Raffaello owner Ferrero believes it can double sales in UK in five years

Raffaello owner Ferrero believes it can double sales in UK in five years

Ferrero has insisted there is "plenty of opportunity" to further grow its business in the UK, with the confectionery giant outpacing its rivals on the back of heavy investment in marketing.

The Ferrero Rocher and Kinder Surprise owner has seen double-digit growth in sales by value and volume in the last 12 months and is eyeing continued growth, with fresh spending on advertising and NPD.

Citing MAT data for the year to 12 July, Ferrero said its sales had grown by 22.1% in value terms, against a market up 0.7%. Volume sales in the sector had dropped 1.9% over the same period; Ferrero said it had seen its volumes grow 14.3%.

The Italy-based group holds just over 3% of the UK confectionery market, dwarfed by the likes of Mondelez International, Mars Inc and Nestle. However, it wants to double the size of its business in the UK over the next five years.

"We believe there's plenty of opportunity because in the end we are only 3.3% of the confectionery market. When you look at our five-year plan - which is to double where we are now and be about GBP650m (US$1.09bn) [in sales] in five years time - that only puts us at 5-5.5% of the market. With our brands, and the strength of our innovation and pipefill we've got to come potentially and the level of investment the group is willing to put behind us, that seems achievable because you are talking about a relatively small scale," Jason Sutherland, sales director for Ferrero's UK business, said.

In a bid to drive sales further, Ferrero is adding to its Ferrero Rocher and Rafaello ranges with new variants and pack sizes in time for Christmas. The company said 39% of UK confectionery sales are made over the festive period and it is lining up a GBP6m media spend behind Ferrero Rocher, Ferrero Collection and Raffaello.

Elsewhere, Ferrero has devised its "biggest ever" on-pack promotion for sugar confectionery brand Tic Tac, which will be backed by a GBP1.7 ad campaign taking in shopper marketing and TV, plus mobile, social media and video on-demand.

"We continue to be disproportionate our spending above the line. It's a very clear strategy for Ferrero. Despite the fact that we have a 3% share of the confectionery market, we advertise heavier than a lot of our competitors and our share of voice in the category is 13%," Sutherland said.

A number of Ferrero's confectionery rivals have sought to increase prices in recent months on the back of rising costs for commodities including dairy and cocoa.

Sutherland said Ferrero had faced its own pressures but claimed the company's brand portfolio helped to absorb some of the costs.

"We're subject to those input cost pressures as well and it's fair to say we're slightly more vulnerable than some in some of our mixes as we are hugely reliant on hazelnuts," he said. "Hazelnuts run as a trend across a lot of our portfolio and that is so vulnerable to the weather. We had a bad harvest this year on hazelnuts.

"When you look at the price per kilo of our products, the benefit we've got is that the products are so unique and give that consumer satisfaction that actually we're able to command premium price points already. We're able to manage that mix."

He added Ferrero had drawn up agreements with retail customers for the months ahead. "We've got a series of joint business plans with our customers so prices are now set. I can't promise what retailers will do."