Destination: chocolate
An ambitious objective for the overall confectionery category and an ongoing commitment to new products and special packs continue to define Nestlé’s approach to the travel-retail channel, as David Davies discovers
As far-reaching, ambitious growth strategies go, the one being pursued by NITR (Nestlé International Travel Retail) certainly takes some beating. By promoting a category management approach that separates confectionery products into one of five sub-categories (informal gifting, snacking, premium gifting, children’s and destination/souvenir), Nestlé ITR is
aiming to double the overall confectionery market in travel-retail within a period of just six years, by 2009.
Speaking to Frontier shortly before the annual exhibition season gets underway with the Duty Free Show of the Americas, NITR general manager Catherine Saurais says that the company’s impressive array of new lines and brand extensions unveiled in Cannes last year has been well-received, and that it remains on course to achieve its ambitious objective.
“Although first shown at Cannes last October, the majority of the new lines introduced there are only actually hitting the marketplace now, so it is really too early to say directly how they have contributed to our objectives,” notes Saurais. “However, the market response to the range has been excellent and we are confident that our business will continue to increase and develop in line with our targets. This will assist us in reaching our goal of doubling the confectionery market by the end of 2009 from US$1299m in 2003 to US$2600m.”
As might be expected, many of the products highlighted in Cannes last autumn continue to figure prominently in NITR’s plans for 2008. Priorities include the further roll-out of the new range of Smarties Toppers, based on characters from the Disney/Pixar movie Cars; the introduction of a Kit Kat Dark Travel Pack, containing eight four-finger bars and intended to meet the growing demand for fine dark chocolate; the promotion of new packaging for the Cailler brand, based on a distinctive ‘chess-board’ concept; and, possibly most intriguingly, the relaunch of Nestlé Swiss (Chocolat Brut) chocolate with new branding and packaging that reinforces the product’s considerable heritage and identification with its home market.
“It was research undertaken at Singapore’s Changi Airport with shoppers last year that alerted NITR to the importance of ‘Swissness’ in its famous Nestlé Swiss chocolate,” recalls Saurais. “This led directly to the decision to relaunch the product with new branding and new quality silver packaging for the 400g tablets… [The use of] quality silver packaging, displaying a mountain of chocolate that blends into Swiss Alp scenery, reinforces its Swiss origin and highlights the use of authentic recipes.”
While the existing six-variant range continues, Nestlé has also developed two new ‘self-indulgence’ varieties: SOLO Dark and SOLO Milk. The 200g varieties are presented in contemporary cube
packaging and feature individually wrapped pieces of chocolate.
Looking ahead, it is possible that there will be more special exclusive packs, such as the Kit Kat pack for the entire Middle East region launched at the end of 2007. And that’s not all. “We are also keen to develop specific celebration packs – for example, we introduced a special Ramadan Quality Street tin in 2007 which was very well-received,” reveals Saurais. “This type of destination and ‘seasonal’ gifting is a vital and fast-growing sector of the market, providing the traveller with a unique memory of where he/she has been or a time they have experienced and wish to share with loved ones. At the same time, they have the confidence of an international brand such as Kit Kat or Quality Street.”
These travel-retail exclusives also help with pricing, notes Saurais, “because there is no exact point of comparison with the domestic market”.
Informing these many developments is an awareness that the confectionery category continues to develop and evolve in all manner of ways. Significant influences on the category to be highlighted by
Saurais include gifting, premiumisation and snacking & sharing.
“The unstoppable advance of snacking & sharing continues to be a key trend in the sector,” she says. “This sub-category, which represents almost 25% of total category sales, has seen fast growth over the last 12 months. This has been driven by significant innovation and NDP by all manufacturers. This sub-category enjoys good visibility, is easy to shop due to good in-store access, and meets the needs of time-starved passengers perfectly. Handy sharing sized, portable packs linked to strong brands and sold at acceptable price-points mean this range has huge appeal to consumers and retailers alike.”
These developments all take place against the backdrop of a category that experiences ongoing challenges from the tax structure and is now facing arguably unprecedented cost issues.
“On top of the cost of doing business, we are incurring massive and recurrent raw material increase [of a degree] never seen before,” says Saurais. “With lower margins than average for travel retail confectionery suppliers on the one hand, and increased pressures on the cost side, we shall have to pass on the necessary increases to the end customer. Having said that, because it is essentially driven by gifting needs, shoppers and travellers will keep on buying confectionery, particularly at airports. […] We are not talking daily shopping with a clear price-point benchmark in this case.
“The impact on the consumer propensity to buy is more likely to be felt in the price-sensitive snacking segment, which represents 25% of the category. In this area the price comparison to domestic is made and shoppers may reduce the quantity they buy.
Nevertheless, if passengers are looking for snacks during their airport journey, confectionery still offers a better value proposition than many of the catering facilities at airports, and the category provides the perfect solution for mobile snacking and convenience.”
Finally, Saurais is currently contemplating another, more personal challenge – taking on the responsibility of being a judge for the 2008 Frontier Awards. “I am very much looking forward to examining the innovations, concepts and ideas that other companies have come up with over the past year,” she enthuses. “It is always fascinating to learn the thought processes that go on behind a product launch, a marketing concept or a promotional plan, and I am sure that I will learn something from it.”
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