarding positioning and selling Nestlé products and echoed previous sentiments that chocolate remains one of the most impulsive categories in the channel.
“Driving sales at counter and off location displays are crucial to conversion by reaching the consumer with multiple touchpoints.”
At the end of the day, Mondelēz believes retailers need to keep evolving as consumer behaviours continue to expand from fuel-only needs.
“Shopper insights show the modern consumer expects a broader convenience offering that includes fresh meals and food delivery and we believe confectionery plays an integral role in unlocking key basket builders within these key P&C missions.”
1AC Nielsen AUS Convenience Scan MAT to 10.05.22
2AC Nielsen AUS Convenience Scan MAT to 10.05.22
3Ferrero Confectionery Shopper Vision Study 2018