Chocolate Confectionery Industry

The Chocolate Confectionery Market Overview

Introduction

This report analyses the chocolate confectionery market in the United States, six major Western European countries: Belgium, France, Germany, Italy, Spain and the United Kingdom and three Eastern European countries: Czech Republic, Hungary and Poland.

The report considers each market in terms of its value and volume over the period of 5 years and provides future growth expectations, by sub-category, to 2024. The report addresses issues such as current and future NPD and distribution trends, major players and company overviews.

Market value

The chocolate confectionery market experienced steady and significant sales market

value and volume growth between 1998 and 2003. The chocolate market total in the 10 countries analysed in this report grew by 11.6% from 1998 to 2003. The United States dominates in terms of market value and volume in the chocolate sector.

Market volume

In volume terms, the market for chocolate confectionery in Europe (Belgium, France,

Germany, Italy, Spain, Czech Republic, Hungary, Poland and the UK) grew by just

5.5% between 1998 and 2003, to reach 2249.8 kg million. The largest of these markets is the German, which grew to reach 683.9 kg million in 2003, although it was down by 2.6% from 1998.

Distribution

Supermarkets and hypermarkets form the largest share of the distribution outlets for

confectionery in Europe. They account for a 37.0% share in Belgium, 32.1% in France, 27.3% in Germany (closely followed by discounters with a market share of 24.1%), 34.3% in Italy, 35.5% in Hungary and 25.2% in Spain (just ahead of traditional grocers with a market share of 19.7%). However, in the United States, convenience stores are the most popular distribution outlets and in the UK, confectioners, tobacconists and newsagents (CTNs) are the most popular. In the Czech Republic and Poland traditional grocers are the most popular distribution outlets.

NPD and marketing trends

NPD is a key driver of growth in the confectionery industry. The majority of manufacturers have a clear programme for NPD and regard it as significant and vital to their business. NPD is costly for all businesses and the fact that most are prepared to give it the resources and financial backing they do indicates that it is deemed worthwhile and, in fact, essential to increasing market share. Companies that fail to innovate, look ahead or anticipate customers’ needs will not be successful in the current, competitive and highly saturated chocolate marketplace.

Expanding markets by developing products into new, perhaps younger markets (e.g.

Kit Kat Bites, Cadbury’s Boost Guarana, Low Carb Rolo) or by introducing existing products into new countries are important drivers for NPD in the confectionery industry.

Ferrero leads the way in innovation

Ferrero is widely acknowledged as one of the most innovative manufacturers of kids’

food and drinks. Ferrero’s Kinder Surprise confectionery sets the benchmark for other manufacturers, as its strong brand appeal is attractive to both parents and kids. The company’s Kinder Surprise brand remains impressive through the use of a changing range of toys and expansion of the ‘egg’ range of brands with products such as Kinder Merendero (which has two pieces of chocolate confectionery inside).

Ferrero moved away from the standard chocolate, novelty snack when it launched its

Kinder Happy Hippo in 2002. This is made up of a hippo-shaped wafer shell filled with hazelnut and milk cream and sold in individual, unique packs.

In Germany, Ferrero’s expansion of its Kinder range has been most visible, as the

Kinder brand has become an umbrella brand for a range of chocolate-based snack

products. One of the most notable goals of the expansion has been to create a range of brands that adults can buy into as well, which is unusual among brands that began their lives as purely marketed/aimed at kids. Ferrero’s innovative approach has led to the seamless integration of its offline and online positioning, and the company has taken a strong stance on corporate responsibility.

Major players

Major global players include Kraft, Nestlé, Cadbury’s and Ferrero. Kraft dominates the chocolate market in Belgium, with a 42.0% share. Nestlé chocolate leads the market in France, from Kraft, Lindt and Ferrero. Ferrero has a leading share of the German market, from Barry Callebaut and Kraft. Together, the top three companies account for 68.7% of the market. Ferrero also dominates the Italian market with a share of 50.1% in 2003, ahead of Nestlé and Mars Inc.

Nestlé dominates the Spanish chocolate confectionery market with a share of 32.0%

with Cadbury just behind with 20.0%. Three companies dominate the UK chocolate

confectionery market, together accounting for over 75% of the market. Mars Inc. leads the market from Cadbury and Nestlé.

Definitions used within the report

Boxed chocolate: Assortments of different, individual chocolates packaged in a box or carton and often sold as gifts and treats.

Countlines: Chocolate-covered bars designed to be eaten as a snack and on the go. This includes bitesize countlines sold in multipacks. Products marketed as biscuits/cookies are not included.

Moulded bars: Solid chocolate bars, blocks or tablets shaped by pouring melted

chocolate into moulds, with or without added ingredients.

Source: Business Insights, 2005