Retail, Innovation and Manufacturing reporter for the NZ Herald

Tense time as Easter choc sales tallied

James Kane. Photo / Nick Reed
James Kane. Photo / Nick Reed

Chocolate companies are set for a "white-knuckle ride" as Easter egg sales are counted after the hunt for consumers during the biggest weekend of the year.

Major market players Cadbury, which is owned by Mondelez International, and New Zealand-owned Whittaker's say Easter is the biggest sales period.

It accounts for about a fifth of Cadbury's yearly sales, and is one of the biggest periods for Whittaker's, which has about 41 per cent of NZ's $139 million annual block market.

Globally the chocolate market is expected to reach US$98.3 billion ($146.99 billion) this year, up from US$83.2 billion in 2010, according to sales data firm markets&markets.

For the market leader in Easter sales, Cadbury, preparation for the period takes almost a year.

"We've produced around 40 million individual eggs and bunnies for New Zealand [this Easter]," said Mondelez NZ country head James Kane. "Because it's such a big event, it's all planned and effectively pre-ordered a long way in advance," he said.

"We have to manufacture such a lot of volume for a short period of time so it's manufactured over an almost 12-month period and it's a bit of a white-knuckle ride because it's only at the end of Easter that you can assess how much was sold and if it was a success or not."

Kane said it was a balancing act between producing enough chocolate so individual items didn't sell out and customers weren't disappointed, but not so much that there was an oversupply left after Easter.

New Zealand's chocolate market, worth $431.7 million last year, has been growing steadily over the years, with Easter eggs alone worth $31.4 million last year, according to Nielsen.

Mondelez's Kane said the season regularly brought in more than $35 million to supermarkets and was up 5 per cent on average each year.

Cadbury's annual Easter events, including its Eggstravaganza, raised nearly $30,000 this year for charity Make-a-Wish, up from $13,000 last year.

Whittaker's head of marketing Philip Poole said the company has grown significantly, particularly in the past 10 years or so.

"The first quarter of the year tends to be our quietest in terms of sales because it's the summer months and then it builds up through from Easter to around Christmas," Poole said.

"The peak months would be probably August/September in the winter months but our sales have been increasing all the time and so that seasonality becomes less and less important.

"The company is growing and we've grown our market share significantly, but the chocolate market has been growing as well," Poole said.

Kane said Cadbury had for many years been a market leader at Easter, with a roughly 65 per cent market share for the "flagship event".

Other big players include premium-focused chocolatiers such as Lindt and artisan businesses.

Chocolate companies are set for a "white-knuckle ride" as Easter egg sales are counted after the hunt for consumers during the biggest weekend of the year. Photo / Getty Images
Chocolate companies are set for a "white-knuckle ride" as Easter egg sales are counted after the hunt for consumers during the biggest weekend of the year. Photo / Getty Images

"It's the biggest time of the year for us and is about 20 per cent of the overall turnover generally speaking, and that's increasing," Kane said.

"So far this year we're seeing that it's growing about 20 per cent within the season itself."

This year, Whittaker's has launched its first Easter-specific product, a chocolate kiwi and its egg, with 20c from every sale going to the Kiwis for Kiwi charity.

Although it was too early to report on exact figures, Whittaker's said sales of the product had already far exceeded expectations.

Kane said that one of the major trends in chocolate had been a shift towards emphasising top quality.

"We're finding in chocolate generally there's a lot of competition around premium chocolate and so premiumisation of what has largely been more of a commodity product has been fascinating," he said.

Poole said this was also a major factor for Whittaker's.

"New Zealand consumers are certainly becoming more discerning and more demanding in terms of premium quality products", he said, adding consumers could tell if companies changed a formulation or recipe. "Quality is absolutely key."

Philip Poole. Photo / Mark Mitchell
Philip Poole. Photo / Mark Mitchell

Global prices put squeeze on cocoa

Weather and seasonality can affect chocolate sales with cooler temperatures boosting returns, but the biggest impact on the industry comes from global commodity prices.

There has been concern about increasing cocoa prices as supply declines and events such as the Ebola outbreak threaten availability, with 70 per cent of New Zealand's cocoa coming from West Africa.

Predictions on future cocoa pricing are varied. Some say it is likely to ease in the coming years and others predict the price will double by 2020.

But for chocolatiers, it is just something they have to deal with.

"Our cocoa beans are sourced from Ghana so [global issues] do affect it because the price can fluctuate up and down," said Whittaker's head of marketing Philip Poole.

Mondelez New Zealand head James Kane said the company had had to make some hard decisions around the increasing cost, such as reducing the size of its family block by 10 per cent from 220g to 200g - the equivalent of a row of chocolate.

The news saw a backlash from the public, but Kane said the decision was made to avoid increasing the cost of the block.

Whittaker's increased the price in 2014 to deal with rising costs.

"Commodity pricing generally is one of the key costs of manufacturing our product and we have seen an increase in this," Kane said.

"We had a choice to make with the headwinds from commodities - do we pass on the price rise to shoppers or do we change the weight of the block.

"We made a choice to change the weight of the block and keep the pricing the same."

Weather is also a factor when it comes to cocoa production - last year's more extreme summer months destroyed some crops in West Africa.

Chocolate wars spill into court

The battle for sweet-toothed consumers has spilled over into court several times in recent years, most recently with Cadbury taking Whittaker's to court over its Berry Forest product.

Cadbury argued its rival's product was too similar to its own Black Forest chocolate. Cadbury eventually conceded defeat in the trademark battle but competition for the Easter market is likely to heat up now that Whittaker's is offering Easter-specific products for the first time.

Cadbury has also had to battle to trademark the distinctive shade of purple used in its packaging - first winning its legal case in 2012, before having it overturned in 2013 after rival Nestle appealed the decision.

The biggest stoush between Whittaker's and Cadbury often plays out in the companies' innovative offerings with each trying to come out with winning new flavours.

Whittaker's collaborations with brands such as L&P and Jelly Tip were welcomed by the market, as was Cadbury's Jaffa collaboration last year - with sales higher than expected.

- NZ Herald

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