Sour turn in sweet profession

Alistair Watts

Marketing confectionery isn't the sweet deal it used to be.

Concerns about child obesity and diabetes have put shoppers off sugary treats and trained their attention on nutritional information tables.

"Confectionery in general has had a bad press along with sugary carbonated soft drinks and all the rest of it," says Alistair Watts, Auckland-based managing director of ACNielsen Pacific and Japan.

Watts has been chewing over the issues faced by confectionery companies and last week presented his findings to ConFectioNZ, the annual conference for the New Zealand branch of transtasman industry group Confectionery Manufacturers of Australasia. "These guys have got a job on their hands," Watts said.

"They're in a category that's been getting a bit of bad press on the one hand and, on the other hand, is under pressure in the supermarket sector."

ACNielsen figures show supermarkets are far and away the biggest retail outlet for confectionery, accounting for $276 million in sales last year.

That makes confectionery the seventh-largest supermarket product category in terms of total turnover.

But while total sales of most top-10 categories grew by between 5 and 13 per cent last year, confectionery and biscuits languished at 2.1 per cent, beating only black-sheep tobacco products, which grew a mere 0.4 per cent.

Confectionery was also one of only four top-10 categories to record a drop in total supermarket unit sales last year. This fall from grace is in part driven by greater shopper awareness of sugar levels in the products.

When ACNielsen asked people if they checked details on food labels, 51 per cent said they regularly scrutinised a product's sugar level, the second most-analysed ingredient behind fat (58 per cent). Shoppers were less concerned about a product's calorie content (which was checked regularly by 31 per cent), carbohydrates, salt and sodium (28 per cent) and additives and preservatives (27 per cent).

Watts said a further possible threat to supermarket confectionery sales was Woolworths Australia's purchase of Progressive Enterprises (owners of the Foodtown and Woolworths NZ chains).

Woolworths Australia's strategy had been to cut back the range of products it sells through its supermarkets, which presented a particular challenge for confectionery brands.

It remains to be seen if Woolworths adopts a similar approach in New Zealand, but if it does that could spell more bad news for confectionery.

Unlike some product categories, where reducing the range could increase sales because it made consumers' choices simpler, this is not the case with confectionery, Watts says.

"The category is dependent on range and choice. If people see a good selection, they will make impulse purchases, and pick and choose and so forth. If they see a limited selection they're less likely to buy."

But Watts' message to sweet-makers at last week's conference wasn't all sour news. His suggestion to them was that they consider tapping more into the "baby-boomer" market.

"My thinking is that confectionery, rather than just being targeted at those younger age groups, might have opportunities - with new product development and so forth - at this [40 to 60-year-old] group. They will buy higher-end brands. They're not just obsessed about price."

Watt said while parents were cutting down on the amount of sweet treats they gave their children, the 40-plus age group were tending to shun the all-or-nothing approach to dieting, often taking a "relaxing the rules" approach.

"The thing about the baby-boomers is that while they're conscious of heath and all the rest of it, they are reasonably affluent and they have what I would call a propensity towards healthy but indulgent consumption."

Alan Stewart, the New Zealand branch president of Confectionery Manufacturers of Australasia and managing director of Auckland-based Campanella Confectionery, says the high kiwi dollar has been a major issue facing local confectionery manufacturers.

He said the strength of the dollar meant retailers, including the Warehouse, were selling a large amount of cheap imported confectionery.

Watts' thoughts on increasing the marketing focus towards the baby-boomer generation were received with interest at the conference.