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Transcript of Hairbo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 1
DATAMONITOR VIEW
CATALYST
This case study looks at Haribo and how the company has addressed key challenges in the sugar confectionery sector.
The firm is one of the leading players in the European market, but has had to adjust its business strategy to be in line with
consumer demands for healthier food. In addition, the sector is experiencing a boost in adult consumers due to growing
nostalgia and comfort trends.
SUMMARY • The European sugar confectionery market is worth over $24 billion, but growth has been slowing due to increasing
consumer awareness and concern over health issues. This has prompted the sector to address health trends with
products that are less calorific and have fewer artificial elements.
• Haribo is one of the longest serving and leading companies in the sugar confectionery segment, which has long
focused on marketing to both adults and children. With new restrictions on advertising and growing concern over
health, the company is targeting adults more with advertising designed for this purpose.
• The company is addressing the health trend with the new Haribo Lite range of candies that are less calorific and
healthier than its conventional products. The latter have also been overhauled to be healthier and now feature no
artificial colors. In addition, Haribo has an opportunity to address the nostalgia trend more clearly to prevent its
competitors from stealing its adult customers and gaining market share.
CASE STUDIES
Haribo Case Study Reinvigorating the sugar confectionery market by focusing on health and comfort trends
Reference Code: CSCM0273
Publication Date: September 2009
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 2
ANALYSIS
The sugar confectionery sector is addressing health and comfort trends to reverse falling growth
Growth in the sugar confectionery sector is slowing due to consumers' growing concern for their health
The European sugar confectionery sector was worth a substantial $24.6 billion in 2008, with the largest regions in terms of
value being in Russia, Germany and the UK (see Table 1). In the top five leading European countries, the value of the
sector is forecast to have a falling or static growth rate in the 2008–13 period, highlighting the impact of consumers'
concern that candies are bad for their health (in that they are generally regarded as being high in sugar and artificial colors
and flavorings).
Datamonitor defines the sector as including the following categories: caramels and toffees, gums and jellies, hard boiled
sweets, medicated confectionery, power mints, regular mints and other sugar confectionery.
Table 1: Leading countries for sugar confectionery in Europe by value, US$ m, 2003–13
Industry Region 2003 2008 2013 CAGR 2003–08 CAGR 2008–13
Sugar confectionery
Russia 4,426 5,747 7,143 5.4% 4.5%
Germany 3,162 3,293 3,463 0.8% 1.0%
UK 2,811 3,017 3,226 1.4% 1.4%
Ukraine 1,435 2,519 3,909 11.9% 9.2%
France 1,207 1,341 1,466 2.1% 1.8%
Europe overall 20,553 24,591 29,099 3.7% 3.4%
Source: Datamonitor's Market Data Analytics D A T A M O N I T O R
Manufacturers have responded to the slowdown with products that are focused on health and comfort
In order to enhance the growth rate of the sector, sugar confectionery manufacturers are addressing consumer concerns
over health by launching healthier candy options and, in addition, are attempting to make confectionery appeal to adults as
well as children by marketing its nostalgic allure (and therefore addressing comfort trends) to maximize their potential
consumer base.
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 3
Leading claims in sugar confectionery have a focus on health
Highlighting the fact that European sugar confectionery manufacturers are focusing on enhancing the healthiness of their
products is the chart shown in Figure 1, which shows that four of the top five claims in new product launches have a health
focus. The leading claims for the year to August 2009 was 'no sugar', followed by 'no artificial color', showing that
manufacturers are concentrating on removing two often criticized elements from their products. Meanwhile, the sector is
still highly focused on marketing its products to children, highlighted by the presence of the 'kids' tag in the top five leader
board. The leading claims show that manufacturers are keen to enhance their reputation among consumers and encourage
them to continue purchasing their products for both themselves and their children by improving the healthiness of the
products.
Figure 1: Health claims dominate the leading claims of the past year in European sugar confectionery
launches
0
10
20
30
40
50
60
70
80
90
No Sugar No Artificial Color High Vitamins Kids No Artificial Flavor
Num
ber o
f SK
Us
Top five claims in new sugar confectionery launches in Europe, August 2008-09
Source: Datamonitor's Product Launch Analytics D A T A M O N I T O R
A significant proportion of Europeans are choosing foods that comfort them
As well as health, manufacturers are focusing on comfort and nostalgia trends to encourage more consumers to purchase
their products. This has been witnessed by the emergence of old-fashioned sweet shops both on the high street and online,
most notably the UK online store aquarterof.co.uk, which sells sweets such as cola bottles and sherbet lemons. In addition,
the trend has been seen in the wider confectionery market, where in the UK, discontinued brands such as Wispa and
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 4
Drifter have been successfully revived, while Starburst candies briefly changed to their original Opal Fruits branding. Such
revivals aim to capitalize on the nostalgia trend among adults for sweets from their childhood, as these offer the potential to
provide comfort, especially during the current poor financial climate.
Datamonitor consumer research found that a significant proportion of European consumers were choosing comforting food
and drinks on an increasing basis (see Figure 2). This was especially the case in Russia, where 44% of survey
respondents said that they were choosing these products more or significantly more frequently. Other European
respondents were less enthusiastic about them, but nonetheless around a quarter of consumers in Germany, Italy, Spain
and the UK were more frequently choosing comforting foods, showing a significant portion of society has a growing interest
in these products.
Figure 2: A significant proportion of Europeans are growing more interested in comfort foods
17%26% 26% 24%
17%
69% 48%
62%
64%
39%
65%
64%57%
14%
27%
12%
25%17%
11%20% 20%
23%
44%
11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
France Germany Italy Neths. Russia Spain Sweden UK
% o
f re
spon
dent
s
More or s ignificantly m ore No change Less or s ignificantly less
Question: In the past six months, please indicate to what extent you have done the following more or less frequently: Chosen comforting food and drinks
Source: Datamonitor's Consumer Survey, August 2008 D A T A M O N I T O R
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 5
Haribo is a leading brand in the European sugar confectionery sector that has been successful in targeting both adults and children
One of the leading European sugar confectionery companies is Haribo, which achieved substantial sales of $715m in 2008.
The company's success has been achieved by addressing health and comfort trends, which have enabled it to tap into a
growing consumer base of both adults and children.
Haribo was formed in Germany in 1920 and has grown strongly in international markets
Haribo is a long-term player in the sugar confectionery market, being formed in Bonn, Germany in 1920 by Hans Riegel
(the name is an acronym for Hans Riegel Bonn). The company has grown internationally over the years, entering the US
market in 1982, while remaining under the ownership of the Riegel family. It is now run by the founder's two sons, Hans and
Paul Riegel.
As shown in Table 2, Haribo is the fourth strongest company in the European sugar confectionery sector, with a market
value share of 5.4%. However, the sector is quite fragmented, being made up of many small players, and the leading
company in the region, Cadbury, has only an 8.6% share.
Haribo currently exports its products to more than 105 countries, while producing its goods in five factories in Germany and
13 elsewhere in Europe. The company also has sales offices in almost every European country and in the US,
demonstrating its strong international presence.
The company's product line now includes an extensive line of sugar confectionery, including the following: Gold Bears (the
company's first mass-produced product and logo), Starmix, Build-A-Burger, Happy-Cola, Eggstras, Fantasy Mix, Fizzy
Cola, Liquorice Favourites (including Liquorice Wheels and Liquorice All-Sorts), Pasta Frutta, Kiddies Super Mix, and
Tropifrutti.
Figure 3: Haribo has factories and sales offices around Europe and the US, but exports globally
In addition to five production works in Germany, today HARIBO has 13 other factories in Europe. There are also sales offices in almost every European country and in the US.
Source: Haribo.com D A T A M O N I T O R
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 6
Table 2: Leading five players in the sugar confectionery market in Europe, 2008
Company Brand Market value share
Cadbury Plc 8.6%
Trebor Bassett 2.4%
Kent 1.1%
Wedel 1.0%
Adams 0.9%
Cadbury's 0.8%
Others 0.8%
Halls 0.6%
La Pie Qui Chante 0.5%
Saila 0.2%
Kiss Cool 0.2%
La Vosgienne 0.1%
Clorets 0.1%
Hacks 0.1%
Babayevsky Confectionery Concern OAO 6.5%
All 6.5%
Perfetti Van Melle 6.0%
Others 3.9%
Mentos 1.0%
Chupa Chups 0.6%
Fruitella 0.4%
Frisk 0.1%
Smint 0.1%
Rocky 0.1%
Fruiteros 0.1%
Haribo GmbH & Co. KG 5.4%
Others 2.9%
Haribo 2.5%
Happy Cola 0.1%
Leaf International 5.2%
Others 2.8%
Leaf 1.2%
Lakerol 0.5%
Red Band/Venco 0.3%
Villosa 0.3%
Chewits 0.2%
Source: Datamonitor's Market Data Analytics D A T A M O N I T O R
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 7
Figure 4: Haribo has an extensive sugar confectionery portfolio in Europe
Source: Datamonitor's Product Launch Analytics D A T A M O N I T O R
The company has a longstanding focus on marketing to both children and adults
While sugar confectionery is traditionally associated with being consumed mainly by children, Haribo recognized early on in
its formation that there was an opportunity to market its products to adults as well. In the mid-1960s, the company changed
its German advertising slogan “Haribo makes children happy”, adding to it the phrase “and adults too”. The English version
was also changed, to: “Kids and grown-ups love it so, the happy world of Haribo.” This highlights how the company has
long recognized that adults enjoy consuming sweets as they have a comforting element that reminds them of their
childhood.
Recent research highlights how much adults enjoy sweets. According to ACNielsen research in 2008, adult levels of
penetration within the gums and jellies subsector are only slightly lower of those of children: where 80% of children aged
five to 15 enjoy eating them, it found that seven out of 10 adults aged 16 to 44 and six out of 10 in the 44–64 age group like
to buy them.
Adult consumption of sugar confectionery is also acknowledged by the current generation of Haribo:
"Gums and jellies consumption isn't just confined to children. They remind adults of their childhood in a positive way."
Herwig Vennekens, managing director of Haribo Dunhills (the UK division), as quoted in The Grocer, 2008
Haribo has changed its marketing strategy in line with stricter regulations by focusing more on the adult consumer
By focusing on the adult consumer as well as children, Haribo can lessen criticism that it is marketing an essentially
unhealthy product to children. Of course, Haribo would argue that its products are treat items that are not meant to be
consumed in large numbers on a daily basis. However, with various countries banning the advertising of high fat, sugar and
salt products to children, Haribo has had to respond by targeting its marketing more towards adults than children.
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 8
The company has addressed restrictions on marketing to kids by directing its TV adverts towards adults
Haribo faces restrictions on advertising its products to children in many countries. In the UK, regulator Ofcom outlawed the
advertising of 'junk food' on TV during dedicated children's programs, and adult programs that could appeal to children, in
2006. The ban included foods that are high in fat, salt and sugar and so covers sugar confectionery.
In response, Haribo started advertising its products on TV in a way that would appeal to adults. An advert for the brand
from 2009, for example, saw a man being interrogated by his young daughter over who ate all the 'fried eggs' from a
Haribo's Starmix bag. The advert is a tongue-in-cheek way of showing that adults often eat sweets secretly to conceal their
liking for them. This style of advert could appeal to parents and adults in general who secretly enjoy sweets and could
encourage more consumption among this consumer type.
Haribo has moved its kids marketing online where regulations are less stringent
While Haribo faces advertising restrictions on TV, it has more freedom to promote its products to children on the internet.
The company runs the Haribo Club, which people can apply for online and in the UK enables anyone "from three to 103" to
receive newsletters and sweets five times a years. Interesting to note, however, is the fact that the company is keen to
point out that these sweets come in "portioned controlled bags", showing how it aims to be a responsible company even
online, where restrictions are less stringent.
The company has addressed the health trend with the new Lite range and by reviewing its product ingredients
Along with addressing marketing restrictions, Haribo has also focused on enhancing the healthiness of its products, in line
with consumer concern over obesity and health-related issues.
In 2007, Haribo introduced Haribo Lite, a new range of fruit-flavored and fruit-shaped gums that contain no artificial colors,
only 0.1g of fat per 100g, 30% fewer calories than its conventional products and 40% less sugar. This followed the
company's more extensive overhaul of its products in 2006, when it began removing artificial colors from its gums and
jellies. By January 2008, all Haribo bags of gums and jellies produced in the UK used non-artificial colors. Such a response
shows how the company is keen to address consumer issues in order to retain a healthy bottom line.
"Confectionery is very much under scrutiny because of widely publicized concerns over obesity. Consumers are now
looking more closely at the nutritional content of all products, and manufacturers have responded by introducing 'healthier'
products."
Herwig Vennekens, managing director of Haribo Dunhills, as quoted in The Grocer, 2008
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 9
Haribo could capitalize on the nostalgia trend but faces competition from others keen to exploit this
While Haribo has successfully addressed the health trend, it could focus more on the nostalgia trend to encourage more
consumption among adults. As noted previously, various online sites such as a quarterof.co.uk, alongside high street
stores, have opened to capitalize on growing demand for nostalgia sweets. In addition, Thorntons has introduced a Sweet
Shop section to its website that sells sugar confectionery. As these of the kind of sweets Haribo produces, such as cola
bottles and gummy bears, the company could possibly enhance business by focusing more on nostalgia. In particular, the
firm could change its packaging to focus more on this, introducing a line that has packaging designed to appeal to adults
and their desire to reminisce about their childhoods.
Such a focus could enable it to compete more strongly against a recent rival to the brand, Rowntree Randoms, which
entered the UK market in 2009. The product is being marketed to appeal to adults rather than children as a fun-loving
brand that reminds them of the sweets of their youth. The brand could take market share away from Haribo, attracting
adults to the brand who would normally purchase Haribo, and is therefore one the company needs to be wary of.
Figure 5: Rowntree Randoms and Thorntons Sweet Shop are new rivals to Haribo's sweet confection range
Rowntree Randoms and ThorntonsSweet Shop were both launched in 2009, targeting adults with a nostalgic product.
Source: Datamonitor analysis D A T A M O N I T O R
Conclusion
Haribo continues to perform strongly as a main player in the European sugar confectionery market. The company's
introduction of the Lite range and its health overhaul of its portfolio show how it is responding positively to consumers'
criticisms of the sector and their overall health and obesity fears. While it has long maintained that it is positioned towards
both adults and children, recent regulations have made it more important to focus on adult marketing. However, the
company has an opportunity to take this further by addressing nostalgia trends, which could safeguard its position against
new entries into the sector and see it become an all-round player loved by every age group.
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 10
APPENDIX
Case study series
This report forms part of Datamonitor's case studies series, which explores business practices across a variety of
disciplines and business sectors. The series covers a range of markets including food and drink, retail, banking and
insurance, pharmaceuticals and software.
Each case study provides a concise evaluation of a company that stands out in some area of its strategic operations,
highlighting the ways in which the company has become one of the best in its field or how it deals with different problems
encountered within that sector.
Methodology
This case study was compiled using a collection of both primary and secondary research, including Datamonitor’s own
consumer survey fieldwork. In addition to this, writing this case study also involved researching innovative product
formulations on Datamonitor's Product Launch Analytics Database, alongside an extensive review of secondary literature
and other in-house sources of information such as Datamonitor’s Market Data Analytics tool.
Secondary sources
• Nestlé UK to roll out Rowntree Randoms, Marketing Week, January 2009
• Sugar rush, The Grocer, May 2009
• Sweetness & light, The Grocer, April 2008
• Haribo, Talking Retail, February 2008
Further reading
• Datamonitor (2009) Global Consumer Trends: Sensory, July 2009, DMCM4693
• Datamonitor (2009) Sprinkles Case Study: capitalizing on the comfort trend with an everyday treat offering, July
2009, CSCM0252
• Datamonitor (2009) Global Consumer Trends: Health, June 2009, DMCM4691
• Datamonitor (2009) Lifestyle & Socialization Trends in Childhood: Implications for CPG, April 2009, DMCM4670
Haribo Case Study
Haribo Case Study CSCM0273/ Published 09/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 11
Ask the analyst
The Consumer Knowledge Center Writing team [email protected]
Datamonitor consulting
We hope that the data and analysis in this brief will help you make informed and imaginative business decisions. If you
have further requirements, Datamonitor’s consulting team may be able to help you. For more information about
Datamonitor’s consulting capabilities, please contact us directly at [email protected].
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