Biscuits & cakes 2023: Brands lose out as biscuit NPD slows

Convincing people to buy brands in a cost of living crisis is the very definition of a tough sell. That’s proven in sales of branded biscuits. While overall biscuit volumes have held steady – they’re down just 0.6% – the big brands are crumbling.

Only 10 of the top 30 brands have sold more biscuits in the past year. It’s indicative of overall branded volumes, which are down 3.5%. By contrast, own label volumes are up 6.4% – fuelling a 22.1% rise in value.

The cheaper price of own label is a clear motivation here. “Consumers are having to be savvier due to the cost of living crisis,” says NIQ analytics executive Ellie Burnett.

That’s only been made worse by a lack of branded innovation. “Popular brands such as McVitie’s, Oreo and Kit Kat haven’t had a high rate of innovation and are struggling to remain relevant,” Burnett adds.

It’s notable that she mentions McVitie’s. Its Chocolate Digestives – the bestselling branded biscuit in Britain – suffered the largest absolute volume slump. Shoppers bought 2.8 million fewer kilos, a decline of 10.9%.

McVitie’s Jaffa Cakes and Digestives suffered the next greatest declines, of 1.9 million kilos (18%) and 1.4 million kilos (9.3%) respectively.

The rise of own label biscuit sales

Not that brand owner Pladis seems overly concerned. “The cost of living crisis is a stark reality for Brits but, contrary to expectation, shoppers aren’t dramatically cutting down on snacking,” insists McVitie’s marketing director James King.

The rise of own label at the expense of brands “isn’t unique to any specific brand or even the wider category” and the dip in volumes “is not a long-term cause for concern”, he adds. “Despite inflationary pressures, frequency of purchase in biscuits is increasing in tandem with shopper appetite for affordable treats.”

Still, it’s a tough sell when own label is so much cheaper. Tesco is currently selling 266g packs of McVitie’s Milk Chocolate Digestives for £1.90 (71p/100g). It asks just 85p for 300g packs of the Tesco equivalent (28p/100g).

Pladis is flashing the cash to justify that premium. In April, it launched ads for the McVitie’s masterbrand starring Martine McCutcheon. Next came the launch of White Chocolate Digestives in July, followed by Raspberry Jaffa Cakes (see Top Launch, below) in August, and new ads starring Trevor McDonald in October.

Mondelez, which has suffered falling volumes in all of its top 30 sweet biscuit brands bar Time Out, has also been investing in marketing. Most recently, it brought back the ‘What’s your Oreo twist?’ campaign to help the brand “engage emotionally with a millennial and Gen Z audience” says trade comms manager Susan Nash.

“Though shoppers continue to feel the pinch, treats remain a ‘must’,” she says. “Moments of indulgence continue to be important, particularly for younger adult consumers, as a way of de-stressing, while many consumers associate snacks with connecting with others.”

Still, when it comes to cakes, shoppers do appear to be cutting back on those moments. While the cake category is up 9.6% in value, volumes have crashed by 5.9%. All top five brands are in volume decline. Three of them – Mr Kipling, Cadbury and McVitie’s – have suffered double-digit slumps.

“The biggest thing driving value growth and volume decline is the cost of living crisis,” says Mark Simester, MD of Soreen. His brand is a case in point, having grown value by 8.6% to £51.8m while volumes have fallen by 4.8%. “On average prices have gone up by circa 20%, so people are cutting back on non-essential products that are treats.”

The cost of living crisis hasn’t been the only challenge for sweet cakes and biscuits in the past year, of course. In October 2022, the government introduced rules that banned products high in fat, salt and sugar (HFSS) from key impulse fixtures in larger stores. It has rendered prime spots such as gondola ends and till points out of bounds for many cake and biscuit products.

Simester suggests this is one reason why Soreen, which is HFSS-compliant and Britain’s third bestselling cake brand, has fared better than its more indulgent peers.

“There has been a real changing of the guard on the gondola ends as non-compliant brands have had to move back into the aisles,” he says. “HFSS regulation has been a real opportunity for us.”

And a huge challenge for others. “The sweet biscuit category has had to adapt to the new HFSS laws implemented by the government,” says NIQ’s Burnett. “Because the way brands can promote their products has changed, we’re seeing new in-aisle bays highlighting price savings as well as an increased emphasis on brand blocking.”

The aim, of course, is to lure more people into the key fixture and draw shoppers’ eyes to beacon brands. But it also means big brands can no longer edge out challengers through prominent display space.

Fox’s benefits from HFSS display ban

“Some brands have actively benefited from the HFSS display ban as it has levelled the playing field down the biscuit aisle,” says Colin Taylor, trade marketing director at Fox’s Burton’s Companies (FBC). “For example, many shoppers have rediscovered Rocky and it is in double-digit growth across 2023. The brand has also been helped by a third Orange variant and a range-wide reduction in calories to below 100kcal per bar.”

Indeed, the Rocky brand has put an extra £8.6m (67.8%) through the tills, and shifted an extra million kilos of biscuits (43.4%). That absolute volume gain is only beaten by Fox’s Fabulous, which has sold an extra 1.3 million kilos, and Lotus Biscoff, which has shifted just over a million.

Fox’s Fabulous has been in strong growth since its premium repositioning and recipe changes in 2020, prompted by Ferrero’s acquisition of the business. The latest year has been buoyed by strong gains for the brand’s cookies and Chocolatey lines, says FBC’s Taylor.

Fox’s Chocolatey Orange Rounds have already racked up £585k since their launch in September 2022, he says. That NPD was followed by the debut of Fox’s Indulgent Centre Cookies in May, and two flavours of Fox’s Chocolatey Indulgent Creams in the autumn.

The brand’s market-leading growth proves that, despite the move to own label, there’s still an appetite for premium biscuits. “As more people are opting to treat themselves to a cosy night in instead of a night out, we are seeing shoppers buy into premium-priced sweet biscuits and as a result, this segment is continuing to grow,” says Taylor.

The biggest sweet biscuit brand in FBC’s portfolio, Maryland, is also bucking the downward trend. It’s delivered value growth of 22.1% to £55.2m on volumes up 1.9%.

In-store marketing has played a crucial role here, says Taylor – pointing to investment in aisle takeovers, “eye-catching” displays and PoS materials. The October launch of Maryland Choc & Caramel has also continued to drive growth, he adds.

Healthy snacking a wider biscuit trend

Amid all this indulgence, though, there is still plenty of space for healthy snacks. So says Jo Agnew, marketing director at Natural Balance Foods, owner of Nakd and Trek. “Healthy snacking is continuing to grow and snacking on the move is in strong growth, paving the way for cereal bars that are a healthier alternative to other on-the-go treats,” she says.

Trek, which has grown value by 26.8% to £26.1m on volumes up 17.7%, is a case in point. “Consumers are continuing to increase spend on ‘better for you’ bars, and this growth can be attributed to natural, good quality ingredients, functional health benefits such as protein and a focus on gut health and fibre intake, as well as great taste,” Agnew says.

It’s part of a wider trend of people caring more about the good stuff that’s been added to their snacks than the bad stuff that’s been taken out. Kind’s HFSS-compliant range of snack bars, which are marketed on their use of natural ingredients and protein content, have grown by 12.1% to £25.7m on volumes up 9.3%, for example.

Not that products need be overtly marketed on health grounds to win. Kellogg’s range of rice Krispies Squares and Bars have achieved the strongest growth in the category – up 45.6% in value on volumes up 24.2%. That’s partly down to targeting impulse fixtures in smaller outlets such as petrol forecourts, which are not subject to HFSS regulations.

It’s proof that brands will need to continue to think outside the (cereal) box if they are to grow in 2024.