The Chocolate Wars

Cadbury's Dairy Milk overtook Nestle's Kit Kat as the UK's biggest selling chocolate bar last year. Now the two giants are competing with new ad strategies. Kevin May reports. Cadbury and Nestle are head-to-head again. After tussling for the top spot in the chocolate bar league tables last year - with Cadbury's Daily Milk pipping Nestle's Kit Kat to the number-one slot, the two are about to do battle with new advertising that represents a departure for both brands.

The market is tough. The problem with chocolate is that everyone loves it. According to Datamonitor, last year the UK ate 684.6 million kilogrammes of the stuff. Translated into old money, that's almost two stones for every man, woman and child in the country. As markets go, this one's about as saturated as it can get. Penetration is close to 100 per cent, and we'd really be struggling to eat much more than we do.

One of the biggest challenges is that consumer behaviour is so entrenched.

According to one industry insider: "People speak with conviction about which brands they prefer. You don't get many chocolate pragmatists who are prepared to take anything as long as it's brown. Most have a very clear view on knowing what they like and liking what they know." The vast majority operate a kind of staged repertoire: at the bottom are all the brands they've heard of, at the next level are the brands they've tried and quite liked, and at the top are the brands they buy regularly. Given how much we stuff down our faces already, it would be hard - some might say irresponsible - to focus on increasing volume or frequency. Instead, the game turns entirely on loyalty and brand switching. The role of advertising is rarely to inform. New launches are notoriously difficult (of the top ten confectionery brands, only two have arrived on the market in the past 25 years) so only occasionally attempted. Apart from new news, the only rational appeal that can be made is to taste and ads can't do much if you don't like the product.

It's not even about awareness: with behaviour and brands both so established, everyone is as familiar with most brands as they're ever going to be.

The object of the exercise becomes nudging people who have drifted away into trying your brand again by reminding them of its existence. It's about trying to shunt back up from the middle tier to the top one. All this is as true today as it has ever been, but there are some key dynamics that are changing and making the lot of the chocolate marketer even harder. Impulse buying is in decline and being replaced by mass purchasing at the grocery multiples. Consumers have wised up to the benefits not only of cost savings but also consumption control (by getting the entire week's allocation for the whole family in one go).

Last year, supermarkets increased their share of chocolate sales by 43 per cent.

This makes advertising all the more crucial in order to secure listings.

But margins are being squeezed at both ends: by the consumer who wants price discounts for bulk buying, and by those retailers who can screw down the keenest deals because of who they are. Combined with the recent effects of media inflation, the end result is that it is no longer financially sustainable for any confectionery manufacturer to advertise a whole range of individual lines. And it makes any innovation that can't be sheltered by the umbrella of an established brand all the more risky: with margins that thin, it can prove a struggle to recoup even the cost of development.

And lifestyles are changing. We are more stressed than we used to be and our days are less structured. Stopping for meals and breaks has become more haphazard but the pause, when it comes, is now even more valued.

Breaks have to count, and so people are increasingly drawn to indulgent treats. It's important not to overdo it or else the sense of reward can be undone by feelings of guilt. Treats that can be shared add a gratifying social dimension to the occasion. All this explains why snack-/bite-size and moulded chocolate bars are enjoying an ascendancy over some of the traditional formats.

Although health is an ever-more prevalent consideration, chocolate has largely escaped being drawn into the obesity debate. It has never masqueraded as proper food, so there's no expectation that chocolate should be healthy.

The taste is more important and, as the failures of Flight and Mars Light bear witness, people will not accept compromise on an occasional indulgence (as opposed to a diet staple). The niched success of organic brands, such as Green & Black's, is not down to healthiness but taste. The taste is better not because of the origin of the cocoa but because of its concentration - almost twice as much cocoa mass as the conventional British bar.

It is perhaps ironic that the very success of chocolate as a market is what makes marketing the product so difficult. With everyone loving the stuff, how do you make people love your version of it more than anyone else's? This may explain why even some of the largest manufacturers occasionally stall. Despite being traditionally one of the higher-spending categories, chocolate has been thinly spread on the television lately. So far in 2004, the odd programme sponsorship deal aside, the TV sales executives have had largely to forgo their usual fix. Cadbury may be back on air with the first work from Publicis since it won the account more than 18 months ago, but Nestle appears to have declared a moratorium on TV ads since the arrival of the managing director, Chris White.

But as they contemplate the conundrum, they should be wary of overthinking it all. The solution doesn't lie buried deep in the recesses of the psyche.

As another insider comments: "It's all about salience. It's ludicrous sitting in endless debates arguing the toss over what this brand 'should be saying' to consumers. People don't think long and hard about what they're going to buy." So forget the semiotics, look for something that's going to make you stand out, engage the consumer, and come across as likeable and fun. Easy really.


Its gestation period may have been long enough to put an elephant to shame, but the new Cadbury "masterbrand" campaign has finally arrived.

Despite rumours of half-a-dozen routes falling at the Millward Brown hurdle, Louise Cook, the marketing director at Cadbury, maintains that this was always the plan: "The first thing you look at is the structure of the brand, then the product, then execution. Communication is the last thing."

The new executions are certainly distinctive. It's hard to imagine quite what the groups must have been like on the nights when these concepts sailed through. The overall feel is surreal, extending to animatronic beasts as metaphors for our happiness which, the endline tells us, "loves Cadbury". Some may feel that these commercials are rather dark - a kind of Stepford Pets in 30 seconds - others will find them just plain weird.

Either way, it's not entirely clear what these commercials mean (though you are forced to assume they mean something), nor whom they are aimed at, nor what they are trying to achieve. There's little that's light, charming or fun about them; more than anything, they smack of trying a little too hard. If the idea worked comfortably, you probably wouldn't need name-tags with "happiness" held in extreme close-up for a second identifying what the animals are supposed to represent. One insider acknowledges: "It's odd advertising. Because it's not common language, it jars now.

But it will grow on you. You'll be seeing it a lot in many iterations and it will soon become part of the vernacular." Stranger things have happened, but not many.

Despite the seeming struggle to develop this new campaign, Cadbury's position within the market is not only strong today but also very well set for the future. With a 28.4 per cent share of the chocolate market (versus Masterfoods at 26.7 per cent and Nestle at 22.1 per cent), it is the leading manufacturer and, as a house brand, represents chocolate more than any other in the British marketplace. The pursuit of the "masterbrand" strategy may border on the megalomaniac, with its visions of purple and yellow patches dominating confectionery displays, but is only likely to reinforce Cadbury's dominance.

The company has already aligned an array of brands under the Dairy Milk banner, so that the likes of bubbly and caramel become variants rather than standalone brands in their own right. According to Cook: "The important thing is to offer people variety within the brand they love." It also means that, even with the commitment to the Coronation Street sponsorship, it is viable to maintain a sustained advertising presence. This year alone will see more than £35 million worth of support that promises to deliver us more than 900 billion impacts of the "happiness" campaign.

There can be little argument with the strategy, and perhaps with enough exposure even the execution may prove to be effective in the end. After all, despite being much maligned to begin with, look at what the "ambassador's party" did for Ferrero Rocher.


Chris White's arrival at Nestle will always be remembered in the industry for his immediate declaration that this was a business in crisis.

He subsequently clarified his pronouncement, saying that it was merely the marketing that was in trouble. What he didn't make clear was whether he was referring to the marketing before or after his advent.

A plain-speaking Antipodean from the "look mate, it's chocolate, just bloody eat it" school of advertising, White felt that attempts at resuscitating some of Nestle's flagging brands had focused too much on being famous and not enough on selling product.

The first priority was Kit Kat. Despite sales being down 9.1 per cent last year, 47 Kit Kats are still eaten every second in the UK and, including all its various formats, it retains its position as the number-one brand.

If there ever were a default "nobody dislikes it" chocolate brand, it's Kit Kat. Its blandness goes a long way to explain its widespread appeal, but that may also represent its biggest danger going forward. Kit Kat advertising had moved away from the product focus, but this was almost inevitable with the demise of the paper and foil wrapping. The ritual of running the nail down the foil and snapping off a finger was as intrinsic to the brand as the endline. This was lost with the switch in packaging to the present plastic sheath.

White has set about trying to shore up some disastrous deals with the trade where too much product has just been given away, and also to pep the brand up with news of some interesting line extensions. Among the ideas being mooted are sweet variants such as Lemon Cheesecake and Caramel, but also some spicy spin-offs such as Ginger and Curry.

After painting his office yellow to draw out his creative side, White has also turned his hand to the advertising. Out went the Jason Statham campaign and the 47-year-old endline of "have a break, have a Kit Kat", and in came "make the most of your break" and a poster of a woman presumably doing just that while eating a Kit Kat. New television work is in the pipeline and is rumoured to include one spot featuring a prisoner on death row.

Beyond Kit Kat in particular, Nestle has other distinctly difficult problems given the direction in which the market is going. It has little provenance in chocolate to the UK consumer. It has a diversified portfolio of brands with no natural home to act as a refuge for them all. It's unlikely that the launch of Double Choc is going to provide the mother-ship that the stable so desperately needs.

White's initial impression - and complaint - about the advertising industry in the UK was that it was too obsessed with winning awards and spent too much time in cahoots with the marketing press. He may have successfully cured both of those ills in his first six months, but only time will tell if he makes a similarly marked impression on the rest of his business.

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