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Confectionery Market Research Report

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Contents Introduction
The success of the confectionery
market in the previous years is
going to provide challenges for the
Introduction 1 following years as the high standard
of confectionery market needs to be
stable as good assurance for
Questionnaires: 2-3 businesses. In 2006 the expectations
of the market value has grown
further.
Nestle Annual Report 4
The confectionery market strangely
changes as years, this wasn‟t
Article on Confectionery 5 happening until the government
decided to encourage and in a way
Purchase force people to eat more healthily as
there is an increase in obesity in
UK. However this is not good for
Mintel: Confectionery 6 - 10 businesses as this means loss in
Market sales but the value of the business
will remain.
Cadbury’s Confectionery 11 - 12 This report examines the hypothesis
Report that the chocolate confectionery
market will split along an alliance of
health and indulgence. In the middle
ground, products will be in danger
of being chosen as „food to avoid‟.
This is where Wally Winka‟s can
come in and get ahead in the market
as they should introduce a new
product that is healthy so not only
will the government be allowing it
but also encouraging new customers
to try this product rather than having
old products that is seen as bad for
the health.
The health debate is having an
impact on the industry as government
and lobby groups campaign for
restrictions on distribution and
advertising. However for Wally
Winka‟s this would be vice versa.
This report covers the UK retail
market for chocolate confectionery,
including any type of confectionery
that has chocolate as its main
ingredient. And this report will be
the guide for Wally Winka‟s to be a
successful business if they are
willing to follow the
recommendation bringing a new
healthy chocolate bar into the market.
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Report
Confectionery Market Background
The UK confectionery market, valued at an estimated £4.41bn in 2006, has seen a slowing rate of growth. Chocolate confectionery accounts for
the bulk of sales in the market, with the remaining share taken up by sugar products. Confectionery consumption in the UK has come under
pressure from the healthy eating lobby. The UK market remains dominated by Cadbury, Mars and Nestlé, and new product development (NPD) is
firmly centred on brand extension rather than bringing new names to the consumer.

I have analysed the information collected Firstly we shall look from the report what healthy as the other chocolate bar such as
and I will describe and show what each of are the reasons why Wally Winka‟s Ltd Mars Bars.
the sources show and I will extract should introduce a new bar.
information from these sources and use it
for showing how the confectionery market Idea most preferred
is and how could Wally Winka‟s change
their business to make them a good
business and make a success. New Chocolate
Bar

I will now show how each source is useful

and what information does each provide. I
will use data in charts, tables, and quotes to
support my recommendation on introducing
a new chocolate bar.
Questionnaires
The questionnaires gives us an awful lot of
information in many fields, e.g. product
taste, packaging, promoting and even
making final decision on whether to bring a
new chocolate bar or not. According to my
recommendation on bringing a new
chocolate, this source will support my
advice.
Promote Old
Bar
However we can use the chart above, which
The pie chart above shows the percentage
number of people that would like to get a is a customer opinion on whether there
new bar from Wally Winka‟s rather than should be healthier chocolate bars. The
promoting an old bar. This is another majority have chosen that there should be
reason why Wally Winka‟s must consider healthier chocolate bars. Wally Winka‟s
must use this opportunity and provide a
to bring a new chocolate bar as they must
consider what would the customer prefers. chocolate bar with ingredients that are
healthy and different from the chocolate
In this case more customers would like to
try out new chocolate bar. bars the already exist in confectionery
market.
Many customers don‟t buy the current
chocolate bar as they know that it is not as

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 know that Diabetes is the more of a
condition than Nut Allergies. Wally
Winka‟s must take this into account that
this doesn‟t mean that they should not have
any sugars or nuts in them; this is to give an
idea on what to consider when using certain
ingredients.
chocolate bar has nothing of such taste or
brand that can be promoted or brought into
the market as a success. The old chocolate
bar is something that is likely to be in shops
that is not famous for their quality but as
cheap option.

One of the most important things when

When considering healthy ingredients we
must also consider that many people have
conditions that prevent them from eating
chocolate. The two main conditions are
Diabetes and Nut Allergies. Unfortunately
because I haven‟t asked enough people for
this questionnaire top work accurately we
can see that Nut Allergies are bigger
conditions than Diabetes. However we all
making a new chocolate bar is to see what
type of chocolate bar is most preferred by
customers; in this case it is usually milk
chocolate as they taste the best in opinion
of the majority customers. Wally Winka‟s
can‟t afford to bring a chocolate bar that is
not favourable to the majority customers as
this means a loss in money and a failure in Wally Winka‟s Ltd could change the old
the decision. chocolate bar (unwanted) to something that
is irresistible.
The questionnaire mostly suggest and
supports my recommendation on bringing a
new chocolate bar, because the current

Old Chocolate Bar New Chocolate Bar (Example)

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Nestle Annual Report (Financial Statement)
All the figures are in CHF (Swiss Francs)
An Extract from the Nestle Financial report of the Confectionery Sales
in 2005
From these extracts of Nestle report we can
seen that 10,794 million sales made to
customers in 2005 which is more than the
number of sales made to customers in 2004,
which was 10,258 million. However we can
see that there isn‟t a huge difference in the
number of sales, but we must consider that
Nestle is a multi billionaire company the
difference is 536 million.
However large this figure may sound in
comparison to the number of sales by Wally
Winka‟s these are only the number of sales
that they have made all around the world
An Extract from the Nestle Financial report of the Confectionery Sales
where as Wally Winka‟s is just a national
business which is very unlikely to make as
many sales. The most important is the net
profit of the business and in comparison to
the number of sales, it is very small amounts.
As the EBITA (Earnings before Interest,
Taxes and Amortisation of goodwill) is only
1,215 million in 2005 and in 2004 the
EBITA was 1,148 million so the difference
was only 67 million which isn‟t a large
difference when looking at a multi-billion
global company.
I am using this to show how the
confectionery market is growing and how
in 2004
well businesses are performing each year if
the right objectives are set. Wally Winka‟s
main concern is the cost restructuring the
business, but this will help in the future
years as they will be reducing at significant
amounts but the foundation cost is needed to
restart the company‟s performance. If we
refer back to the two extract of Nestle report
we can see that in 2004 the restructuring
costs were 152 million and then in 2005 they
reduced to only 60 million. Wally Winka‟s
will not be working with figures as high as
this but this is an example of how a business
will perform if the right decisions have been
made.
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Article on Confectionery Purchase
(Extract of article on confectionery purchase in UK)
The extract above support my
recommendation on Wally Winka‟s
introducing a new chocolate bar, as we can
see that the confectionery purchase is
increasing every year and the purchases
were up by 1.8 percent last year. This is
quite surprising as there is a big concern in
UK on healthy eating but the confectionery
sector remains stable. This is a good sign
for Wally Winka‟s as it means that there is
no worries for them bringing a new product
and still expecting it to be a success.
We can see from the other extract that 14%
of UK‟s children are obese in 2003 in
comparison to 9.6% in 1995. In order to
prevent this and promote Wally Winka‟s as
a healthy and yet still tasty confectionery
manufacturer. We must therefore use
healthy ingredients as mentioned in the
Questionnaires subheading. Wally
Winka‟s will be given a reputation such as
Kellogg‟s Nutri-Grain Bars for being a
healthy and delicious product.
Wally Winka‟s can use this as their slogan
of being famous for producing healthy
(Extract of article on confectionery purchase in UK)
products. This could mean a change and
difference in the confectionery market that
customers are looking for. Wally Winka‟s
is not much like to make a success in
promoting and old bar because the taste
isn‟t unique and different that customers
couldn‟t get from other chocolate bars.
The image above is the current product
„Dreemy‟ which looks great as a packaging
however from the inside it doesn‟t turn out
quite Dreemy as expected. It is very similar
to the well know Mars Bars (Global) and
this is a very large competition that Wally
Winka‟s (National) will not be able to
compete against if they are going to
promote Dreemy as their product.
However if Wally Winka‟s brought a new
product to the market then they may have a
chance to make the product and the
business a great success. It will change the
business‟s financial status over the years,
however this may mean high restructuring
costs that Wally Winka‟s may have doubts
on but if they promote the chocolate bar
then is more like to be a failure according
to today‟s market. So it is in the best
interest of Wally Winka‟s to follow my
recommendation on bringing a new
chocolate bar.
This doesn‟t make it easy though as a lot of
research is needed for the right ingredients
as the article extract show a lot of obesity
among children. Wally Winka‟s must
consider the price that is needed to be
charged, and the advertising needed to
bring the chocolate into the market and get
it to be popular amongst customers.
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Mintel: Confectionery Market
chocolate bars eaten by adults has generally
increased. This may seem unusual
regarding there is a large health debate.
From 2003 – 2005 numbers of chocolate
bars eaten by medium, light and non users
increased however heavy user decreased
due to the influence on the health debate.
For Wally Winka‟s this may work
differently as not only will they gain
customers in medium, light and non user
but also heavy users of chocolate bars
because their bar will be healthy and
nutritious if the new product is launched.
However if Wally Winka‟s decided to
promote the old chocolate bar this may
work out as a big loss as the „All users‟
will decrease significantly for them as they
are not even a well branded confectionery
company in comparison to Cadbury‟s,
Nestle etc.
„Other chocolate items‟ doesn‟t apply to
Wally Winka‟s currently but they should
consider perhaps even introducing other
products that aren‟t chocolate bars in the
future. As a confectionery company Wally
The above table is a source from Mintel
Winka‟s has a lot of options they can
report, which is made from a survey of
consider on to improve their status in the
around 25,000 adults. This source will
confectionery market. This may not be an
support my argument on why Wally
easy step for Wally Winka‟s to introduce a
Winka‟s should introduce a new chocolate
new bar but it could help them in future.
bar. As we can see that the number of
Orgasmic Chocolates – a new take on functional
ingredients
Launched in October 2005 this company has
launched a range of fair-trade and organic chocolate
using “wild-crafted Chinese fruits, flowers and
spices” which affect the senses; in some cases these
are claimed to boost libido.
Other key launch trends include:
● Products using low/no/reduced sugar and
diabetic claims increased significantly
● Low carb slows down with potential to be
replaced by low GI
● Functional offerings remain niche but give
chocolate important links with health
● Organic remains small but is steadily growing
● Companies combine and expand brands
● New flavours arose catering to mature and
daring consumers
● Promotional advertising observed on packaging
● Dessert flavoured confectionery is popular in
mainland Europe; we can expect to see this
coming into the UK, Lindt have already started
with their „Petit Desserts‟ range.
(Source from Mintel Report – New Product
Development)
From the above source we can see that
these new product launched are very
similar to the one which Wally Winka‟s
should do if they bring a new chocolate bar.
They should use ingredients that are
suitable for diabetic, obese, athletes etc, to
be distinguished from other chocolate bars.
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 Below we can see the table (Figure 11) that
shows that all the famous and large
confectionery companies aren‟t performing
as well as the Own-label. They are getting
more value shares in the confectionery
market than any other companies. This is
because Own-label is led usually by fair-
trade and has organic chocolate as
mentioned in the quote below from the
Mintel report. If Wally Winka‟s bring this
type of Organic and fair-trade chocolate
then it may be able
From this source we can see that the to gain shares in the
multiple grocers continue their expansion confectionery market
onto the high street, sales of chocolate just like how Own-
through this channel continue to grow in label have gained
both the short- and long-term. However for shares.
the independent grocers are losing sales in
chocolate confectionery. These changes
have happened all due to the health debate,
in order for Wally Winka‟s to be back into
market it is essential for them to introduce a
new healthy chocolate bar as I
recommended. If the old product (Dreemy)
is promoted than it will have no chance
against the health debate and will not be
able to compete against large global
confectionery companies.

When looking at the Distribution Section of

the confectionery, it is essential to consider
the Supply Structure.

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Young consumers are a key aspect towards
confectionery market as it is them that eat
the most confectionery product. Figure 33
is an extract from the Mintel report and it
shows how much chocolate does 7-10 years
old consume. We can see that in 2005
around 62% of 7-10s eat about 1-4 bars of
chocolate per week. This is a lot of
chocolate bars eaten by just 7-10s if we
consider the population of 7-10s in UK.
Most of the confectionery companies are
dependant on these children because they
are the ones that eat the most of the
confectionery.
From „Figure 32‟ we can see who buys the
chocolate that the 7-10 years old eat. From
the survey we can see that 83% on average
Parents buy the chocolate for their 7-10s
kids. This means that only from their
parents‟ approval the kids can eat the
chocolate at most of the times. If the
parents are concerned about the health
debate then they may not approve for
unhealthy chocolate bars. However Wally
Winka‟s can change their current product
„Dreemy‟ and make a new healthy bar that
both the children and the parents like.
If the Dreemy bar is promoted and brought
back into the market then the parents will
definitely not buy the product. So to
encourage more sales and demand and get
market share Wally Winka‟s has to get a
new healthy chocolate bar.
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In value terms, the chocolate market
appears to be stable, with values leveling
out at £3.15 billion in 2005. On the right
hand side we can see „Figure 8‟ which
shows the UK retail sales of chocolate
confectionery. (Market values are based on
an estimate of quantifiable retail sales
through conventional multiple and impulse
trade channels).

Alone in UK there was £1.953 billion sales

of chocolate confectionery in 2006. If we
look at the table we can see that over the
last six years the sales of chocolate
confectionery is growing more each year,
despite the health debate. So if Wally
Winka‟s introduce this new bar than
certainly the sales are likely to boost more
than the already are.
If Wally Winka‟s is going to introduce this
new product than it would be wise for them
to consider how their new product will be
sold as a sector. By looking at „Figure 7‟
from the Mintel report we will be able to
see what sector is the new product most
suitable for Wally Winka‟s. It is very likely
that the new chocolate bar will fall under
the Chocolate Confectionery as the UK
retail sales were +3.7% from 2001-2005.
However for the Boxed chocolates sector
the retail sales in UK were -8.1% from
2001-2005 and as for Seasonal sector the
change from 2001-2005 in retail sales were
-12.0%.

From this we can assume that it is most

wise for Wally Winka‟s Ltd to introduce a
new chocolate confectionery product. And
these sales figures are accurate enough to
support my recommendation in order for
Wally Winka‟s to come back into the
confectionery market and stop the business
from ailing as it currently is.

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„Figure 50‟ is very useful as it gives us a
forecast of the chocolate confectionery
from 2006-2011. Wally Winka‟s need to
consider how the new chocolate bar is
going to be like, if it is introduced to the
confectionery market. As we can see from
these figures that the Count-line and Self-
lines aren‟t doing well in the future, this
may be reflected from the heat debate.
However Moulded Bars are doing well in
the future and this perhaps is also reflected
from the encouragement of health debate.
The only sector to grow are moulded bars,
shows forecast to increase by 37% at
current prices (26% real-growth), bringing
this sector to an estimated £785 million by
2011. Combined with the decline in count-
lines, this could make moulded bars the
dominant sector in 2011 with a market
share of 42% in 2011 in assumption.
If Wally Winka‟s bring the new chocolate
bar out the moulded bar option is a good
opportunity for them as it would mean that
their future forecast in confectionery
market share and financial status is more
likely to perform well. However the
restructuring costs for Wally Winka‟s are
going to be high if they bring this new
chocolate bar but according to this accurate
Mintel report if my recommendation is
followed the future sales of this new
chocolate bar are going to be high and
Wally Winka‟s may bring themselves very
high in the confectionery market.
Figure 11(sugar confectionery) is and
extract from the Mintel report of sugar
confectionery rather than chocolate
confectionery. Advertising needs to be
considered if Wally Winka‟s bring this new
chocolate bar into the market.
Support for defined sugar confectionery has
followed a similar pattern and in 2004 was
equivalent to two-thirds of the total
industry spent. At the equivalent of just
1.6% of sales, advertising support for the
defined sugar confectionery is much lower
than that given to either chewing gum
(around 6%) or chocolate confectionery
(around 3%).
This may be the only downfall of
introducing the new chocolate bar as some
advertising is essential for customers to
know that the product is in the market.
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Cadbury’s Confectionery Report 2003
This report will give us a clear
understanding and support my
recommendation on Wally Winka‟s to
introduce a new chocolate bar rather that
promoting the old chocolate bar. This
report is based on one of the confectionery
market leader and how they have used their
effective management and decision making
to be a very successful business and
managed to tackle obstacles such as the
health debate.
We can see from this pie chart that
Cadbury‟s is a leading Manufacturer in
Value Share of Chocolate. They are a
leading company because they produce new
and different types of chocolate into the
market. Similarly we want Wally Winka‟s
to use this viewpoint on bringing new
chocolate bar so they can follow Cadbury‟s
path to successful. It will be difficult for
Wally Winka‟s to get as high as these
companies but it will surely increase the
business capital if there are better sales.
We have already seen charts in the mintel
report, on the importance of children in the
confectionery market. Similarly on the right
on we can see which sex buys/eats most of
the confectionery on average. From the
figures we know that the most
confectionery bought is by women;
however the most confectionery eaten is by
a man, based on the national average. So
when advertising we must encourage
women to buy it, but the chocolate must be
unisex presented as around similar number
of men and women eat confectionery.
Similarly we must also apply this to age of
confectionery buyers and eaters. We know
that 0-16s eat the most confectionery in
comparison to the population but 45-64s
buy the most confectionery. Wally Winka‟s
must advertise this new chocolate bar, great
for children health and should show a
family theme of mothers buying the
chocolate. This must discussed more in
detail with an advertising agency for ideas.
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If Wally Winka‟s is going follow my
recommendation and introduce this new
chocolate bar into market then it is
important to consider the promotion
section. Below we can see that the chart
shows how the segmentation breakdown The above quotation is extracted from the
looks like, as we can see that „For Home‟ Cadbury‟s report and it tells us how
has the biggest percentage this means that it foodservice channel s still growing and at a
would be ideal to give a market slogan very high amount. Wally Winka‟s must
based on healthy food and family. If we believe that the Foodservice sector requires
also look at the functional breakdown pie and approach which will meet the needs of
chart we can see that a lot of the every customer. This will result to customer
confectionery is for mouth fresh rather than demand and this would mean profit, but
as medicated confectionery. What Wally what Wally Winka‟s should understand is
Winka‟s could provide is a mixture of both giving the best service to their customers.
as the new chocolate bar would contain This approach would make Wally Winka‟s
mouth freshening ingredients yet it is going lots of profit and in future with minimum
to be healthy with lot of useful nutrients. effort.

We can see that Cadbury‟s is the leading

company in confectionery, chocolate and
sugar market share in multiple grocers. This
is because they provide and introduce
products that are new to the market and not
similar to what the product is already in the
market. Similarly if Wally Winka‟s bring
this new bar then it could progress their
current performance as not many large
confectionery companies are introducing
these types of organic and healthy eating
chocolate. And the chances of this product
working well in the market are higher than
usual confectionery companies.

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