London, Nov 21 - Nestle, the world's biggest food group, says British sales of its KitKat brand rose 18 percent this year in an overall market up 3 percent, as the Swiss giant gained market share and saw no impact from an economic slowdown.
Nestle said it had gained 0.5 percentage points in the UK confectionery market share to 15.6 percent this year and despite a tough consumer and retailing climate it was confident it will maintain its gains over a difficult Christmas period.
"Confectionery is seen as an enjoyable treat and we have not seen any effect from the credit crunch in the UK," Paul Grimwood, managing director of Nestle Confectionery UK, said in an interview with Reuters on Friday.
"Christmas is always competitive but we are confident we can hold our own in a tough environment."
Nestle's UK confectionery, with brands such as Aero and Rolo as well as KitKat, saw its market share rise to 15.6 percent in the 45 weeks to Nov. 8, gaining 0.5 points from its market share in the first 45 weeks of 2007.
The market share figures compare to Cadbury Plc which gained 0.2 points to 26.8 percent while privately-owned Mars, which took over Wrigley earlier this year to become the world's biggest confectionery group ahead of Cadbury and Nestle, saw its share fall 0.3 points to 19.1 percent according to figures from market research firm Nielsen supplied by Nestle.
Nestle's UK confectionery market share was 15.5 percent in both 2006 and 2007.
KitKat, which accounts for a quarter of Nestle's UK confectioner sales, was the fastest-growing confectionery brand among the UK's top 30 sweets brands so far in 2008 within an overall UK confectionery market worth 4.5 billion pounds ($6.7 billion).
Grimwood has led a recovery in Nestle's UK confectionery business and takes over as Chief Executive of Nestle UK and Ireland from Alastair Sykes, who is retiring, at the end of the year.
Grimwood moved to the helm of Nestle's UK confectionery business in December 2005 when he says the business had "lost its way" and was proving disappointing in terms of efficiency, poor displays in stores and poor new product development.
Its KitKat brand, one of Nestle's worldwide billionaire brands in terms of annual sales in Swiss francs, had just launched an array of new flavours from Strawberries & Cream to Christmas Pudding, but the move had flopped.
Consumers who tried these flavours often did not return and Nestle admitted it had tried to push a much-loved brand too hard. "You could call it hyperventilation" said Nestle's then group Chief Executive Peter Brabeck.
Grimwood went back to basics, removed all the exotic flavours while keeping the well-established orange and mint as extensions to the chocolate-covered wafer brand first launched in 1935 by Rowntree, which was taken over by Nestle in 1988.
He focused the UK business on its key "magnificent seven" brands of KitKat, Aero, Smarties, Milky Bar, After Eight, Quality Street and Rowntrees, which generate three-quarters of UK sales, and cut 70 percent of the group's 1,000-plus lines.
He also restructured the business. He spent 15 million pounds on a new Aero factory at its UK confectionery headquarters in the northern English city of York, cut jobs, and moved the production of some lines such as Smarties to Nestle's Frankfurt factory.
Next he looked to improve quality and nutrition. He reformulated every product, increasing fruit juice levels in pastilles and gums, making products with all natural ingredients and giving more nutritional information on packages.
With the basics in place, Grimwood was confident enough to launch KitKat Senses as a light "indulgent" product in early 2008. Those who look for the next big deal in confectionery are often disappointed as 90 percent of the brands in the UK were around in the 1950s, he said, adding KitKat Senses has done well enough to be rolled out across Europe.