Has the salmonella crisis earlier this year done permanent damage to Cadbury’s standing in the all-important UK confectionery market?
The latest set of Nielsen figures plotting market share suggest that is has. Cadbury, for the first time since it grouped its brands under the Dairy Milk umbrella three years ago, has lost market dominance to Mars. The figures, for the record, show Mars at 33.7% by volume and Cadbury at 31.3% in the four weeks to October 14.
Of course, as Cadbury eagerly points out, this is not exactly a rounded picture, more a snapshot. First, the company remains top in the overall confectionery market, with a 30.7% share, so Bertie Bassett and his friends are doing all right. Second, it’s only one quarter’s figures and not – it is suggested – a very important quarter at that. Q3 accounts for about 15% of sales, whereas Q4 (Christmas) accounts for 35%; and Easter time is also very important.
Nevertheless, the October sales figures have got the City rattled, with consequent damage to Cadbury’s share price. Clearly its investor relations department needs to work harder here. The October ‘blip’ (as Cadbury might choose to call it) is nothing compared with the damage inflicted on Nestlé. Whereas Cadbury has managed to increase (albeit marginally) its market share, Nestlé is beginning to look a basket case. Wherever we look – the sad slippage of Kit Kat, once the number 1 UK confectionery brand; the failure of Nestlé new product development; redundancies in York; or perhaps most telling of all, Nestlé group ceo Peter Brabeck’s savage characterisation of his former UK confectionery chief Chris White as no more than ‘an ice cream salesman’ – Nestlé Rowntree does not present a pretty picture. All due, in no small measure, to the marketing firepower Cadbury has brought to bear on its unfortunate rival over the past three years.
This alternative vision of a Cadbury momentarily deflected would be a lot easier to swallow but for one inconvenient truth: the still smouldering salmonella crisis. Cadbury insists that it has not been put off its stride. True, advertising was temporarily suspended, but contrary to retailer conjecture, it did not hold back its new product development schedule. Indeed, says the company, Flake Dark and Melts, the new products in question, are selling well.
They may well be, but things are not going so well on the legal front. It appears the Food Standards Agency has indirectly been providing funding for a potential prosecution under newly minted food hygiene regulations. This might seem a bit rich, as Cadbury is quick to point out, coming from a regulator which had never hitherto given the company, or any other company for that matter, advice on what was (under previous legislation) deemed an acceptable, or unacceptable, level of contamination. The suggestion that the FSA is a regulator keen to cut a few teeth through some specimen prosecutions hangs in the air.
Whether or not this is a fair reflection of the situation, one thing is crystal clear. Cadbury will remain under a morale-drenching cloud until the litigation issue is cleared up.