With the pound falling and prices rising, the confectionery market is set to suffer. Lee Graham shares advice from major suppliers on how to ensure sales remain as strong as possible in the category.
With some manufacturers putting up prices in the wake of the Brexit vote and others changing the design and weight of their products to keep costs down, there is concern from wholesalers that the margins available through pricemarked items are becoming slighter and slighter. The situation puts smaller wholesalers in a particularly difficult position, and categories with an above-average number of pricemarked packs (PMPs) – such as confectionery – become a worry.
Worse still is the news that market analyst Euromonitor International has tipped confectionery to suffer the biggest fall in volume of all the packaged food categories in the years to 2020. So what can you do to keep sales sweet?
To start with, let’s get a sense of where we are from Mondelez International, which leads the chocolate market with a 36.5% share. “The UK confectionery market is worth more than £5.3bn, with the candy market worth almost £1.8bn,” says Susan Nash, trade communications manager at Mondelez.
“Confectionery is also the number-one snack and the most impulsive category available to convenience stores,” she adds. “This scale and impulsivity means that confectionery is a critically important category in your depot, and if its potential is fully maximised, it can play a huge role in driving incremental sales for wholesalers and retailers alike.”
Dan Newell, confections marketing manager at Wrigley, says: “The success of the sugar confectionery category is the result of a combination of successful marketing initiatives, a host of innovative new products and excellent category management advice, all of which Wrigley looks to continue in 2017 and beyond to maintain lasting category growth.”
Bebeto is owned by Turkish confectionery group Kervan, and began trading in the UK in 2015. Only last month it announced its acquisition of Dexters Confectionery, the Glasgow company which counts Dynastix and Star Wars among its brands. Paul Simpson, UK commercial director for Bebeto, says the acquisition reflects the company’s confidence in the UK confectionery market.
“We created a UK team in 2016 that we believe will be fundamental in achieving our aim of being one of the top five confectionery brands in the UK by 2020,” he adds. “Our product portfolio reflects the key growth sectors and trends of the confectionery market, and offers consumers great value for money.”
What to stock and how
Simpson advises wholesalers to stock packs for sharing and individual consumption, to ensure that the two key usages are covered.
“In addition, keep your fixture simple and easy to shop by only having strong, branded products on shelf. I would also advise wholesalers to have the right case sizes in shelf-ready packaging (SRP) and remember that branded SRP helps to strengthen category stand-out.
“Also look to gain additional sales by placing confectionery in other parts of the depot to encourage impulse purchases, and therefore drive weight of purchase and penetration,” says Simpson. “And finally, avoid duplication in the range and focus on those suppliers that will support your brands and effectively support you.”
Based in Cornwall, Buttermilk is an award-winning artisan producer of sugar confectionery. The company’s marketing director, Olivia Hope-Hawkins, says that by choosing premium products such as decadent fudge gift boxes, wholesalers can receive a higher cash margin per box sold.
“The best way for wholesalers to boost profit is to be savvy with the products they list,” she notes. “Give a producer a bay in your warehouse, buy smart and make more money. We have ranges that are specifically for wholesale and farms and delis, therefore ensuring that there is a point of difference to the supermarkets.”
She adds: “Education and trial are key to driving confectionery sales. Once people try the products, they buy them – so encouraging shops to sample is key.”
Wrigley’s Newell says communicating to retailers the importance of key trends such as Big Night In is imperative. “With 47% of consumers spending less money on out-of-home entertainment and with 50% eating out less, the Big Night In remains a key sales opportunity,” he notes. “Wrigley’s Skittles are a vital offering, with 60% consumed as an evening snack. The brand also over-indexes against the total sugar confectionery category.”
In terms of PMPs, Newell suggests that, despite their concerns for the future, wholesalers would be unwise to give up on this proven sales-driver. “More than two-thirds of shoppers buy PMPs in convenience stores,” he says. “As well as offering good value, PMPs help retailers build a sense of confidence and trust with shoppers, with half saying PMPs reassure them that they are not being overcharged. Currently, 68% of retailers stock a selection of PMPs as part of their confectionery offering.”
Mondelez’s Nash says that to maximise the confectionery opportunities available to them, wholesalers should focus on new and eye-catching products. “Some consumers are looking for excitement, and tempting innovations that delight them are key to driving sales,” she comments. “The most exciting new products in confectionery have been all about blowing apart category boundaries and bringing together different flavours, textures and brands, which drives new consumers to the category.”
Simpson at Bebeto agrees that it is important for retailers to push new products.
“The supermarkets tend to be restricted to set range review dates with long lead times,” he says. “Wholesalers have more flexibility, which enables them to bring new products to market more swiftly. It is essential that wholesalers make the most of this and communicate this point of differentiation.”
Support from suppliers
Establishing good relationships with suppliers is vital for any wholesaler. So what are confectionery suppliers doing to show that they have wholesalers’ interests at heart?
“We undertake advertising in wholesale brochures, attend their events, and offer sampling packs and point-of-sale material. We also direct customers to our wholesalers by taking stands at trade events,” says Hope-Hawkins at Buttermilk.
Bebeto’s Simpson comments: “We provide insights into the confectionery market and category advice to drive rate of sale – for example, ranging, marketing and promotional activity mechanics such as customer-specific and event-themed point of display packages and support. This advice is based on our UK and global market intelligence.
“In terms of keeping the shared margin healthy, we provide great-quality products at very competitive prices, thereby enhancing the overall margin. And given that 2017 is sure to be a year of economic uncertainty, we feel that by trading in sterling, we will at least be taking the euro exchange rate uncertainty out of the mix.”