Canadian Chocolate Bar Market

REPORT I: Marketing Background

Economic Trends:

• Increase in cost for manufacturing such as packaging or ingredients.

Chocolate bars are thought of as impulse buys, which means they require no thought. This is due to how inexpensive they are. However, if an ingredient such as sugar was to rise drastically, so will the cost of the chocolate bar therefore changing the buyer’s perspective on the product class.

Social, Demographic Trends:

• Although chocolate bars are thought to have been more enjoyed by a younger consumer, crispy crunch has always focused towards older demographics. This is shown through their mature packaging commercials.

Healthier Living:

• Consumers are now watching what they eat, and want to avoid products that contain ingredients that have become deemed as fattening.

Technology:

• Internet advertising is at an all time high, and consumers are attracted to products that they can get more information on over the Internet. Also, “buzz” promotion can be created efficiently via Internet.

Political:

• French/English Packaging

• In Canada it is illegal not to have both English and French writing on the packaging.

Ingredients:

• All ingredients must be labeled on the packaging.

Market Analysis

Total Canadian Size and growth:

• From 1996 to 2000, the chocolate market enjoyed a total growth rate of 19.1% with retail sales in 2000 producing a whopping $13.7 billion.

Competitive Analysis

Market Trends:

• Hershey Canada is one the largest competitors in the chocolate bar market. Hershey brands have a strong market value and a long history dating back to 1903. Hershey Canada owned three of the top five chocolate bars sold in 2000 to 2001. Hershey’s three principle brands held fifteen percent of the Canadian market share. Hershey’s brands, Reese Brand, and Hershey Milk Chocolate gained 0.9 percent market share in 2000-2001. Hershey brand Oh Henry lost 0.3 percent market share but still holds the number four spot in market share value. Hershey Canada has strong brand recognition, and loyalty.

• Nestle Canada’s three principle brands, Kit Kat, Coffee Crisp, and Smarties represented 13.4 percent of the Canadian market in 2000-2001. Nestle has a considerable market share and strong brand insistence however only one brand gained market value. Kit Kat, Nestle principal brand gained four points surpassing Cadbury’s Caramilk. Kit Kat now represents the second largest piece of the market at 5.4 percent. Coffee Crisp was stalemate at 4.2 percent of market share. Nestle Smarties lost 0.3 percent of market value now ranked ninth out of the top ten chocolate bars in the Canadian market, leaving only Effem’s Mars behind it.

• Effem Foods has two brands ranked in the top ten chocolate bars in the Canadian market, Mars and M&Ms. Effem’s two principle brands represents 8.2 percent market share. Effem’s Mars and M&M’s both lost an accumulated 0.9 percent of market share in 2000-2001.

Market Analysis:

• Hershey Canada, Reese Brand, represented 6.3 percent of the Canadian chocolate bar market share in 2001. Reese brand targeted young children “the ads have a youthful orientation and show kids having fun eating the bar”(Crunch, Crispy Case). Reese Brand was creating strong brand insistence by penetrating younger consumers. Reese used point-of-purchase materials to attract the impulse consumer. Reese also employed the leadership positioning strategy; Reese showed their product as a preferred choice among children. Hershey Milk Chocolate and Oh Henry both have a strong brand loyalty due to their insistent customer base that had been developed over years.

• Nestle Canada, was a leader in the Canadian Chocolate bar market due to strong market