Uk's Chocolate Market Analysis

Chocolate market in the UK is dominated by large multinational companies such as Cadbury, Nestle, Mars and Kraft. According to Marketing Week (April 2011) Cadbury has just over 30% of the market share, and is considered to be the largest in the market. However consumer tastes and choices have been changing throughout the 20th century and about to change even more since British consumers are beginning to demand more of high-quality goods, exclusive goods and this is also the case when it comes to chocolate. As there are 4 large producers, there is a high degree of market concentration, therefore this is an oligopoly. During last 10 years, the situation changed several times. Brand owned by Cadbury, Daily Milk, grew 11,7% from £374m to £418m in 2010 while Kraft brand`s Milka sales increased from £8,7m to £21,3m according to Miggiano (category vice-president for chocolate in the UK). So the oligopolistic industry is more competitive if four firms have nearly equal sales than if one firm has significantly more sales than the others. However, so-called premium chocolate has now become the fastest growing part of the market and is about to bring huge changes to concentration ratio, if it`s to continue.

As UK’s chocolate market is fully dominated by a few firms and there exists a high level of market concentration, which measures the extent to which a market or industry is dominated by a few leading firms. Normally an oligopoly exists when the top five or less firms in the market account for more than 60% of total market demand/sales. In 2010 four leading firms in the UK had about 75,5% of market share (Cadbury 32%, Mars 21,5%, Nestle 17,7%, Kraft 5,3%). And the proportion of the market share is about to change in the nearest future due to the new trend in the chocolate industry, for example Cadbury repackaged their major products and relabeled them with Dairy Milk brand, which helped Cadbury to grow by 13% for the last year. Another reason why the situation in the...