This is the text of the first part of an interview published recently in Food News.
As commodity prices escalate and companies look to cut profit margins, confectionery companies have been accused of becoming stagnant.
We spoke with food and confectionery consultant Graham Godfrey, who gave his candid opinion on the lack of innovation in the industry.
Godfrey has an impressive background in confectionery, having worked in the industry since 1973. From then until 2005 he held various positions at Cadbury Schweppes Group including; Supply Chain Analyist for mergers and acquisitions division, Operations Development Director (Europe, Middle East and Africa), Technical Director (Europe) and Process Director (South Africa). He now works alongside the Acumentia group of food consultants.
FN: What do you think are the main challenges for the confectionery industry?
G.G: Availability and cost of ingredients, energy and capital. The world is becoming more and more unpredictable and competitive. However, this is making companies increasingly risk averse but sooner or later the consumer is going to get fed up with the same old products and the company who introduces genuine innovation will rapidly move into a leadership position. To some extent there has been a shift in this direction in assortments where consumers have moved their gifting to products which offer something more original leaving the old favourites without a role. In supermarkets, smaller companies such as Thorntons have taken on the global giants and are winning. The likes of Cadbury’s Roses and Nestlé’s Quality Street have not been innovative and others have taken over the gifting market. If you had asked 100 people 15 years ago if they had heard of these chocolates, people would know them as household brands. I do not believe everyone will have even heard of them anymore.
FN: Do you think confectionery has become boring and do you see any wasted potential?
G.G: New products create energy in the marketplace but for a long time now the emphasis in the major players has been on cost reduction of existing product lines because of changes in the structure of the industry. I think the industry is largely ignoring the aspirations of consumers in the search for profit. Just look at the shelves – the current “innovation” is twin bars, but every bar on the shelf has been around for many years. I am sure the potential for innovation in mainstream products exists but unless manufacturers and retailers change strategy we will be condemned to the same old products for the foreseeable future. It is so sad. I go into petrol stations and supermarkets and look at displays that have an average age of 40. I joined the confectionery industry in 1973 and there was constant refreshing. Eight out of ten products may not make it, but it was exciting and all that has gone away.
FN: Do you think consumers are aware the market is stagnant or are happy purchasing the same products?
G.G: I think everyone is asleep. If someone came in with something new, consumers will sit up and take notice. Look at breakfast cereal, they are constantly introducing new products and building excitement. You only have to look at the growing boxes of cereal on supermarket shelves to see there is a market for it.
FN: Are there any audiences that are not being targeted to its full potential?
G.G: Confectionery is slightly middle-aged or aimed at children. The young adult market is one that could see great increases in sales. No one is appealing to that generation and this ‘social networking generation’ have a heck of a lot of disposable income.
FN: When taking a new product to the market, what are the biggest obstacles and how would you face them?
G.G: The route to market becomes more daunting and difficult daily as the major retail chains dominate the confectionery business. A new product has to be extremely well researched and strongly supported so that it produces an immediate impact in the market and becomes a ‘must-stock’ item. An alternative route has been adopted by some smaller entrants and mirrors and extends the traditions of the ‘confiseur’ in Europe – a small number of specialist shops stocking exquisite products but extended by the use of web-based marketing and distribution. It would be very interesting to see if a web based marketing campaign using the social networks could be successful for the type of product which appeals to the youth market. It might even develop a different distribution model to go with a new marketing approach. I think that consumers will always prefer to shop for the physical product but the internet will have more importance and this is not being utilised to its full potential. Especially in tapping that “ignored market”. One of the big problems in launching a new product to market is the cost in getting it on supermarket shelves and distribution. What the industry needs is a really good website that would link all confectionery together under one banner. It would defeat the stranglehold suppliers have on business at the moment, but no one is taking advantage. In superstores, people haven’t got a snowballs chance in hell of competing against Mars, Nestlé and Kraft