Confectionary Market

Market Characteristics:

The UK accounts for the third largest confectionary consumption in Europe, with only Ireland and Denmark ahead in terms of sales . Confectionary sales are predominantly gained from chocolate bars (70%) whilst the sweets sector also plays a central role for many companies. The market bares all the characteristic hallmarks of an oligopoly structure with a few main firms dominated the industry. Many of these firms are firmly entrenched in the history of the confectionary industry, prime examples being Cadbury Schweppes, Nestle and Mars. A key aspect of their success lies with their heavy investment in advertising in order to muster brand loyalty and recognition; few would be unable to identify the infamous red and white packaging of Kit-Kat for example. The tendency has been to extend existing brands with new flavours and/or into new product areas, taking advantage of reputable names by turning them into umbrella brands. For example, during 2005, the celebration of the centenary of the Cadbury Dairy Milk brand offered a strong opportunity for new products. This therefore highlights the importance of non-price competition within the industry. However whilst it is important for firms to gain an established consumer base, as greater emphasis is constantly being placed upon product innovation and development Dairy milk and Galaxy no longer have the luxury of trading off name alone.

Whilst the industry use to be primarily focused on individual or child consumption the focus has now moved towards "share" packages, such as Cadburys Dairy Milk share boxes introduced in 2005 , and development into higher tier premium products which has also assisted in adding value to the market.

Market Potential:

Chocolate is primarily a mass market product, although the need to exploit niches in the market has become evident in recent years. With the industry deep into its maturity stage, some would argue that it is soon to face decline as emphasis in the market place shifts towards healthier alternatives. As consumers become more aware of health issues with sugar and fat levels in chocolate being of particular concern, the industry has been slow to reply to consumer needs. Although dark chocolate is traditionally perceived as a healthier alternative to the milk variety, the main issues lie in retaining quality and taste which has severely restricted the