Saturday, December 18, 2010

UK's chocolate bars shrinking due to cost.

From Daily Mail:
Some of the biggest confectionery firms are shrinking their biggest brands to protect profits.

Companies such as Nestle and Cadburys have reduced the size of some of their most popular brands at the same time as increasing prices to shelter profits from the rise in VAT, looming in January.

Poundland offers a typical example. Chief Executive Jim McCarthy said he’s agreed to cut the size of Toblerones by one triangle so he can keep the price at £1.

Dairy Milk bars will lose a couple of chunks in February, following to the reduction in the weight of a bag of Maltezers from 140g to 120g.

Bourneville, which was called a Scrooge for removing the expensive chocolates from tubs of Heros two years ago, has taken more cost-cutting steps, under its new owner, Kraft.

A Cadburys spokesman claimed they increasing the price of packs due to rising ingredient costs, according to the Guardian.

Mintel analyst David Jago said the first wave of changes in confectionary value went largely unnoticed. Changes in the sizes of bars such as Mars and Twix were not obvious to most consumers, but now that companies are changing the price of bars as well, people are seeing a change.

Jago said the changes are a tactic being used by confectionary companies to keep profit margins stable when VAT is expected to rise and the price of sugar and cocoa are also increasing.

He also said manufacturers had been asked to alter the size of packs to help tackle the obesity epidemic.

The cost of chocolate has been rising since 2007 when cocoa prices hit a 33-year high over £2700 a tonne.

Customers are already seeing price rises at newsagents. Cadburys and Nestle have boosted recommended retail prices of Kit Kat, Yorkie, Wispa and Dairy Milk by a noticeable 7% – more than twice the rate of inflation.

A Nestle spokesman said the company ‘occasionally’ made changes to prices due to a change in formation or packaging.

The Office for National Statistics has said that food inflation is nearly 5%, in part due to Russia’s ban on grain and wheat exports following the summer droughts.

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