How new flavours and HFSS are re-shaping the category
1. Chocolate singles account for a quarter of confectionery sales in independents and symbols
Being skint hasn’t blunted c-store shoppers’ desire for the sweet stuff. In fact, with bigger purchases temporarily out of reach, it seems they’re choosing chocs as an affordable treat.
“2022 saw another strong year of growth across the confectionery category,” says Susan Nash, trade communications manager at Mondelēz International.
“The challenging circumstances and unsettled nature of the year made for changing consumption patterns, with shoppers re-evaluating their basket spend and preferred purchases. The confectionery category still grew by +2.9% versus the year before [Nielsen] Total Confec inc Gum, Value Sales vs YA, Nielsen MAT we 03.12.22, Total Coverage inc Discounters, suggesting that while many are strongly seeking value, they still want to treat themselves.”
Susan Connolly, director of Connolly Spar, says that the recent RRP rise in price-marked packs shows how resilient the market can be.
“Recently we saw the PMP on some Cadbury products go from a pound to £1.25,” she says.
“And we were nervous just because kids come to the store with maybe a pound in their pocket. But it hasn’t made sales dip – I think that’s because people like the strong value message of the price mark.”
Kenton Burchell, trading director at Bestway Wholesale, says that in the convenience sector chocolate multipacks (+12%) are showing galloping growth [Nielsen]. But format-wise it’s still singles that command the highest demand.
“Chocolate singles still have the largest share of confectionery with a quarter of sales in independent and symbol stores, and Duos are growing +9% [Nielsen],” he says.
For 2023 Cadbury has expanded its Duos range by bringing its best selling singles product into the format with Twirl Xtra, offering shoppers more for their money.
“Chocolate is a core part of our business,” adds Richard Inglis, owner of several Co-op stores in Southampton.
“Events like Christmas, Easter and Halloween are all big selling points for us. And chocolate is a big part of those sales. Plus we’ve got a theatre near one of our stores and people come across for treats to take in with them.”
2. The effects of HFSS are starting to be felt
HFSS is now a fact of life for retailers with big enough stores to fall foul of the supposedly obesity-busting law. It’s still early days, but in the mults at least, it seems to be having the desired chilling effect on promotions.
“Ten million less was spent on chocolate deals in January in comparison to last year’s promotional sales, according to Fraser McDevitt [head of retail and consumer insight, worldpanel division] from Kantar,” says Burchell. “[He] pointed out that this is partly down due to the HFSS rules, and concluded this marked a wider impact in the drop in promotions.”
Susan Connolly notes that in some ways the mults have it worse than c-stores. She points out that a pre-April Tesco’s customer would normally see Easter eggs stacked high front and centre in the store’s ‘power aisles’, but they’re now tucked away.
In her stores, she says that incremental chocolate sales have been hardest hit.
“People wouldn’t necessarily come in for chocolate but then just grab it because it was there by the queueing system,” she says.
“Now those sales are gone and I don’t think there’s an easy way to bring them back. What you have instead are the planned purchases where people come in for chocolate as part of a big night in.”
However, Richard says that HFSS has so far had zero effect on chocolate sales in his HFSS-compliant stores.
“The main thing that’s been impacted is our ability to have displays on the gondolas,” he says. “But to be fair, we’ve been moving away from that in the last few years anyway, because it created a lot more work. So we actually got rid of a lot of our gondola ends. Now we have a graphic on the end of the aisles, and there’s an extra two bays on the end of each gondola.”
One thing that angers Richard is the way that some bigger retailers seem to be ignoring HFSS regs. Plus, he doesn’t believe HFSS will have any wider effect on health.
“Maybe the cigarette gantry going dark would have a big effect,” he says. “But if people want chocolate they’re going to buy it wherever it is in the store. I think it would have more impact for manufacturers to cut sugar so it’s healthier at the source.”
3. 80% of consumers want healthier options
HFSS may be confusing customers and irritating retailers – but shoppers do genuinely want to see healthier treats, or at least they say they do.
“The focus on wellness and healthy living means 80% of consumers want healthier options, [VoxPopMe Jan 2022 150 respondents]” says Nick Reade, sales director at Mars Wrigley.
Like soft drinks brands before them, the major players in the chocolate category are having to reformulate products to meet evolving customer needs for ‘better-for-you’ treats.
“Consumers typically want to recharge and reward themselves, as well as connect with others and celebrate special occasions with confectionery,” says Reade.
“The sector is still all about enjoyment and taste, but health is becoming increasingly important.”
Mars has pioneered HFSS-friendly treats with its Triple Treat range, which use ingredients like date paste, raisins and peanuts (alongside chocolate) to reduce sugar across Mars, Galaxy, Snickers and Bounty. Plus, the brand is investing in KIND to promote primarily peanut-based permissible snacks.
Grenade unveils OREO protein bar
The launch of the new Grenade OREO protein bar, from the UK’s best-selling protein bar brand (IRI), has added another perfect healthier alternative for consumers looking for a sweet treat. With under 2g sugar and still packing 20g protein, Grenade’s range of indulgent chocolate protein bars provide a better way to snack.
A wide range of Grenade’s bars are also HFSS compliant, including must stock flavours, Chocolate Chip Cookie Dough and White Chocolate Cookie, ensuring retailers can still have great tasting snacks in their impulse locations. Having these bars available at the counter, with a wider range of indulgent flavours in your aisles can be the perfect combination for healthier snacking sales.
4. Free From chocolate in the convenience channel has grown 25%
The focus on HFSS also means that vegan and free-from brands are also getting more of a look-in on c-store shelves.
“At a total market level, UK Free From chocolate has continued to see strong growth in 2022, with value sales + 7.2% YA [Nielsen],” says Jacqueline Tyrrell, brand manager for Nomo.
“The UK Free From chocolate convenience channel has seen even higher growth, with an increase of 25% growth YA [to become worth] £9m [Nielsen]. This indicates there continues to be a high demand for free from chocolate within convenience.”
Tyrrell says that when Nomo first launched in 2019 its two target consumers were those with food allergies or intolerances and vegans. But now the rise of the flexitarian has changed the game.
“There is an interesting intersection between vegan, free from and health,” says Tyrrell.
“We have always positioned Nomo as a confectionery product and treat that is to be enjoyed as part of a balanced diet, however consumer perceptions of what constitutes as a health product are nuanced. For example, a chocolate bar which holds free from credentials might have perceived benefits for those who have intolerances or see dairy free as the more environmentally friendly option versus a regular chocolate bar.”
5. Caramel flavours are driving NPD
In a competitive market, regularly changing up flavours can keep consumers coming back for more.
“Research indicates that new flavours are by far the most likely facet of NPD to encourage consumers to buy chocolate products, given that 44% [Mintel UK Confectionery Report 2022] of buyers and eaters of chocolate agree that a chocolate brand that regularly brings out new flavours is more appealing than one that does not,” says Alison Robson, marketing manager at Baileys Chocolate, which recently added a Strawberries and Cream variant to its truffle range.
So what will be the favoured chocolate flavour for 2023? It could be that caramel (salted or otherwise) continues its market-straddling streak. Burchell points out that “caramel has been a proven winning flavour for singles formats” – in symbols indies the flavour experienced a 15% YTD sales uplift (Nielsen).
That’s good news for Mondelez. The firm has just launched a Cadbury Dairy Milk Salted Caramel range, featuring a tablet, Buttons and Fingers. The move comes hot on the heels of limited-edition Wispa Gold Salted Caramel, Toblerone Gold and the caramel-flavoured Twirl released in 2022.
Christina Bland, brand manager for Cadbury, says: “Salted Caramel is incredibly popular with shoppers, and as a flavour is second only to orange in terms of growth over the last two years [Nielsen].
Ritter has also picked up on the trend, adding a Salted Caramel bar to its range in October.
Nestle has invested in caramel too with its new Golden Collection,which includes Aero Golden Honeycomb, Milkybar Gold Buttons and block, Munchies Gold made with Caramac, and Smarties Gold Buttons made with Caramac.
Susan Connolly has seen caramel flavoured MilkyBar Gold Buttons do well.“They’re selling really well because they’re something different and I think people like the white chocolate,” she says.
6. Chocolate is the most popular food item to buy as a gift
In a cost-of-living crisis expect to see shoppers swap pricier gifting options for a box of chocs.
“79% of people who bought food as a gift purchased chocolate in the 12 months to April 2022 [Mintel],” says Daniels of Ritter Sport UK & IRE, which is releasing a new ‘Delightfuls’ (RRP £3.99) gifting line featuring milk, nut and caramel flavours.
“Token gifts under a few pounds are great impulse buy drivers and perfect for consumers looking for low-cost gifts in particular.”
This means keeping an eye on traditional boxed chocs that consumers will typically grab on the way to a family visit or gathering. Kenton says that the symbol group supports retailers with ‘Must Stock’ lines to boost these incremental sales. These include big-hitters like Cadbury Milk Tray Chocolate and gifting boxes such as the Celebrations Milk Chocolate & Biscuit Bars Box.
Karen Crawford, marketing director at Lily O’Brien’s, says that casual gifting is “driven by more casual box formats offering individually wrapped chocolates.”
She adds: “It’s why we launched Lily O’Brien’s Truffles in Milk Chocolate and Salted Caramel varieties (RRP £5) towards the end of 2022, adding close to £1m to the category. It’s the perfect box of tumbled treats for sharing with ‘the people you really know’.”