Confectionery final
- 1. Confections Category Abhijit Bapat Sweety Roy Sumeet Mahajan
- 2. Presentation Scope Business Issue Chocolate Manufacturing Process Promotions SWOT Analysis Trends Market Overview Demographic Profile Packaging New Products Analysis Distribution Competitors Seasonality
- 3. To understand that category dynamics in the Confectionery category. The Sales of the Chocolate & Non chocolate Candy & Gum The Effect of Seasonality New Product Analysis Competitive Analysis of some Major Confectionery Brands Business Issue
- 4. Chocolate Manufacturing Process Ingredients: Sugar, Cocoa Butter, Milk solids and Flavorings
- 5. Market Overview Market Value The United States confectionery market grew by 3.5% in 2006 to reach a value of $28.7 billion. Market Value Forecast In 2011, the market is forecast to have a value of $33.8 billion, an increase of 17.8% since 2006. Market Volume The market grew by 2.2% in 2006 to reach a volume of 4,729.2 million kg. Market Volume Forecast In 2011, the market is forecast to have a volume of 5,302.4 million kg, an increase of 12.1% since 2006. Market Segmentation The sale of chocolate generates 52.8% of the US confectionery market's value. Global Segmentation The United States confectionery sales generate 28.5% of the global market's value. Market Share The Hershey Company maintains a 29% share of the US confectionery market's value. Distribution Supermarkets & hypermarkets form the most important distribution channel. 47% of the market's value is distributed via this channel. United States - Confectionery © Datamonitor (Published November 2007)
- 6. Sales Trend
- 7. Sales Trend in the Confectionery Market Chocolate Candy sales peak during Feb, Apr, Nov and Dec, indicating categories high dependence on seasonal sales.
- 8. Continuous Growth of Confectionery Total value and pounds of confection sold at retail has increased consistently over the past five years 2006- US Dept of Commerce 311 D Report Department of Commerce Data is released in late summer. Please return in August for actual 2007 data.
- 9. Global Segmentation U.S. Department of Commerce Census Bureau 2006 MA 311D Report Europe is the biggest Market for Confectionery
- 10. Market Segmentation U.S. Department of Commerce Census Bureau 2006 MA 311D Report Chocolate Candy contributes more than 50% of Total Confectionery
- 11. Forecast-Confectionery U.S. Department of Commerce Census Bureau 2006 MA 311D Report Confectionery is expected to grow at a CAGR of 3.3% in the period 2008-2011
- 12. Chocolate & Wine Top in Online Supermarket Sales Source: IRI Consumer Network Panel-Total U.S. - All Outlets- 52 weeks ending 3/2/2008 Interesting statistics for the huge increase of online supermarket sales from our online shopping portal statistics and Yahoo Search Marketing: Obviously, the snack category is winning out. The statistics match those on our own shopping channel . According to Yahoo search marketing the top online supermarket searches are as follows: 10% 9% 7% Pizza Coffee Champage 37% 11% Wine Chocolate 12% 4% Sainsbury’s Aldi Costco 52% 21% Tesco ASDA
- 13. Seasonality
- 14. Confectionery Seasonal Sales (** in millions of dollars) Source: NCA estimates based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce. Sales Figures in billions
- 15. Syndicated IRI data understates actual seasonal sales. It only includes packages with seasonal graphics, and does not count regular packs sold during the season Halloween is severely impacted, none of the “big bags” that are popular are counted as Halloween sales. Actual seasonal sales are 50% to 100% higher than reported in IRI data tables NCA estimates based on December 30, 2007 IRI Data, NCA Manufacturers Shipment Reports and U.S. Department of Commerce MA311D Report Total Confectionery Seasonal Shares Halloween and Easter together contribute more than 60 % of the total
- 16. Distribution
- 17. Food Category Ranking IRI Food, Drug & Mass Excluding Wal-Mart 112/30/2007 Candy and Gum Ranked 3 rd among 2007 Food Categories in Food, Drug and Mass Outlets Candy and Gum Ranked 3rd Among 2007 Food Categories
- 18. Confectionery Sales share by COT Source: NCA estimates based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce. Sales Figures in billions
- 19. 2007 Retail Channel Performance Channel 2007 Billion $ Sales 2007 % Growth Supermarkets $4.6 +2.4% Wal-Mart $3.5 +7.3% Mass X Wal-Mart $1.4 +6.5% Convenience Stores $4.5 +6.2% Drug Stores $2.6 +3.9% *Warehouse Clubs $2.2 +2.0 *Dollar Stores $.8 +0.2% Vending $1.2 +0.7% *Bulk $1.4 -0.5 Based on 52 Week Sales – January - December 2007 Source: NCA estimates based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce. Sales Figures in billions The confectionery retail market has grown across all trade channels but convenience stores, club stores, dollar stores and chain drug stores have outpaced the overall retail market. * Indicates NCA estimate
- 20. Price per units paid Source: NCA estimates based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce. Sales Figures in billions Chocolate prices are the highest in MassX whereas Gum & Non Chocolate Candy is averagely priced across All Outlets
- 22. Nearly A Third Of Candy Sales Are Produced By New Items New products are truly the lifeblood of Confectionery Source : NCA
- 23. New products are generating 17.7% of category dollars with Hersheys new items contributing one fourth the new products sales. New Products = Products having zero sales last year but sales for the current year. New product dollar share and distribution by key item - Total U.S. FDMx 52 WE 06/17/07 New Chocolate Brands
- 24. New products are generating 9.4% of category dollars with William Wrigley and Tootsie Roll new items contributing one fourth to the new products sales. New Products = Products Having Zero Sales Last Year But Sales For The Current Year. New Product Dollar Share And Distribution By Key Item Source: IRI Infoscan; Total U.S. FDMX, 52 Weeks Ending 07/15/07 New Non Chocolate Brands
- 25. Cacao Reserve trial has reached 12.5%HH’s with 36.8% repeating. Quad weeks from when there were sufficient buyers = 100 for the brand Trial and Repeat % Triers Repeating % of HH Trying Coupon Coupon VLNT Easter 3 new UPCs added Coupon BTS HLWN 9 new UPCs added Source: IRI Multi-Outlet Panel, Geo: Total US – All Outlets, Prod: Cacao Reserve, Data Ending 12/30/2007 Xmas 2 new UPCs added Coupon
- 26. Promotions
- 27. Chocolate Candy is highly dependent on promotions, 66% of its promoted volume is truly incremental. Chocolate Candy volume decomposition and efficiency index by channel – 52 WE 06/17/07 FDMx Grocery Drug MassX % of Volume Promoted 65 59 73 73 % of Volume Incremental 43 39 47 51 Efficiency Index 66 65 64 70 Efficiency index = incremental volume/promotional volume*100
- 28. Non Chocolate Candy has a high dependence on promoted sales, with nearly half of the volume sales being promoted sales. 28.6% of the promoted volume is incremental. MassX has the highest efficiency index Non Chocolate Candy Volume Decomposition And Efficiency Index By Channel Source: IRI Infoscan; Total U.S. FDMX, 52 Weeks Ending 07/15/07 FDMx Grocery Drug MassX % of Volume Promoted 50 45 57 14 % of Volume Incremental 29 25 31 9 Efficiency Index 57 56 55 66 Efficiency index = incremental volume/promotional volume*100
- 30. Market Share by Value Source: NCA estimates based on input from Information Resources, Inc. NCA/CMA Monthly Shipment Reports and U.S. Department of Commerce. Sales Figures in billions The Hershey Chocolate company contributes more than 1/4 th of the Confections market share.
- 31. Mars produces and distributes branded snack foods, main meal foods and pet care products. The company has a direct presence in 65 countries. The company's products are sold in over 100 countries. Its major brands include M&Ms, the Mars bar, Milky Way, Snickers, Starburst and Twix. Its other products include 3 Musketeers, Dove, Milky Way, Skittles, Twix, Combos and Kudos snacks. MARS Source : Google Wrigley Wm. Wrigley Jr. Company (Wrigley) manufactures chewing gum and other confectionery products. The company's products are sold in over 180 countries inEurope, the Middle East, Africa, North America, Asia Pacific and Latin America. Wrigley's main gum brands include Juicy Fruit, Doublemint, Big Red and Wrigley's Spearmint. Other brands include Airwaves, Alpine, Eclipse, Extra, Freedent, Orbit and Winterfresh.
- 32. The Hershey Company (Hershey) is engaged in the manufacturing, marketing, selling and distribution of various types of chocolate candy, sugar confectionery, refreshment and snack products and food and beverage enhancers under more than 50 brand names. The company’s confectionary products are marketed in over 50 countries. The company markets its products under brands such as Hershey's, Reese's, Hershey's Kisses, Kit Kat, Almond Joy, Mounds, Jolly Rancher, Twizzlers, Ice Breakers, and Mauna Loa, as well as Take 5 candy bar and Hershey's Cookies. The company operates primarily in the US. It is headquartered in Hershey, Pennsylvania and employs about 13,000 people. For segment reporting purposes, the company aggregates its operations in the Americas, which comprises of the US, Canada, Mexico, Brazil Japan,Korea,Philipins China and India.(5 operating segments) The company bases this aggregation on similar economic characteristics and similar products and services, production processes, types or classes of customers, distribution methods and the similar nature of the regulatory environment in each location. It also aggregates its other international operations with the Americas to form one reportable segment. Product Lines: Premium products Snack products Refreshment products Food and Beverage enhancers The Hershey Company Source : The Hershey Company Annual Report 2007
- 33. Hershey's Major Brands Source : The Hershey Website Coming soon in 2008 launch of Hershey's Bliss (TM) and Starbucks (R) new products
- 34. Packaging
- 35. Standard Loose Single-serve items found on the front end
- 36. King Size Larger than a Standard Loose bar, but still found on the front-end
- 37. Snack Size Take home bags of candy with smaller versions of the standard bars
- 38. Presentation Box Box of candy meant for gift giving and special occasions
- 39. Peg Sold on hooks above “gondola” shelves
- 40. Limited Edition Innovative products sold on a temporary basis
- 41. Novelty Specialty items with added value, such as canisters, bowls, toys, etc.
- 42. Panel Volume Sales (MM) Total US – All Outlets In YTD Solid Dark Chocolate posted gains of 36.3% in Volume Sales. Source: IRI Multi-Outlet Panel, Geo: Total US – All Outlets, 24 weeks ending 6/17/07
- 43. Hershey’s Special Dark Chocolate Key Messages Solid Dark Chocolate posted volume gains of 36% for Q2 vs. Year Ago driven by increase in penetration. M&M drove the increase in volume due to increase in penetration. Increase in Penetration of Hershey Special dark and Lindt also contributed to the increase in volume sales Dove posted declines of 28% driven by decline in both penetration and buying rate. Overall Penetration increased by +7.3%; possibly driven by new product activity. Decline in buying rate is driven by decrease in purchase size 30% of MnM volume was sold on deal MnM and Extra dark saw decline in both Dollars spent per buyer and Dollar spent per buyer
- 45. Demographic Comparison- Total Chocolate Candy Volume Index Skews (>120) Source: IRI Consumer Network Panel-Total U.S. - All Outlets- 52 weeks ending 3/2/2008
- 46. Demographic Comparison- Total Non-Chocolate Candy Volume Index Skews (>120) Source: IRI Consumer Network Panel-Total U.S. - All Outlets- 52 weeks ending 3/2/2008
- 47. Demographic Comparison- Gum Volume Index Skews (>120) Source: IRI Consumer Network Panel-Total U.S. - All Outlets- 52 weeks ending 3/2/2008
- 48. Trends
- 49. Trends in US Confections Market Dark chocolate sales accelerating - +50% in 2007 Chocolate experiences Chocolate testing Chocolate and wine pairings Exotic chocolate flavorings: citrus, spice, salt, fruits High cocoa content chocolates Gourmet chocolate bars Gourmet packaging for chocolates Single origin chocolates Urban names for upscale chocolates Sugar Free gum - +13.5% sales in 2007 Exotic fusion flavors Fortified products Theater Box candies Event merchandising – theaters, birthday, game nights Single-serve seasonal items New seasonal offerings Source Source : NCA
- 50. US Census Bureau MA 311D Annual Confectionery Consumption Report • What is it? – The Census Department annually surveys US confectionery manufacturer to report all confectionery product shipments in total dollars and pounds and combines information from U.S. Customs reports for imports and exports thus providing total manufacturers shipment reports. • What does it mean? – It is the total output of the US confectionery industry. It is the only source that gives total market information. • What are its uses? – Provides manufacturer shipments in dollars and pounds for total industry and sub-categories. – Provides Per Capita apparent consumption, the total dollars/pounds purchased by everyone in the US – Use Apparent Consumption to better understand total US consumption - it is the sum of manufacturer shipments plus imports minus exports • What are its limitations? – It provides no information on company, channel, or brand performance – Historical data tends to get “adjusted” as late reporters and changed information is supplied, short term trends can change • What is its relationship to other data sources? – Syndicated data is either scanner data, of convenience, drug, grocery and mass, which tends to be about 40% of total market, but it provides brand, company, channel and home panel data on consumers. – NCA Survey data is a measure of key manufacturers of varying size and does not include all manufacturers, however it is a much more current estimate providing current month versus the 1 – 2 year old 311D data..
Editor's Notes
- #18: 2
- #24: Copyright © Information Resources, Inc., 2006. Confidential and proprietary The purpose of this slide is to show the percent of category dollars generated from new products, which brands are generating the highest new product sales and the dollar share and distribution held by the best performing new items. If there is a high degree of category volume being driven by new products, you should consider completing the new product analysis template. Reading the Chart The red slice of the pie illustrates the percent of category dollars generated by new products in the past year. The stacked bars to the right of the pie shows how the new product sales are split across brands. The table details the specific new items and notes their dollar share and weighted distribution level. Chart Dimensions Measure(s): Percent of category dollars generated by new products, split of new product sales across brands, dollar share and weighted distribution for each new item. Product(s): Established product and new products Market/Class of Trade: Total U.S. FDMx or Total U.S. Grocery, depending on the type of product Time Period(s): Latest 52 weeks Questions to Answer What percent of category dollars are generated by new products? Which brands are generated the new product activity – new vs. existing brands? What are the top performing new products? What market share and distribution levels do they hold? Title Line New products are generating X.X% of category dollars [largely] driven by [Brand A]
- #25: Copyright © Information Resources, Inc., 2006. Confidential and proprietary The purpose of this slide is to show the percent of category dollars generated from new products, which brands are generating the highest new product sales and the dollar share and distribution held by the best performing new items. If there is a high degree of category volume being driven by new products, you should consider completing the new product analysis template. Reading the Chart The red slice of the pie illustrates the percent of category dollars generated by new products in the past year. The stacked bars to the right of the pie shows how the new product sales are split across brands. The table details the specific new items and notes their dollar share and weighted distribution level. Chart Dimensions Measure(s): Percent of category dollars generated by new products, split of new product sales across brands, dollar share and weighted distribution for each new item. Product(s): Established product and new products Market/Class of Trade: Total U.S. FDMx or Total U.S. Grocery, depending on the type of product Time Period(s): Latest 52 weeks Questions to Answer What percent of category dollars are generated by new products? Which brands are generated the new product activity – new vs. existing brands? What are the top performing new products? What market share and distribution levels do they hold? Title Line New products are generating X.X% of category dollars [largely] driven by [Brand A]
- #28: Copyright © Information Resources, Inc., 2006. Confidential and proprietary Promoted sales are analyzed using equivalent volume. Dollars metrics are generally not used to evaluate promotion because promotional activity is often accompanied by a price discount. Units are generally not used because when evaluating products with various size packages (small, medium, large) units do not reflect shifts across pack sizes. Reading the Chart The pie chart shows the percent of volume sold in the absence of promotion (non-promoted volume) and the percentage of volume sold in stores during weeks with promotion activity. The stacked bar decomposes promoted volume into two components -- incremental volume and subsidized base volume. Incremental volume is the portion of promoted volume sold as a direct result of merchandising activity such as feature ads, displays and price reductions. Subsidized volume, also known as promoted base volume, is volume that would have been expected in the absence of any promotional activity. Subsidized volume is calculated by subtracting incremental volume from promoted volume. Chart Dimensions Measure(s): non-promoted volume, promoted volume, incremental volume, subsidized base volume, efficiency index Product(s): Category,slide may also be created for market segments and brands Market/Class of Trade: FDMx, Grocery, Drug and MassX Time Period(s): Latest 52 weeks Questions to Answer Is the category, segment or brand highly promoted? To what degree does promotion generate incremental sales volume? (refer to the efficiency index) Does promotional dependency and promotional efficiency vary across channels? Title Line [Category] has a [high/low] dependence on promotion which is [highly/minimally] efficient
- #29: Copyright © Information Resources, Inc., 2006. Confidential and proprietary Promoted sales are analyzed using equivalent volume. Dollars metrics are generally not used to evaluate promotion because promotional activity is often accompanied by a price discount. Units are generally not used because when evaluating products with various size packages (small, medium, large) units do not reflect shifts across pack sizes. Reading the Chart The pie chart shows the percent of volume sold in the absence of promotion (non-promoted volume) and the percentage of volume sold in stores during weeks with promotion activity. The stacked bar decomposes promoted volume into two components -- incremental volume and subsidized base volume. Incremental volume is the portion of promoted volume sold as a direct result of merchandising activity such as feature ads, displays and price reductions. Subsidized volume, also known as promoted base volume, is volume that would have been expected in the absence of any promotional activity. Subsidized volume is calculated by subtracting incremental volume from promoted volume. Chart Dimensions Measure(s): non-promoted volume, promoted volume, incremental volume, subsidized base volume, efficiency index Product(s): Category,slide may also be created for market segments and brands Market/Class of Trade: FDMx, Grocery, Drug and MassX Time Period(s): Latest 52 weeks Questions to Answer Is the category, segment or brand highly promoted? To what degree does promotion generate incremental sales volume? (refer to the efficiency index) Does promotional dependency and promotional efficiency vary across channels? Title Line [Category] has a [high/low] dependence on promotion which is [highly/minimally] efficient