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Category feature: Chocolate Bars

13.5 million people a chocolate bar every four weeks on average.

What do you call a lamb covered in chocolate? A Chocolate Baa.

While that joke might get some snickers around the office, the chocolate bar industry has soared to new heights recently and the only people laughing are those who are manufacturing and selling them; laughing all the way to the bank, that is.

Despite wellness and healthy eating being the driving force of many publications in the media, championed by celebrities with their affiliated diets, Australians are eating more chocolate than ever before.

Roy Morgan reported that in 2016 around 68.4% of the population aged more than 14 years (equivalent to 13.5 million people) ate a chocolate product in an average four week period.

The shift from 65.3% in 2013 represents a jump of one million Australians who have introduced chocolate into their diets in the past three years.

Bars are a mature category in P&C – growth of 2-3% would be the norm, to step up this growth we need to think differently about the category – look at new merchandising solutions and location in store, develop & launch innovative products that target different consumption occasions, launch new products with unprecedented scale to generate interest and visibility.

Chocolate bars are an established part of every convenience landscape, and a combination of manufacturer innovation and smart in-store marketing has ensured busy customers have kept picking up chocolate indulgences at their local convenience store.

A piece of convenience

Chocolate bars play an important role in convenience as they make up a 92 per cent share of dollar growth across the confectionary channel as reported by the 2016 Australasian Association of Conveniences Stores (AACS) annual state of the industry report.

They are particularly important in convenience as they are perfect for on-the-go consumption which shoppers are looking for within the channel. They are easy open, and a quick and satisfying snack accompanied by a sugar rush to keep you going.

Chocolate bars are nothing if not impulsive and an in-a-rush convenience store shopper who has popped in to fill up on petrol or a quick snack can be easily swayed to add a chocolate bar to their purchase.

According to Shopper Tracker Data, the role of chocolate bars within the confectionary category is to ‘drive the basket’. This term refers to driving category growth by engaging shoppers to spend more in store.

The two most common purchases made in response to the ‘drive the basket’ approach, are “shoppers looking for an irresistible deal on something interesting” and “highly impulsive purchase with limited to ability to premiumise.”

Shopper Tracker Data said that the chocolate bar category is number five in the overall ‘drive the basket’ approach.

Chocolate bars rank second in the ‘because I feel like it’ sector of ‘drive the basket’.

Who wins in the choco-larity contest?

Roy Morgan reported that Cadbury proved to be the market leader across the chocolate categories for Australians, with the 50g bar eaten by 17.7% of the over-14 population at least once a month.

According to the 2016 AACS report, confectionary has been led by the larger brand suppliers engaging customers with innovation. However not all chocolate bars were of equal value.

“While Cadbury Oreo generated around 40 per cent of the category’s entire growth, another Mondelez brand fared less well; Marvellous Creations recorded double-digit value losses in 2016 on the back of a decline in 2015 too,” it said.

“The King Size Twirl pack has recorded two consecutive years of dollar growth above 20 per cent.”

The Roy Morgan chocolate report said Cadbury 50g chocolate bars were the most popular bar consumed, 17.4 per cent of Australians 14+ consumed at least one in an average four-week period, well ahead of other brands and bars.

The top 15 most popular bars in Australia

Roy Morgan Single Source (Australia), April 2015-March 2016, n=15,074

 

Willy Wonka’s chocolate factory

Just like Willy Wonka’s factory and his hidden rooms of innovation and new and exciting confectionary, chocolate manufacturers need to consistently be at the forefront of taste and innovation to stay relevant to the market.

Chocolate manufacturers work to create a number of new product developments (NPD) every year, and while this feels like a lot for the creative team and manufacturers, the customer is the one who benefits from having a constant array of new chocolate products from the biggest brands in the world.

Already 2017 has seen the addition of many chocolate bars onto the market including; Twirl Orange, Kit Kat Raspberry Cheesecake, Kit Kat Tiramisu, Mars Salted Caramel, Snickers Hazelnut, Cadbury Dark Milk and Cadbury Oreo Double Choc – just to name a few.

Chocolate bars are a repertoire-driven category with shoppers reportedly having approximately eight products in their repertoire.

Having a breadth of offerings across different flavours enables convenience stores to satisfy different tastes and capture the breadth of the market.

Mondelez category development manager Neal Naidoo said NPD usually drives around 40 per cent of category growth.

“NPD provides shoppers an alibi to interact and re-engage with the category i.e. something they must try,” he said.

“Line extensions (flavour rotations) are the norm, manufacturers need to be innovative and bring NPD to market that targets different occasions and ultimately increase consumption.”

Despite this rapid fire of new products, not all chocolate bars last long once they are on the shelves. Take for example Nestle’s Wonka chocolate bars. The bars were introduced off the back of blocks in 2013, however the entire Wonka chocolate range was deleted in late 2014.

Either the range just wasn’t selling as well, or there were too many other options creating a crowded market with too much choice.

Often when chocolate blocks become popular, they can also be developed into bars. This evolution from the share size to the single size is something that Nestle and Cadbury have always been across, the single serve Kit Kat bar and the Cadbury creations bars both single servings of the share sized block.

Pricing and promotions

Experimental marketing i.e. sampling campaigns to see how they fare with customers is important for growth in convenience stores.

Offering ‘two for’ deals are also popular in the channel as they give customers a perception of achieving greater value and therefore do drive sales.

Chocolate consumption increases in winter; there is opportunity to partner/combo chocolate bars with hot beverages/meals.

On-the-move customers who are looking for a quick snack or treat are often prepared to pay that little bit more for the convenience of buying in the convenience channel but they do have their limits.

Mr Naidoo said that reverse fuel offers have proved to be successful promotions.

“For example BP’s 8c per litre off when you purchase two King Size bars – hypothesis being, that consumers are price sensitive regarding fuel evidenced in fuel dockets, fuel price checks,” he said.

“Chocolate bars are one of the most impulsive categories and consumption is highly expandable.

“Capitalise on these insights and increase the visibility of bars in store (on counter top, utilize eye catching point of sale).”

The best way to maximise sales and profit from chocolate bars is to place them on the front counter within arm’s reach. Chocolate bars should be prioritised for placement within this area as research has shown that this is the best place to optimise sales.

Shopper Tracker data reported that medium bars are the most impulsive of all the confectionary segments.

Chocolate bars are skewed towards a younger shopper with a higher disposable income, with a majority of consumers purchasing for themselves as a treat/indulgence.

The healthy option

A report on chocolate trends by PLAY Market Research found that the chocolate industry has seen a increase in premium chocolate and healthier product options.

Is there such a thing as a healthy chocolate? When placed side by side the obvious differences in the fat and sugar content of each chocolate bar are hard to miss; it’s these ingredients that make them so delicious.

But despite some of the chocolate bars claiming to be lower in fat and sugars than others, (Fry’s Turkish Delight – 60 per cent less fat per gram that the average of leading chocolate bars) is there actually a healthy option that doesn’t compromise on the chocolate?

The Bar Counters range of nutritious bars are shelved in the same section as the rest of the chocolate bars but offer an alternative “for those with a focus on health and nutrition”.

The range is divided into health categories including; paleo, high protein indulgence, raw foods, gluten free, high protein and no added sugar.

A statement from The Bar Counter aims to answer the question of why it is a unique brand.

“The Bar Counter is about being colourful and vibrant. We have created a delicious range of products using only the best combination of ingredients and flavours,” it said.

According to PLAY Market Research pressure on the industry as a result of consumers increasingly being concerned about fat and sugar in foods, has see the demand for confectionery weaken.

Manufacturers must be innovative in their approach to these concerns.

The Bar Counter goes on to say: “If you have been searching for a nourishing snack that is gluten free, or contains raw ingredients, or no added sugar- then our range has you covered.”

Catering to these specific customer needs may very well be the filler in the gap in the market for a healthier chocolate, so you can have your chocolate bar and eat it too.

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