CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS 1
CONTENTS MARS, INCORPORATED
INTRODUCTION 3 SALES OF CHOCOLATE PRODUCTS 15 IN KAZAKHSTAN
5 CONSUMPTION OF CHOCOLATE IN KAZAKHSTAN
THE CHOCOLATE MARKET IN KAZAKHSTAN 10 SUPPLEMENTS
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This case study was prepared by Changellenge>> for Mars solely to use for educational purposes in the framework of Changellenge National Case Study League >>. The authors do not intend to illustrate effective or ineffective management. Certain names in this case study, together with other identification data might have been altered for confidentiality purposes. Case study data might not be valid or accurate, and also might have been altered to comply with commercial confidentiality policy. All rights reserved, unauthorized use is prohibited. In order to purchase the case and for distribution purposes please contact us: info@changellenge.com. You will dive into a real business Mars and feel yourself as a top managerof the company for one week. You and your team will have a real challenge - chocolate sales are fluctuated by seasonality, and how to make it anadvantage? You will manage the portfolio of brands of chocolate products and make decisions determining the further Mars development inKazakhstan. Your aim is to change the strategy of brand management and achieve growth of attractiveness of brands in key seasons. You will need to carefully analyze the current sales, market conditions and the position of competitors, identify the leading categories and define their price policy, and to propose the overall coherent marketing strategy to promote chocolate products.
ПРОДАЖИ ИНСУЛИНОВ В РОССИИ
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МАРКЕТИНГ ИНСУЛИНОВ
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
INTRODUCTION
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INTRODUCTION Sheets of paper scattered around next to the laptop. Reports full of notes and bookmarks, pages of records, number columns and diagrams. An unfinished cup of coffee. A monitor screen used for viewing presentations; a calculator; multicolour stickers for notes; and a stand for office accessories. Anyone entering the cabinet immediately realises that Kairat, the marketing director of Mars, has been busy developing some new ideas. The working desk itself is situated next to the window. The sun is now shining through the window, and the sound of droplets is coming in from the outside, creating a heightened spring mood. Kairat gets up from his seat, opens the window, and looks outside. Tomorrow is 8 March, and the feeling of pre-festive bustle is in the air. Two years ago, Kairat graduated from the Harvard Business School, and began working for Mars. He managed to achieve impressive results during his first year at work, and took over as the head of the marketing department six months later. In spite of his high position, Kairat’s enthusiasm did not diminish, and he continued to bristle with new ideas. Even now, as he was observing passers-by on the street, Kairat was thinking about his work.
S a l e s o f c h o c o l a te p ro d u c t s a re characterised by seasonality, reaching their peak during the months with more national and state holidays, and falling during the summer. Suppliers and distributors prepare for the seasons in advance, as they can increase their sales by 50-100% during these periods. The International Women’s Day (8 March), when it is customary to congratulate women and buy small gifts for them, is about to arrive, and Nowruz – the Persian New Year, which is traditionally widely celebrated in Kazakhstan – is not far away either. The festive seasons are particularly successful in terms of selling premium products. In Mars’s portfolio, this place is taken up by the ‘A. Korkunov’ brand. The elegantly decorated boxes of chocolates are being readily bought by people as gifts for their colleagues, friends and relatives. Nevertheless, Kairat is used to thinking on a global scale, and thinking about future prospects, too. He recently spent a whole day studying the state of the market, the sales figures for Mars products in Kazakhstan, and marketing reports. Boxed chocolates sell well seasonally, but they only make up 0.2% of Mars’s chocolate portfolio. What can be done to increase seasonal sales in other product categories in this
portfolio? Where to find a niche for the chocolate bars and dragées? How to experiment with their positioning, advertising, promotion, and packaging? Today, Kairat is planning to call a meeting of the working group, share his ideas with his colleagues, and task them with developing a concept for the increase of sales in the chocolate portfolio, making the best possible use of the seasonal factor. The aim is to increase the volume of sales in Mars’s chocolate portfolio by 20% during 2015 by increasing sales in every category of chocolate products during key seasons. The participants of the meeting are tasked with the following: • To analyse the current sales of the chocolate portfolio, as well as the leading categories, formats and brands on the market, by taking the seasonal factor into account. • To put forward product offers that are capable of achieving success during the season, and to determine the pricing strategy for them. • To formulate a marketing strategy for the product promotion (including trade marketing in the stores), and to substantiate the effectiveness of the said strategy. Kairat has assembled an excellent team. Team spirit, mutual assistance and quality of work represent the main company values at Mars. Kairat has never doubted the motivation, effectiveness and high level of professionalism of his colleagues, and has been certain of achieving success.
Ie. to increase sales by 20% on the account of seasonal and gift products. 1
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CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
MARS, INCORPORATED
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MARS, INCORPORATED The Global History of Mars Mars, Incorporated was founded by Franklin Clarence Mars, who started his business, together with his wife Ethel, by selling creamy caramel and inexpensive sweets that were handmade in their own kitchen. It was Franklin Mars’s idea to wrap chocolate in foil, and to store it in individual packaging – until then, chocolate had only been sold in bulk and by weight. According to the legend, this idea came to Franklin during a visit to the shop with his son, when little Forrest Mars asked for chocolate, and ended up smearing himself with the treat. In 1923, Franklin Mars came up with the Milky Way® bar, which became a revolutionary product in the confectionery industry, and brought unprecedented growth and success to the family business. Sales rose eightfold, and by 1929, the company was employing around 200 people, while the main production site was moved to Chicago, Illinois. There followed another bestselling chocolate product in 1930, in the form of the Snickers® bar, which was initially sold for 5 cents apiece. Having grown up, Forrest Mars began actively participating in the family business, and moved to England, where in 1932, he
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began manufacturing the Mars® bars. While promoting the product, Forrest thought of a brilliant marketing move, ridding the thrifty Englishmen of the idea that buying confectionery was a mere treat, and therefore a waste of money. He insisted that Mars® bars provided no mere pleasure, but were a source of energy. It was food, rather than just confectionery – eggs, heated milk, and butter provided an ideal mixture for removing tiredness, he claimed. In its 80 years of existence, the Mars® bar only changed its size and proportion of its ingredients, while the recipe has remained the same. It has become one of the most popular chocolate bars, not only within the United States and the English-speaking world, but worldwide. Forrest Mars’s other famous invention was the chocolate candy M&M’s®. The idea apparently came to him during his stay in Spain during the civil war, when he observed Spanish soldiers eating chocolate balls covered with sugar glazing, which prevented the chocolate from melting. Manufacturing this product during the difficult time of war required further investment, and thus, Bruce Murrie became his partner – hence the name M&M’s, denoting the surnames of Mars and
Murrie. Even though Forrest Mars later bought out Murrie’s stake, the second ‘M’ in the product name has remained to this day. In contrast to his father, Forrest Mars did not focus on confectionery alone. Success on the chocolate market was supplemented with equally impressive results in the food and pet food product markets. Whiskas® and Pedigree®, as well as Uncle Ben’s® cereals, remain among the leaders within their respective fields to this day. Instant rice appeared in Mars’s product portfolio in 1943, when rice porridge formed an integral part of a soldier’s diet, while time for cooking was scarce. Forrest Mars thought of the idea of steaming the rice seeds, thereby providing them with heat treatment that removed husk from the seeds. Initially, income was secured through orders from the military. Starting in 1946, the product appeared on the store shelves under the Uncle Ben’s® brand, and immediately became the leader in sales for the next six years. By the mid-1950s, the manufacturing of pet food had been firmly established in Europe (especially in the Netherlands), and was
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
a source of substantial profits. In 1967, it expanded beyond the continent, and the company began selling confectionery, as well as cat and dog food, on the Caribbean, Central and South African markets. Today, Mars is one of the largest privately owned companies in the United States according to the influential Forbes magazine. More than 400 offices and factories around the world employ up to 75 000 workers. The company maintains its leadership on the market through the love towards its work, the care that it shows towards the people it is surrounded by, and the respect that it extends to its business partners. Mars is one of the world’s largest manufacturers of chocolate, controlling 11-14% of the global market (based on various evaluations), and manufacturing 7 of the 20 most popular chocolate bars worldwide. Its annual global sales exceed $33 billion. Moreover, Mars is the world’s leading manufacturer of pet food, with its portfolio incorporating up to 89 brands in this industry. Having acquired Wrigley®, the company also leads the chewing gum market. The company’s business is expanding to such an extent that it does not rule out exploring new areas of activity in the future.
Mars in Kazakhstan In 2010, for the purpose of structuring the new developing markets to which Mars has already been exporting its products for several years, the company opened a new subdivision – Mars Central Eurasia and Belarus (CEAB), with offices in Almaty and Minsk. This subdivision includes countries such as Kazakhstan, Belarus, Azerbaijan, Georgia, Armenia, Kyrgyzstan, Moldova, Mongolia, Uzbekistan, Tajikistan, and Turkmenistan. Mars’s Almaty office is the head office for the company’s activities in 11 countries. The main regional markets are Kazakhstan, Azerbaijan and Belarus. The company’s activities in the region focus on three business segments – chocolate products; pet products; chewing gum and confectionery. The majority of Mars’s chocolate products that are on sale in Kazakhstan are being imported from Russia. There are currently three functioning factories: the Stupino factory in the Moscow Oblast, the Cherdakly factory in the Ulyanovsk Oblast, and the A. Korkunov factory in St. Petersburg.
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In order to maintain a stable position on the market, it is important to pay a lot of attention to sales and distribution. Working in the Kazakhstani market has taught the company to be extremely attentive towards its business partners, supporting and monitoring them, ensuring that all terms of the existing agreements are being strictly adhered to. This strategy has allowed Mars to firmly establish itself in the Kazakhstani market and successfully increase its sales turnovers, in spite of difficulties, crises and unforeseen circumstances. Mars has a great potential for development in Kazakhstan. Thus, along with Russia and China, the Kazakhstani market belongs to the list of Mars’s FullForceGrowth markets, meaning that the company is investing in the development of the market in Kazakhstan, and sees a lot of potential in its development. The company’s short term plans include strengthening its position in the CIS and Kazakhstani market, introducing new products to this market, and actively cooperating with suppliers in the field of ecologically clean manufacturing and ‘green’ business.
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
Associates and Culture at Mars From the moment when Forrest Mars united the company’s American and British enterprises in 1964, Mars actively began developing a unique culture, focussing on mutual support and family relations between employees, regardless of their positions within the company. The popula r phrase ‘ no employee i s i r r e p l a c e a b l e ’ wa s c o n s i d e r e d inappropriate within the company. Forrest Mars liked to say: “I can be replaced – I’m only the company president! It is more difficult to find a replacement for a talented employee.” The head of the company did not spare money and effort to search for talented individuals who could have benefitted the company, and created an exceptional working environment for them. The company did not make use of cabinets or any other barriers separating workers from each other. This was done to ensure that all employees felt that they were part of one team. Mars was also one of the first companies to establish its own training centre for its personnel. The team spirit was also embodied by the deliberate absence of
special parking sections and diners for the company’s leadership, protective ‘frontiers’ of secretaries in front of the directors’ cabinets, or company cars and other symbols of social stratification that are present within most large firms. Everyone knew that Forrest Mars’s sons – John and Forrest Jr. – shared one secretary, arrived to work at 5 AM, and rarely took holidays, just like any other employees who were aspiring to achieve promotion. The attentiveness and meticulousness of Forrest Mars himself was legendary. He would start each working day by going around the manufacturing plant and personally tasting the products. He once bought a packet of M&M’s® in a night store and saw that the two large letters ‘M’ were not printed at the very centre of the logo, as required. Forrest, who had highest possible demands for quality, woke the company’s management team in the middle of the night, and ordered the whole batch with the printing error to be removed from sale at once. According to another story, Mars once saw a paperclip lying on the floor in a corridor. He picked it up, called over one of the few secretaries,
and said: “are you aware, young lady, that the cost of this paperclip equals the profits from the sale of a packet of M&M’s®?” The company’s ideology, which was formulated by Forrest Mars many decades ago, boils down to five principles, which any of the company’s employees can recite at any time of the day: quality, responsibility, efficiency, freedom, and mutuality. The main idea behind the principle of quality is to manufacture quality products that fully satisfy the consumer’s demands. “The consumer is our boss, quality is our job, and value for money is our aim.” The principle of responsibility implies that each employee has an important job to do, and is responsible for carrying it out to a high standard. In accordance with the principle of efficiency, employees ought to do their job as efficiently as possible, spending a minimum of resources. The main principles of manufacturing tell us that only mutual benefits will stand the test of time. Developing a culture of leadership is a clear example of realising the principle of mutual benefit. For the
company, this means that it is assured of the sustainability of the business in the long term, and of the fact that we are doing everything today to develop the company leaders of tomorrow. For the employees, it stands for the opportunity of professional and personal growth, and consequently, for career opportunities. The adherence to the given principles by all of the company’s employees allows Mars to develop unique products, to make a profit, and to ensure its leadership in the global market for many years. Today, Mars is on the list of 100 best companies to work for2. Factors that are taken into account when compiling this list include trust towards the management team, job satisfaction, camaraderie, salaries and bonus programs, methods of internal communication, training programs, and corporate social responsibility. These may seem to be ordinary factors that ought to be maintained at an appropriate level by any large global company. Nevertheless, they often play a crucial role in shaping the mood at work.
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CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
According to the Fortune magazine
Ten Interesting Facts about Mars 1. The founders of the Mars empire were 4. There is a special salad that includes 7. Continuing with the theme of technology, Mars became the strong and extraordinary figures. Frank Mars never graduated from school, was bankrupted three times, and had to start from scratch on each occasion, before finally managing to establish a successful company. It was turned into the presentday FMCG3 empire by Frank’s son Forrest, who valued his right to privacy to the extent that he only ever gave two interviews in his life.
2. E mployees are reminded about the
principle of responsibility by a sculpture located on the second floor of the company’s head office in McLean. It depicts a block with an axe on it, with the writing underneath stating that “the head of each employee lies on the block of responsibility.” Posters depicting this sculpture decorate each of the company’s offices.
3. The brand Snickers® was named after
the favourite horse of the Mars family. Up to 15 million Snickers® bars are manufactured each day, consuming 99 tonnes of peanuts. Kazakhstan actually has the world’s highest rate of consumption of Snickers® bars per head of population.
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Snickers® among its ingredients. This dish is popular in the Midwest of the United States, consists of crushed Granny Smith apples, Snickers® bars and whipped cream, and is served in a bowl. The Snickers® recipe itself has remained unchanged since 1930.
first company to start selling real products through the social networking website Facebook. All Facebook users had an opportunity to give a Mars chocolate to their friends as a gift. To do this, they had to pay for the chocolate online, indicating the name of the recipient. The latter then received a unique code which they could use to collect the chocolate at one of Mars’s and Facebook’s partner stores.
5. Mars has altered the colour scheme of its 8. Another popular social networking website, MySpace, also M&M’s® sweets on numerous occasions. Special red and green festive editions of the sweets were manufactured in the 1980s for the Christmas period, different pastel shades for Easter, while the colour blue was introduced in 1995 as a result of a special petition signed by 5.4 million Americans.
6. In 1981, the M&M’s® sweets were sent
into space, when the astronauts of one of the space shuttles asked for them to be included among their on-board food supplies. As a result, M&M’s® form part of an exhibit at the National Air and Space Museum in Washington.
received the company’s attention. The official Mars radio station began operating on it, aiming to attract the attention of the youth. Interestingly, the company focussed on new musical groups that had a chance to quickly attain popularity with the help of the said radio station.
9. In 1998, Australian rules footballer Garry Hocking changed his
legal name by deeds poll to ‘Whiskas’ as part of a promotional campaign involving the Mars company and Geelong Football Club. This was the first publicity stunt of its kind.
10. The brand name Whiskas® is now also widely used to denote a cat colour. This is in reference to the colour of the British cat that appeared in Whiskas® commercials for many years. Specialists usually classify this cat as a ‘black and silver mackerel tabby,’ or a ‘marbled tabby.’
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
Fast moving consumer goods (FMCG) are products that are relatively cheap, and sell quickly. Although 3
t h e a b s o l u te p ro f i t s from the sales of such products are relatively low, they usually sell in large quantities, and the overall profits may therefore be substantial. This market is characterised by a high degree of competitiveness, seasonal sales of specific product types, and by the regular appearance of new brands and product types.
THE CHOCOLATE MARKET IN KAZAKHSTAN 27,5 26,5
26,1 25,2
Sales Volume, 1 000 Kgs
2011
2012
2013
2014
The Market Volume and Main Segments In 2014, the chocolate market in Kazakhstan was valued at 55.5 billion Kazakhstani tenge (KZT). Sales are expected to rise by around 7.5% in 2015, and by 2017, the market is expected to be worth around KZT 66.5 billion. The increasing availability of chocolate confectionery in rural areas will positively affect sales and consumption of confectionery. In 2014, the sales of chocolate products amounted to around 27 500 tonnes in volume terms.
Data from the Nielsen report may not correspond to the data found in other research. 4
Sales Value, 100 000 Tenge
505 208 435 693 390 336
2011
2012
407 554
2013
2014 Source: Nielsen report, 2014
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CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
The chocolate market in Kazakhstan is divided into three main segments – chocolate tablets, chocolate sweets (individually packaged, or sold in bulk), and chocolate bars. In addition to these, there are smaller separate segments of chocolate dragée (such as M&M’s) and chocolate eggs (such as Kinder Choco Eggs).
The structure of the chocolate product market in Kazakhstan Total ASSORTMENTS
Sales Volume 1000 Kgs
Sales Value, 100 000 Tenge
27 590,5
505 208
2 787,3
93 601
BARS
7 216,7
133 339
DRAGEE
781,1
16 913
TABLETS
5 008,6
108 749
CHOKOLATE BULK
11 509,4
124 304
CHOKOLATE EGGS
287,5
28 301
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Source: Nielsen report, 2014
This category includes chocolate products in cardboard, plastic and metal boxes, such as A. Korkunov, Raffaello, andothers. 5
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In 2014, the sales of chocolate tablets accounted for 21.5% of the market in monetary terms. Tablets are a long-established and highly popular type of chocolate in the country. There are wide ranges of products that cater to every taste and price segment. Plain milk remained the most popular type of tablets, accounting for 42% of total tablet sales. This is due to the fact that Kazakhs are traditional people with traditional tastes. Milk chocolate has a lighter flavour, and is not bitter.
fall in impulsive purchases of chocolate bars. In addition, leading companies and most popular bars have faced increased competition.
Chocolate bars accounted for 26.4% of total sales in monetary terms. The shares of bars and tablets in monetary and volume terms are similar, while chocolate sweets accounted for 43.1% of the sales for a 51.7% of the market share in volume terms (combined share of bulk and boxed sweets). In this segment, buyers prefer local and Russian brands, which are known from the Soviet era.
Another popular type of traditional confectionery is standard boxed chocolate. In Kazakhstan, standard boxed assortments are a traditional gift given by people to each other on the New Year’s Day, on the International Women’s Day, as well as on various other occasions such as birthdays, visits to a doctor, to schoolteachers in school, or as a general sign of respect. Consumers in urban areas choose more sophisticated standard boxed assortments, especially when they use them as gifts. These are usually bigger in packaging size, even though the quantity is smaller. Consumers with above-average income levels are interested in attractive packaging and sophisticated fillings. For most females, Raffaello is a very popular gift to receive, especially on 8 March – the International Women’s Day.
The sales volume of chocolate bars increased at a slow rate during the period under review. This was due to the market being saturated, and due to the baby boomers who used to consume chocolate bars switching to other chocolate types, such as bagged selflines/softlines. The bars were usually consumed by teenagers and the younger generation. Bars were perceived as a cheap way to treat oneself, and as indulgent products that were frequently bought. Moreover, sales decreased due to people’s busier lifestyles and the increasing popularity of modern trade, which led to a
The fastest growing segments in monetary terms, compared to the preceding period, were chocolate eggs (25% growth), bulk chocolate sweets (18.6%), and chocolate tablets (16.4%). In volume terms, the highest rate of growth was also recorded by the chocolate eggs segment (16.5%), followed by chocolate bars (6.5%) and chocolate tablets (6%).
The second most popular type is plain dark chocolate, which accounts for 30% of the chocolate tablet sales. In Kazakhstan, dark chocolate contains 45% of cocoa, which exceeds the minimum requirement for dark chocolate. The health trend is expected to positively affect the consumption of plain dark chocolate. Filled tablets accounted for 22% of the sales, with the most common fillings being hazelnuts and vanilla. Plain white chocolate remained the least popular type with a 7% share of the sales.
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
Competition in the Chocolate Market The 5 largest players occupy 70% of the Kazakhstani chocolate market. The leading company in this market is Mars, with an annual sales volume of KZT 12.9 billion. The company’s main product category is the chocolate bars (66% of the sales on the market). Mars is also ahead of its competitors in the relatively smaller segment of chocolate dragées (the sales of M&M’s account for a 78% share of this market). The second place in the market is occupied by Ferrero, with the annual sales volume of KZT 7.7 billion. Ferrero’s leading products in Kazakhstan are packaged sweets that are sold under the brand names of Raffaello, Ferrero and Kinder (accounting for more than 40% of the revenues). Ferrero registered the fastest rate of sales growth in 2014, at 29%. This was due to an aggressive marketing campaign that included advertising on television and in printed press, product placement, and promotions. These promotions, as well as the positive attitude of the Kazakh population towards the products, were the main factors that impacted the sales growth. An increased number of children supported the demand, particularly on the back of the strength of Ferrero’s Kinder brand. The third spot is occupied by the company Mondelez, with annual sales of KZT 5.2 billion. Its main products are chocolate tablets (such as Alpen Gold, Milka, and others), which account for 81% of the company’s revenues. The following spots in the market are occupied by Rakhat (KZT 4.7 billion) and Nestle (KZT 4.0 billion). The Rakhat confectionary is famous for its loose sweets (accounting for 50% of the revenues), and its leading brand on the market is Kara Kum. The company has a wide range of products, which are widely represented in all retail channels. Furthermore, Rakhat is one of the largest manufacturers of chocolate products in Kazakhstan, with 70 years of history, and deservedly benefits from a high degree of loyalty among the Kazakh consumers. In July 2014, Rakhat was acquired by the Korean company Lotte Confectionery Co Ltd.
Companies’ share of the chocolate production market in Kazakhstan, % Company
VALUE SHARE, %
MARS
25,6
FERRERO
15,3
MONDELEZ
10,4
RAKHAT
9,4
NESTLE
7,9
ROSHEN
6,9
STORCK
4,6
ULKER
2,3
Nestle is a fixture in two main categories: Chocolate tablets (Nestle), and countlines (Nesquik, Kit Kat, Nuts), which account for 42% and 51% of the revenues, respectively.
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CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
Source: Nielsen report, 2014
Compared to the preceding period, the companies Mondelez and Nestle lost their positions of strength on the market. Their shares of the market fell in both the absolute and the percentage terms. T he compound annual growth rate of Mondelez fell by 5.1%, and that of Nestle by 13.5%. The companies Ferrero, Roshen and Storck have experienced stronger growth than Mars, with growth rates of 42%, 26% and 23% respectively, compared to 0.6% for Mars.
The key players on the Kazakhstani chocolate production market: Segment
Major Brands
Leading Manufacturers
The Segment’s Share of the Market
Bite size
M&Ms
Mars
3%
Egge
Kinder Surprise
Ferrero
5%
Assortiments
Raffaello, Merci
Storck, Ferrero
18%
Tablets
Vdokhnovenye, Dove, Alpen Gold, Milka
Nestle, Mondelez
22%
Chokolate loose
Rakhat (Kara Kum, etc), Grand Toffee
Rakhat, Roshen
25%
Bars
Snickers, Mars, Bounty, Twix, KitKat, Picnic
Mars, Nestle
26%
Source: Mars internal data The segment of cheaper chocolate accounts for 36% of the market sales, while 50% is taken up by mid-range price categories, and the remaining 14% by the premium product segment. At this time, Mars products are available in almost every shop, and the company devotes more attention to intensive growth (better representation of the company’s products in each specific store), rather than to extensive growth (attempting to get additional stores involved in the sales). Mars is in possession of strong brands, but it has to be said that they shift towards higher-margin segments. The competitors’ brands are stronger in the lower-margin segments due to greater representation.
Forecasts and Market Development Trends According to industry analysts KPMG6, the following are the main factors influencing the growth of the chocolate industry in the regions: ●● Demographic changes (geography and age structure of the population). ●● Increased attention towards health issues, which has either already been, or could be expressed in the form of additional taxes to limit excessive consumption of chocolate, or in the form of reducing the volume of production of new children’s products. ●● Adherence to the principles of sustainable development: major manufacturers receive Fairtrade certificates (confirming that their products meet the standards of fair trade), or other certificates. ●● Seasonality of sales: 25% of new chocolate products is issued for festive periods, since chocolate is regarded as a prestigious yet inexpensive gift. ●● Innovation with a focus on product differentiation (this is one of the most significant factors).
In the globa l perspec tive, lea ding manufacturers will seek to attract consumers by offering a wide range of products. As consumers in developed markets are becoming increasingly demanding in terms of their taste preferences, manufacturers seeking to increase sales will increase the range of chocolates with unusual flavors. There will be an increase in the number of products with a combination of sweet and savory flavors, or sharper taste (for example, the ‘bacon with chocolate’ combination is already popular in the United States). By 2030, it may become commonplace to create chocolate to suit individual tastes customers will be able to combine different tastes, and, most likely, they even will be able to design their own packaging. It is expected that these new niche products will be in demand among buyers. For example, in Western Europe, where the market is saturated and the pace of growth has slowed, manufacturers are paying more attention to the issues of caloric intake and healthy lifestyle. In 2013, 12% of the range
KPMG report The Chocolate of Tomorrow: What Today’s Market can tell us about the Future, 2012 6
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CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
of new products consisted of chocolate for vegetarians, 9% of chocolate with no additives, and 7% of chocolate produced in complia nce with environmenta l standards (organic chocolate). In addition, manufacturers are experimenting with new types of packaging, trying to stand out from the competition. It is also possible that we may see the appearance of new distribution channels, from coffee shops to stores that sell healthy products. Supermarkets and discounters will continue to lead the sales, especially among consumers who foremost of all look for a bargain purchase. In the future, manufacturers may seek to increase the sales of more expensive products by opening their own stores. This has already been successfully done by Hershey and Mars (with its M&M’s brand), among others. Due to the rising prices of cocoa, producers will have to expend cocoa products more economically, which will affect the milk chocolate in particular, as its cocoa content decreases. Growth in demand for cocoa may get out of control: one manufacturer from Latin America predicts that even if the average amount of chocolate
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consumption per capita in China and India grows by 1 kg, the business model of most manufacturers could become unviable. In this scenario, artificial cocoa may be used as an alternative. The prevalence of obesity and the introduction of new regulations will lead to the manufacturers reducing the size of their products. Consumers who are concerned about the amount of food eaten at one time will be more likely to buy family packs of mini-bars, instead of the standard sized bars. The average chocolate consumption per capita (it now stands at about 9 kg in Europe) may be reduced, but overall consumption is likely to rise against the background of the rapid expansion of the middle class. The Kazakhstani chocolate market has now entered a stage of maturity, and is close to saturation. Fierce competition in the market not only leads to the creation of new innovative products to meet the ever increasing needs of consumers, but also to the consolidation of a number of players, as well as the integration of market participants into holding companies. At the moment, market leaders are focused on brand promotion
and expansion of distribution channels. On the consumer side, it is assumed that on the one hand, their loyalty towards the brands that they prefer at the moment will be strengthened, and that on the other hand, demand for products with additional positive qualities will increase. Manufacturers are trying not to make radical changes to the recipes, but to stand out from the competition through smart promotion campaigns and sophisticated marketing strategies. Each year will see an increase in the cost of products, primarily due to higher raw material costs for manufacturers. In this regard, there remain the limiting factors of the competition between ma nu fa c tu rers a n d t h e fa c t t ha t , according to research, price plays an important role for the buyers. It is expected that we will see a fall in demand for premium products on the Kazakhstani market, an increase in demand in the economic segment, and an expansion of the range through the mini-format of products.
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
SALES OF CHOCOLATE PRODUCTS IN KAZAKHSTAN
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SALES OF CHOCOLATE PRODUCTS IN KAZAKHSTAN The share of brands in the portfolio Types of Chocolate Produc ts of Mars in monetary terms, % in Kazakhstan
Brands of Mars In Kazakhstan, brands of Mars are widely known to the consumers. A total of nine brands are represented on the market: Mars®, Twix®, Bounty®, Snickers®, M&M’s®, Milky Way®, Dove®, Celebrations®, and the recently introduced A. Korkunov, which was added to the line of brands in 2012. The largest brand in Kazakhstan is Snickers®, which accounts for 22% of sales in Mars’s portfolio. It is followed by M&Ms®, Twix®, Dove®, Bounty®, Mars®, Milky Way, and A. Korkunov.
16
Snickers
22%
M&Ms
17%
Twix
17%
Bounty
14%
Mars
14%
Milky Way
9%
Dove
7%
A.Korkunov
0,2%
Source: Mars internal data
All major brands of Mars in Kazakhstan in 2013 showed double-digit growth, while total sales growth amounted to 21%. Higher margins from higher sales are still supported by savings in trade expenditures.
Markets performance, 2013 Brand
Net Sales
Earnings
Snickers
17%
46%
M&M’s
27%
38%
Twix
18%
53%
Dove
45%
33%
Mars
22%
52%
Bounty
24%
40%
Milky Way
19%
51%
A.Korkunov
100%
21%
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
Chocolate Consumption Types In terms of the types of consumption, chocolate products are divided into the ‘impulse consumption’ and ‘future consumption’ categories. Impulse consumption (IC) products are designed for immediate use. They account for 34% of all sales in the chocolate market. The goods in this category include: ●● Bars without multipack (77%) ●● Chocolate eggs <60g (13%) ●● Bite size <60g (6%) ●● Tablets <90g (4%) In the portfolio of Mars, this includes chocolate bars and small packages of M&M’s. Mars’s share in this category is 53.7%, but is decreasing (-3.5% CAGR). Future consumption (FC) includes all the products that are bought for home (weighed sweets, minis-bags, multipacks, large packets of M&M’s). This category covers the remaining 66% of sales. Over the past three years, Mars has shown a stable growth rate of product sales in this category (+ 20.0% CAGR in 2012-2014).
17
Distribution Channels in Kazakhstan In terms of the sales channels, 50% of the world’s chocolate is sold through Traditional Trade (grocery stores, department stores, stalls, markets; hereafter referred to as TT), and 50% - through Modern Trade (supermarkets, hypermarkets; hereafter referred to as MT). In Kazakhstan, where the modern trade is still developing, there has been some shift towards traditional trade (which accounts for about 65% of the market). However, this trend will change in the future (Euromonitor predicts an increase in the proportion of
MT by 2017). According to the Euromonitor report, independent small grocers remained the largest retail channel in 2014 with a 43% share of retail value sales. Other grocery retailers had a 34.5% value share, followed by supermarkets and hypermarkets with 13% and 4.4%, respectively. Food, drink and tobacco specialists had a 5% share, with the most popular being Rakhat. The trend for increased sales through modern retail formats, such as supermarkets and hypermarkets, continued in 2014.
Development of distribution channels in Kazakhstan Share of Sales
2011
2012
2013
2014
2015
2016
2017
Modern Trade
24%
27,7%
31,2%
34,3%
37,2%
39,7%
42%
Traditional Trade
76%
72,3%
68,8%
65,7%
62,8%
60,3%
58%
Source: Euromonitor data MT is currently the fastest growing channel in Kazakhstan, accounting for 33% of all sales in monetary terms (and 30% in volume terms). Of the company’s competitors, Ferrero has strengthened its position in the MT during the past year, coming very close to Mars, with a share of 19.4%, compared with Mars’s share of 19.8%. In TT, Mars occupies the strongest position
with a share of 27.3%. The main partners of Mars are the retail chains Adil M Plus, Altyn Alma, Dom-9, Nomad, Progress Torg, and Toccata. MT’s significant advantage as a distribution channel is that once an agreement is reached, it will be adhered to in all retail points of the chain. In case of TT, a separate agreement has to be reached
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
with each representative. Modern channels also provide many more opportunities for product marketing - coordinated marketing campaigns and promotional campaigns, as well as support for merchandising and trade marketing systems. At the same time, MT has more opportunities to apply price pressure on the manufacturer, due to its scale.
Currently, Mars has a highquality distribution system in TT, while the distribution system in MT requires significant improvements. According to experts, the position of Mars in MT is slightly inferior to that of the main competitors of the company.
Marketing of Chocolate Products Each brand, especially in the FMCG market, where competition is very high, is in need of constant monitoring and management. Normally, without the intervention of promotional activities (do-nothing), the brand’s sales tend to decline, caused by a loss of interest and awareness among customers about the product. A successful development of the brand requires its constant replenishment in the form of marketing activities that would remind customers about themselves, thereby reviving demand for the product. ‘Working with a brand’ implies an alignment of the lines of sales during the course of the year through a variety of marketing tools. Overall, promotional activity in Kazakhstan is still more typical for retailers than manufacturers. It is important to note that only 5% of customers deliberately go to the chocolate products section, so it is very important to arrange the products in a way that would attract attention in other areas of the store, too.
18
The planning of advertising activities is primarily derived from the goals of the advertising campaign. Increasing brand awareness, increasing sales, or maximising profits requires different approaches, using different tools and frequency of their use. In each case, some methods of promotion would be more effective than others. Pursuing the task of reviving the brand, increasing the demand for products, a company can select between two strategies of advertising activity: permanent promotional activity. and large one-off events. The chocolate market is characterised by a high level of branding and consolidation of major market sections around key brands. The main characteristics of a consumer’s perception of the brand are uniqueness, familiarity, and trust. Kazakhs do not pay much attention to whether a product is produced locally, or is imported. The more important factor is the reputation of the
brand, and its familiarity. Russian and Kazakh brands largely migrated to the market during the Soviet era. Foreign companies are conquering the market through active investment, modern technologies, and vibrant advertising. Chocolate confectionery is one of the packaged food categories which continues to be actively advertised through a wide range of media channels, such as television spots, outdoor advertising in Kazakhstan’s main cities, and in-store promotional activities through modern grocery chains’ retail channels. Much of the advertising in chocolate confectionery is undertaken by multinational brands such as Mars’s Snickers, Mars and Twix, and Nestlé’s KitKat. In addition, many Kazakhs are exposed to television advertising for multinational chocolate confectionery brands through the Russian television channels which are widely available in Kazakhstan.
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
Seasonality of the Sales of Chocolate Products In marketing, seasonality refers to regular, periodic fluctuations in demand, depending on the time of year, weather conditions, holidays, budgeting habits and stereotypes of the buyers. If a product is characterised by rigid seasonality, the difference in sales may reach 100%. Such products include the Easter cakes, Christmas toys, Valentine’s Day cards, and other festive accessories that lose their relevance after the occurrence of a specific event. In this case, no marketing intervention will be able to help to increase sales to their former level. In cases of severe seasonality, the difference in decline amounts to between 30% and 40%. In cases of moderate seasonality, the difference is between ten and twenty percent. In the latter two cases, a smart marketing strategy can significantly boost sales of goods. The chocolate sector, more than any other, is subject to seasonal fluctuations in sales. The difference in decline can amount to between 30% and 50%. There is a marked decrease in consumption during the summer months, and an increase in
19
consumption in the autumn-winter period. The decisive factors influencing the increase in the consumption of chocolate products are the number of holiday events in this period, and the need for light psychological stimulants in the ‘depressive’ period. For several reasons, the latter factor is most pronounced among the residents of large cities. In addition, retail may not always be able to create the necessary conditions for the storage of products during the hot season. Therefore, the peak of advertising activity traditionally falls on a season of high sales - in the period from October to March. Packaging also becomes of particular importance in the run-up to the holidays, since chocolate products are among the most popular gifts. Retailers and manufacturers start their preparations in autumn, in order to ensure an adequate supply of goods on the shelves, optimal calculations, and promotional offers that are beneficial to the consumers. Buyers can be attracted through promotions that include additional gifts, offers of a higher volume of the product for the same price, or through promotional discount offers.
At present, the competitors of Mars occupy more firm positions with regards to promoting their products and conducting promotional activities, especially within the modern trade channels. At Mars, marketing support is currently carried out for three of the nine brands that make up the largest share in the portfolio – Snickers, M&M’s and Twix. It consists of allyear-round television advertising, billboards and digital advertising campaigns, as well as one BTL (below the line) campaign per year for each of the three brands. Bounty, A. Korkunov and Dove have received no marketing support since the beginning of 2014. According to experts, Mars needs to develop a comprehensive strategy that includes consistent management of the entire portfolio of brands. At present, Mars’s promotional activities are very diverse, and are not aligned with a strategy (mechanics, brands, formats, channels). Moreover, their strategy is not clearly reflected in promotional activities.
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
CONSUMPTION OF CHOCOLATE IN KAZAKHSTAN
20
CONSUMPTION OF CHOCOLATE IN KAZAKHSTAN The Culture of Consumption
Chocolate consumption per capita has been growing in Kazakhstan in recent years, and it is now not lower than in countries such as
Chocolate consumption per capita in Kazakhstan (urban population), 2013 Consumption per capita, kg
Almaty North
South West Center
Turkey
Uzbekistan
Switzerland
Consumption per capita, kg
Approximately 60% of the purchased chocolate products are consumed at home: during holidays, at family meals, while receiving guests, or simply as a snack in-between meals, and while watching television. In Kazakhstan, there is a highly developed culture of drinking tea and hospitality. No wonder the country is 10th in the world in terms of consumption of tea per capita. In Kazakhstan, family, friends and colleagues traditionally gather around the table for drinking tea. Therefore, chocolate
Source: Euromonitor data
21
East
Source: Euromonitor data
Sweden
Ukraine
Russia
Belarus
Germany
Chocolate consumption per capita in different countries, 2013
Đ?zerbaijan
Kazakhstan has a population of 16.8 million people, and in recent years, it has steadily been increasing by 17% on the average. The expected annual birth rate for the next few years is 350 000. In recent years, the countryâ&#x20AC;&#x2122;s GDP has increased, and with it the disposable income of the population. Consumer spending, including that on food, has also been growing.
Russia. During the period from 2006 to 2013, the consumption of chocolate per person per year has grown from 3 kg to 4.5 kg. Yet at the same time, the consumption of chocolate is even higher in the major cities and regions of Kazakhstan that have higher levels of disposable income (in Almaty, like in Russia, the level of consumption is approximately 5.5 kg per year).
Kazakhstan
The culture of chocolate consumption varies from region to region. In the countries of the CIS, chocolate is associated with childhood and festivities. Boxes of chocolates are, in most cases, either presented as a gift, or opened at the festive table. Meanwhile, in Europe and the United States, chocolate is regarded more as a product of daily consumption. Switzerland is regarded as the world leader in the consumption of chocolate, with annual consumption of around 12 kg per capita. In countries of Asia, sweets had been completely absent for a long time, so chocolate there is consumed to a much lesser extent. In Japan, for example, each person eats less than 1 kg of it per year.
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
is commonly used as means of drawing people closer to each other. Sweets are used as presents by guests during visits, and they are put on a festive table and shared with loved ones during a friendly tea-drinking session. Standard boxed assortments are very popular as small gifts for doctors, teachers and other public workers, and during the period of devaluation, large boxes with small amounts of chocolate were very popular, as buyers paid more attention to the appearance than to quantity. Bagged selflines/softlines are very popular as gifts from newlyweds to all their guests during weddings, and sales of this type of chocolate confectionery go up during the period between late spring and early autumn.
The Perception of Chocolate, and Situations of Consumption Consumer attitude towards chocolate in Kazakhstan is generally positive. Chocolate is not being associated with health risks, and it is even being referred to as a ‘healthy drug.’ In general, the Kazakhs have a positive attitude towards chocolate and its effect on the body. They tend to ascribe useful properties to chocolate, and most
often regard it as a source of energy and as a product capable of stimulating the brain. Views about chocolate’s negative effects on health are not so popular, and they occupy the bottom ranks when it comes to people’s subjective perception of chocolate.
Subjective assessment of the effects of chocolate (percentage of those surveyed) Source of energy
84%
Stimulates the brain
84% 76%
Heightens the mood, removes depression
52%
Extends life
Tend to disagree
Could not answer
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
16%
13%
20% 69%
Tend to agree
13%
28% 48%
16%
8%
34% 39%
31%
Causes addiction
22
31%
33%
Causes skin problems
Bad for the heart
44%
35%
Increases cholesterol levels
8%
9%
24%
24%
42%
Causes obesity
12% 30%
55%
Causes caries
7%
16%
Chocolate consumption (percentage of those surveyed)*
67%
For dessert
20%
Have a bite, quickly satisfy hunger
16%
During stress, depression, to set the mood Eat constantly Other Not sure
13% 7% 4%
It is not only the product perception that affects the consumption rates of chocolate, but also the situation of consumption. According to a survey, most Kazakhs still perceive chocolate as a delicacy that is to be used as a dessert. This was the reply given by 67% of the respondents.
23
Source: GFK research, 2013
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
*Since the respondents chose more than one answer, the total sum is greater than 100%
Consumption of chocolate by level of commitment, % Although some people buy chocolate without planning to do so in advance, it increasingly appears on the consumers’ lists of daily purchases. We can distinguish between three different types of buyers, each of whom stands out through particular behaviour and requirements. Customers who value convenience foremost of all. This category includes those chocolate lovers who prefer to run to the nearest shop to buy a chocolate bar, or to buy a whole bag consisting of several bars during their weekly shopping trip. This leads to an increase in sales of batches of chocolate, as well as the growing popularity of chocolate products sold in family packs (sharing bags), which is convenient because it can be shared within a group, or be saved for later. In response to the current trends, manufacturers have been introducing new packaging. Mars, for example, has been offering consumers chocolate bars in wrappers that curl easily after use, allowing the remainder to be kept until later. Mars argues that innovations provide consumers with new opportunities, along with increasing brand loyalty.
24
4%
Customers whose primary concern is value for money. Value for money is of particular importance for customers in those countries where the middle class is still being shaped, and income levels lag significantly behind those of the middle classes in Western countries. Therefore, a significant proportion of the population remains committed to products of the lower and mid-range price segments. Universal retail stores are gaining in popularity on the emerging markets, offering a wider range of products at low prices. Buyers who prefer luxury products. Luxury chocolate products are gaining in popularity among the main section of chocolate lovers, and this is not only the case in the developed countries. Consumer psychology is such that even expensive chocolate is seen as an affordable luxury. In developed markets, there is a tendency to increase the share of premium products, as well as the appearance of ‘mass raids’ on premium brands against the background of the consumers’ growing desire for daily luxury.
10%
19%
67%
I choose between 2-3 brands I prefer one particular manufacturer I buy anything that I can Not sure
Preferred places to purchase chocolate products, % 5,8% 3,5%
6,4%
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
Grocery stores near home Small stalls
15,6%
19,5%
49,2%
Super- and Mini-markets Market places Hypermarkets Other
SUPPLEMENTS
25
SUPPLEMENT 1
KEY PLAYERS IN THE MARKET OF CHOCOLATE PRODUCTS, KAZAKHSTAN (SALES VALUE)
KEY PLAYERS IN THE MARKET OF CHOCOLATE PRODUCTS, KAZAKHSTAN (SALES VOLUME)
Sales Value, 100 000 Tenge
Sales Volume 1000 Kgs
Company
2014
2013
2012
Company
2014
2013
MARS
129 184,9
105 901,5
105 869,8
FERRERO
77 048,5
62 088,6
46 555,5
MONDELEZ
52 332,2
42 352,5
RAKHAT
47 432,4
NESTLE
39 872,9
ROSHEN
2012
MARS
6 910,2
6 066,5
6 263,4
FERRERO
1 519,5
1 289,7
1 106,2
48 505,6
MONDELEZ
2 358,7
2 131,9
2 484,8
40 993,1
49 750,3
NESTLE
1 961,8
1 994,8
2 394,0
37 220,9
44 009,6
RAKHAT
4 177,7
3 778,8
4 705,7
34 717,1
36 121,7
28 069,1
STORCK
620,7
591,1
500,8
STORCK
23 370,5
20 444,8
17 014,1
ULKER
666,7
623,5
499,2
ULKER
11 367,5
9 556,6
7 651,4
ROSHEN
2 513,6
3 282,2
2 482,3
Source: Nielsen report, 2014
26
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
SUPPLEMENT 2
DISTRIBUTION OF SEGMENTS (VOLUME/VALUE, %)
SALES VOLUME, 1000 KGS 2012
2013
2014
ASSORTMENTS
2 907,5
2 785,9
2 787,3
COUNTLINES
7 381,4
6 773,6
7 216,7
DRAGEE
1 004,2
800,6
781,1
TABLETS
5 160,5
4 726,5
5 008,6
CHOKOLATE BULK
8 675,3
10 865,9
11 509,4
CHOKOLATE EGGS
123,9
246,8
287,5
SALES VALUE, 100 000 TENGE 2012
2013
2014
ASSORTMENTS
77 778,5
84 196,9
93 601,0
COUNTLINES
121 917,7
115 129,6
133 339,4
DRAGEE
17 695,1
15 560,8
16 912,6
TABLETS
100 480,1
93 418,5
108 748,8
CHOKOLATE BULK
78 923,8
104 827,6
124 304,4
CHOKOLATE EGGS
10 758,7
22 559,4
28 301,3
Source: Nielsen report, 2014
27
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
SUPPLEMENT 3 COMPARISON WITH COMPETITORS IN THE MARKET SEGMENTS (VALUE SHARE)
Mars 78%
Ferrero 91%
BITE SIZE (Dragee)
EGGS
Others 38% Rakhat 11%
Storck 23% Ferrero 29%
ASSORTMENTS
Others 43% Nestle 14% Mondelez 37%
TABLES
Mars 7% Others 49%
Mars 8%
Rakhat 19% Roshen 23% Others 18% Nestle 16% Mars 66%
CHOKOLATE LOOSE
BARS
Source: Mars Data, 2014
28
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
SUPPLEMENT 4 84%
52% 43% 33% 27% 22%
21%
Korkunov
10%
Minis
Multipacks
15%
Milky Way
Dove
Bounty
Twix
44%
Mars
45%
Nuts
M&M’s
KitKat
48%
Raffaello
55%
Roshen loose
56%
Nestle Classic
Kazakhstanskyi
68%
Alpen Gold
Rakhat loose
Snickers
87%
HOUSEHOLD PENETRATION FIGURES FOR TOP 10 BRANDS, 2013
Source: Mars Data, 2014
29
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
SUPPLEMENT 5
PENETRATION BARRIERS IDENTIFIED ON PRIORITY BRANDS
Brands Snickers
Penetration barriers • Not relevant for home consumption • Not in my consideration set as a format (e.g. tablet) not available • Don’t see it in-store (need to activate heros in store) • Can’t afford it as the smallest size is too expensive for my coinage ( < 50 gr
M&Ms
format is not available) • Not relevant for my chocolate consumption moments/ occasions • Brand is fun, but I don’t understand when to consume it
Twix Dove
Korkunov
• Don’t think of it (poor quality copy, TVC wear-out) • Don’t see it in-store (Minis and Multipacks) • Can’t afford it as it is too expensive vs. mainstream tablet • Doesn’t deliver value for money • Can’t find it • Cant afford it
Source: Mars Data, 2014
30
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
SUPPLEMENT 6 Price tier, KZT, Value share, %
Price tier, KZT, Value share, %
450-550
>2000
400-450
1800-2000
350-400
1600-1800
300-350
1400-1600
250-300
1200-1400
230-250
1000-1200
210-230
950-1000
190-210
900-950
170-190
850-900
150-170
800-850
130-150
750-800
110-130
700-750
90-110
650-700
70-90
600-650
<70
550-600
2,7%
2,6% 0,6% 0,9% 5,1%
0,3% 1,1%
11,9% 7,3%
9,5% 1,7% 1,1%
11,9% 2,7% 2,1%
31
HOUSEHOLD PENETRATION FIGURES FOR TOP 10 BRANDS, 2013
2,5% 1,6% 1,7% 1,7%
4,9%
10,4% 1,6% 3,1%
1,6%
3,6% 1,4%
0,8% 0,8% 1,3%
1,5%
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
SUPPLEMENT 7
DISTRIBUTION CHANNELS
Sales Value (100 000 tenge) Gas station Traditional trade
3 638,9 72 004,9
Kiosk
1 448,9
Wholesale
6 699,1
Open market
7 867,2
Modern trade
37 550,0 Source: Mars Data, 2014
32
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
SUPPLEMENT 8
CURRENT SALES OF PRIORITY BRANDS (MONTHLY)
8.1 Impulse Consumption Brand
Year 2014, Sales Value (100 000 tenge) Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Bounty
370
572
646
640
612
559
492
658
610
727
750
787
M&Ms
355
1 111
671
389
644
1 156
1 308
1 743
1 526
1 546
1 568
1 825
Mars
241
416
392
429
380
392
315
436
400
500
505
528
Milky Way
89
183
207
223
240
222
180
210
209
257
272
305
Snickers
2 271
3 996
4 676
4 191
3 467
1 083
443
1 506
2 506
4 952
5 414
5 663
Twix
574
889
1 068
1 049
969
832
732
983
908
1 266
1 495
1 472
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Bounty
19,7
30,1
33,8
30,9
28,3
25,8
22,7
29,6
25,3
30,1
31,0
32,6
M&Ms
14,3
44,5
26,9
15,0
24,3
43,6
49,2
64,7
52,9
53,8
54,4
63,2
Mars
12,3
20,4
19,1
19,5
16,4
17,0
13,6
18,4
15,6
19,5
19,6
20,6
Milky Way
3,8
7,9
8,9
9,6
10,3
9,6
7,8
8,7
7,6
9,3
9,8
11,0
Snickers
119,8
207,9
241,3
205,9
165,1
52,0
21,0
72,5
109,7
211,9
230,9
242,2
Twix
30,4
46,3
55,6
50,4
44,6
38,3
33,6
44,1
37,5
52,4
61,7
60,9
Brand
Year 2014, Sales Volume (1000 kg)
Source: Mars Data, 2014
33
CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
CURRENT SALES OF PRIORITY BRANDS (MONTHLY)
8.2 Future consumption Brand
Year 2014, Sales Value (100 000 tenge) Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Bounty
239
438
507
529
561
629
455
628
486
549
523
679
M&Ms
75
118
90
43
99
122
187
286
234
161
141
245
Mars
257
373
343
470
524
531
381
603
465
522
521
565
Milky Way
115
160
194
163
157
142
113
160
188
178
161
180
Snickers
630
1 076
1 123
985
1 394
1 164
1 005
1 457
1 289
1 451
1 490
1 536
Twix
267
429
720
749
787
860
720
937
747
877
779
858
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Bounty
13,1
24,1
27,8
27,8
28,4
31,9
21,4
28,9
20,2
23,0
21,7
28,2
M&Ms
3,4
5,4
4,1
1,8
4,0
5,0
7,6
11,5
8,8
6,1
5,3
9,2
Mars
13,2
19,5
17,5
23,4
25,7
26,1
17,2
26,9
18,9
21,3
21,1
22,9
Milky Way
4,7
6,6
8,1
6,4
6,0
5,4
4,0
5,7
6,6
6,3
5,5
6,0
Snickers
32,7
56,2
57,4
48,0
68,0
56,2
45,7
63,8
49,3
55,1
58,9
60,2
Twix
14,4
23,1
38,4
37,7
38,1
42,5
33,1
41,6
29,8
35,4
31,5
34,2
Brand
Year 2014, Sales Volume (1000 kg)
Source: Mars Data, 2014
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CHOCOLATE SEASONS: A STRATEGY TO INCREASE CHOCOLATE SEGMENT SALES DURING KEY SEASONS
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