The sugar confectionery market is facing increasingly difficult times. Brands are having to fight harder for their share of the fiercely competitive snacking sector, as well as coming under fire from health watchdogs urging consumers to cut their sugar intake.
While sugar confectionery may often be ignored in favour of chocolate, which is seen as a more indulgent treat, sales of sugar products, such as mints, toffees, boiled sweets and liquorice, will top &£1.5bn in the UK this year, according to Euromonitor. It is a steady increase on the &£1.49bn last year and &£1.3bn in 1998.
There is a plethora of companies in this market but only a handful of brands dominate. The Euromonitor data shows that Cadbury-owned mint range Trebor is the UK’s biggest sugar confectionery brand with a 6.4 per cent share, Haribo is in second place with 5.8 per cent and NestlÃ©-owned Polo is in third with a 4.4 per cent share. Only Haribo has increased its share over the past three years. But a number of niche manufacturers, such as Kinnerton Confectionery which makes merchandised products, and own-label supermarket brands are fighting for that market share.
The fact the sector is bursting with so many different brands and formats is why it is so difficult to achieve growth in this market, says Rob Rees, a former Masterfoods marketer and founder of Freestyle Marketing. “The difficult challenge with the sugar confectionery market is that it has such a variety of products that are available in a variety of formats to suit a number of different outlets. These are not just packaged goods products that can be pumped through one retail channel – there are sweets that are available in jars, on pick ‘n’ mix counters and through garage forecourts.”
Mastering the market
To counter this problem, Cadbury has stepped up the focus on its Trebor, Bassett’s and Maynard’s brands, all of which are being developed as “master brands”. NestlÃ© has added several products to its Polo range and has launched a fruit flavoured variant of its Smarties brand (MW March 25, 2004). Masterfoods has extended Skittles into chewing gum and launched AquaDrops, a sugar-free mint alternative (MW November 6, 2003).
But while NestlÃ© and Cadbury are only aiming to extend the influence of their existing brands, Masterfoods’ ambition has been to create a new category with its AquaDrops – a refreshing adult sweets category. Seeing the adult market as a key area of potential growth, Masterfoods launched AquaDrops with a &£4m marketing campaign and positioned it as a “hydration sweet”. But so far it has failed to make an impact on consumers, and retailers are unimpressed with sales, with at least one considering delisting the product (MW last week).
The problems for AquaDrops started just months after its launch when the Advertising Standards Authority ruled that Masterfoods could not use the phrase “instant hydration” because it could encourage consumers to eat the sweets rather than drink water (MW June 24, 2004). The ASA upheld complaints that the advertising was misleading and it led to the campaign being pulled. A new burst of advertising was launched at the start of this year with the strapline: “Give your mouth a drenching”.
Industry insiders say this has led to a number of problems with the product’s positioning. One source says: “The product is a bit too fussy and the issue with advertising just after it launched really did not help.”
Another source agrees, adding: “It is not a priority for Masterfoods and it is not the right product for the UK. It is an adult sweet but it is not overly adult in its positioning or packaging.”
Masterfoods also faced the difficulty of launching AquaDrops from scratch rather than being able to draw on a brand heritage, as Cadbury is doing with its Bassett’s, Trebor and Maynard’s brands, and NestlÃ© with Rowntree. Although Masterfoods has Skittles and Starburst in the sugar market, the brands are separate from each other and from the overall Masterfoods portfolio.
Richard Buchanan, head of corporate branding at consultancy Corporate Edge, points out that chocolate companies historically find it hard to launch into the sugar arena, and says segmentation under already established brands has proved to be the most successful launch strategy.
Stick to what you know?
Buchanan applauds Masterfoods for trying to launch a completely new and original product but says the positioning needs to be redefined. He explains: “A sweet for hydration is questionable anyway, but following the ASA ruling, that was taken away and it wasn’t clear what need it was answering. That put AquaDrops on a sticky wicket, but all Masterfoods needs to do is redefine what the sweet does. I still think that functional and adult confectionery is an area of innovation with massive potential for development.”
This potential new area of development, combined with the growing demand for healthier products, is the future of the confectionery market, says Jonathan Thomas, principal market analyst at research and consultancy Leatherhead Food International.
He points to markets such as Japan, where there is greater emphasis on using plant extracts in confectionery to give them a medicinal purpose. “There is evidence that medicated sugar confectionery will attract more interest in the coming years,” says Thomas. “Look at Wrigley’s Airwaves [medicated chewing gum] and the success it has had across Europe. That shows consumers are willing to accept such products.”
There is also expected to be growth in the sugar-free market. Chupa Chups Perfetti van Melle has already made a big step into this area with the launch of Cremosa and Fruitella Light.
But even here, says Persis Subramaniam, senior research scientist at Leatherhead, manufacturers face challenges in trying to create reduced-sugar confectionery. For instance, products must be made either entirely with sugar or with sugar substitutes. No mixing of sugar and artificial sweeteners in products is allowed.
“A sugar confectionery product can never be completely healthy,” she says. “Even if you put healthy ingredients into it such as vitamins, it will still be full of sugar. You can make them with sugar-free products, but too many sugar-free sweets have a laxative effect on consumers.”
The sugar confectionery market is still showing small signs of growth, but it is likely to decline in the coming years if manufacturers do not tackle the issue of health or offer compelling reasons to buy sugar products. The potential for functional additives and the challenges of sugar-free should give them plenty to chew over.v