Why making a profit is no longer enough for big brands

When you’re one of the world’s largest confectionery brands, you’re under the microscope. We live in a time where a more discerning, informed public are not only interested in the products a company is producing, but how they are making them – where are they sourcing their ingredients? What sort of packaging are they using? What are the products nutritional health benefits?

It’s not lost on Nestlé’s Oceania director of eBusiness, strategy and marketing, Martin Brown. It’s his job to not only sell the company’s message in the local environment, but make sure it is adhering to the best practices he and other strategists have put in place.

Brown knows that the younger consumers are the ones driving the conversation – and not only in terms of whether a product tastes good or not.

“If you look at the diversity of our population and the expectations, it is the younger consumers that are shaping our industry,” said Brown. “They are shaping a couple of key forces that are really important for us to consider. One is, they make choices on brands and consumption based on beliefs. They’re very much looking at the actions of the brand – what is behind the brand – particularly with the supply chain.”

No longer is it good enough to make a great tasting product under the banner of a worldwide known and trusted brand. A lot of food and beverage companies – and those in peripheral arenas like packaging – are employing people whose sole purpose within the conglomerate’s structure is to look after sustainability and traceability. This is because companies like Nestle know that social media and other modern trends have a huge influence on purchasing decisions.

Nestlé is looking at a variety of ways of making sure that it not only provides products from sustainable sources and can be traced back to the farm, but it is also taking steps to reduce its carbon footprint.

“As a company that operates 10 factories in the region, we have plenty of scope to influence that commitment. Part of those commitments is accelerating the use of renewable energy,” said Brown. “For instance, we use the spent coffee grounds in our Gympie factory as fuel to drive the energy in that factory.

“At our Smithtown factory, which is the home of Milo, we use sawdust from the local timber industry to power 85 per cent of the energy in that plant. These are good examples of clever renewable energy sources. We’re also committed across all of those operations to have zero waste to landfill by 2020 and are pretty close to achieving that.”

Globally, Nestlé has signed up to the RE100, which is a group of companies that have pledged to use 100 per cent renewable energy. The accord means that Nestlé has agreed to zero net greenhouse gas emissions by 2050 as part of the pledge to hold to the 1.5˚C maximum temperature increase through climate change.

When it comes to another hot-button issue for consumers – recyclability – Nestlé is committed to meeting its 2025 responsibility of its packaging being reusable or recyclable. Currently, 50 per cent of the materials it uses is recyclable, while 40 per cent is partially recyclable.

“We’re going to focus first on the 10 per cent that is non-recyclable,” said Brown. “We’ve got a negative list of materials that we are removing from all of our packaging. The cardboard is fine, however not all of the substrates used in flexible packaging are recyclable.

We have multi-layers of material that are not recyclable. That’s where we need to find solutions.”

These solutions will not appear out of thin air. Investment is needed, and Nestlé doesn’t mind putting its hat in the ring when it comes to spending money to find the answers that will lead to more sustainable packaging. Brown also realises that there are other issues that need to be addressed with packaging – recyclability is but one aspect.

“This is where the science comes in with regard to coming up with new packaging solutions because they’re not available right now,” said Brown. “We’ve invested in the Nestlé Institute of Packaging to work with the science community and the rest of the packaging community to develop novel solutions that are fully recyclable and/or compostable. These will be the replacement solutions for that 10 per cent non-recyclable packaging.

“If we can come up with solutions that meet consumer expectations of quality, tamper-proof food safety, and is relevant in a category that can fully eliminate packaging, that would be a good thing. We’re trialling those solutions already.”

Another hot topic is food trends. Two that have caught the eye of Nestle’s hierarchy are confectionery products with less sugar [see box story Satisfying the Sweet Tooth], and plant-based proteins. Again, it is the younger consumer driving the issue. In the case of the latter, it is not about getting rid of meat altogether, but about replacing one or two meals a week with plant-based proteins. Brown thinks there are many reasons for the growing trend.

“There’s health reasons,” he said. “They may also connect the dots between meat and greenhouse gas emissions. Ultimately, for them, it might be about living in a more sustainable environment. With our Harvest Gourmet products, and along with the rest of the plant protein industry, we are providing alternatives that make that transition seamless in a way that is pretty surprising. We think that it is going to grow quickly as a market opportunity.”

Brown said that Nestlé is looking to develop a range of meat alternatives – from chicken breasts to mince – that will give customers versatile options for food consumption. Then there are dairy alternatives, too.

“You can expect we will bring plant-based dairy options across a range of our beverage products,” he said. “We’ve seen that it is becoming popular in the way people are adopting plant-based milks into their out of home coffee consumption. That is definitely an opportunity for in-home coffee consumption as well.”

And what about another, albeit minor, trend of insect-based proteins? Brown acknowledges that it is an idea the company might look at in the future, but there is nothing in the pipeline at the moment.

“We’re aware of insect-based proteins. They’re probably not mainstream enough for us to look at yet,” he said. “We’re blessed at being in a pretty resource-rich environment so we’re not quite yet at the insect level. It’s an imaginative solution, which is arguable very sustainable and we should never rule it out.”

Brown is confident that Nestlé is on target to not only continue meeting the needs of its traditional consumers, but also encompass new food technologies and trends that will be entering the food chain over the next 5 to 10 years. It is not only about keeping the taste great, but making sure the brand keeps its reputation.

“As we continue to offer more choice and lift the nutritional credentials of all our products, it is important to remember that any change has to be underpinned by great taste. And with that, will come trust – something that is very important to any brand like Nestlé.”

Social responsibility
Chocolate and coffee – two items that tick all the endorphin boxes when consumed. Debating traceability of products, sustainability in packaging, and energy efficiencies during the production process are all well and good, but what’s the point if the key ingredients no longer exist? No ingredients means no products. Coffee beans and cocoa plants are grown in a narrow window of land on the equator. The main producers are in sub-Sahara African and the equatorial climate of South America. A recent article in Business Insider titled Chocolate is on track to go extinct in 40 years, concentrated on how the aforementioned strip of land is set to shrink due to climate change. Cacao plants, which product the cocoa for chocolate, need certain temperatures to grow and that is starting to change. However, that is not the main issue, because if humanity does get to reverse the more undesirable effects of climate change, there is another more urgent problem – will there be cocoa farmers to produce the crop?

It is an issue that the likes of Nestlé and Mars are taking head on. They realise without cocoa, a large portion of their business is affected. It is with this in mind that Nestlé’s Martin Brown explains why the company’s attitude towards its primary producers is holistic. The company knows that trying to buy the biggest amount of cocoa at the cheapest price possible is short-sighted. Long-term viability is needed and is something that the company champions. With more than 70 per cent of the world’s cocoa being produced on two million small farms in Ghana and Cote d’Ivoire, logistics can be challenging.

“The reality is that a lot of these communities are in undeveloped economies and live in challenged social spaces, so we have to help them resolve things such as unsafe work practices,” said Brown. “They’re complicated problems to solve that need total integration by the government across all industries.”

Brown said that in 2014 Nestlé was one of the first major companies in Australia to use 100 per cent sustainable cocoa. He said the company is committed to paying a premium to all farmers it buys through. The company also likes to make sure its suppliers are in compliance when it comes to eliminating unsafe child labour work practices and ensuring children go to school.

“We are also eliminating the use of unsafe pesticides,” said Brown. “We’ve built schools in farming communities to ensure that their kids are getting educated. We’ve distributed new cocoa plants. We’ve renewed the cocoa plantations to drive productivity in their farms. We’ve educated farmers on how to look after their farms better.”

A lot of actions undertaken by food conglomerates are driven by consumer expectations. However, Brown also knows that goodwill in these communities goes a long way. Because if climate change does get addressed, and the standard of living is accelerated, there are other issues that will also need addressing. Only collaboration between the farmers and businesses will solve them.

“There are a numbers of reasons why the cocoa supply has been under threat,” said Brown. “First, cacao trees are at their most productive between 2-20 years of age. If they are not renewed and the tree is not continuously replenished, productivity drops, and drops away sharply.”

Next, if the farming methods to optimise the layout of a farm – from ventilation between trees, right fertilisation methods, pruning and cropping of the trees – isn’t maintained, the productivity of the tree is reduced. Then there is the issue whereby farmers might not grow the crop anymore because they are not getting the economic outcome of it that another crop might provide.

“Another reason why you might have a compromised future with the cocoa crop is that the next generation don’t want to farm,” said Brown. “The next generation might leave farm communities because the conditions are just not good enough. They are not liveable and those meant to be taking over the farm have higher expectations of quality of life. And that should be everyone’s expectation – that the next generation gets to lead a higher quality of life or has the opportunity.”

Mars launches M&M’S Block chocolate range

Australians are set to become the first in the world to taste the new M&M’S Block chocolate range.

This chocolate innovation will combine M&M’S with smooth milk chocolate crafted from the finest ingredients, in six varieties – Milk, Almond, Hazelnut, Crispy, Crispy Mint and Strawberry.

The new range will tempt chocolate lovers, by bringing the iconic brand to Australia’s favourite chocolate segment. It will be available in all major supermarkets and convenience stores from Monday 24 April.

Yowie’s sales up in March quarter

Confectionary maker Yowie Group has reported sales of $US5.9 million ($A7.8 million) in the March quarter, a 50 per cent increase over the previous corresponding period.

According to AAP, this is the company’s highest-ever quarterly sales result.

The result follows the re-launch of the Yowie brand in Australia last week.

According to Universal Candy, Yowie’s distribution partner in Australia and New Zealand, the response from retailers has been  positive and the products are now available across a range of retailers representing the grocery, convenience, oil and convenience, department and toy store channels.

Yowie chocolates – based on the Australian mythical indigenous creatures – were originally introduced in Australia by Cadbury in 1997 before being discontinued in mid-2005.

The brand then made a comeback and Yowie products were released in the US in 2014.

“Australia was a logical choice to begin our expansion outside of the US because of strong residual brand awareness and consumers love and affinity for the Yowie brand,” said Bert Alfonso, Yowie Group’s Global Chief Executive Officer.

 

Yowie US manufacturing plant commissioning on schedule

Confectionery company, Yowie is on schedule to ramp up its US manufacturing capabilities through its agreement with New York based Madelaine Chocolate Company.

The company said in a statement the agreement allows Yowie access to high speed, high volume, automated and robotically driven manufacturing of the Yowie chocolate candy product. It added that installation of manufacturing equipment for production of Yowie product is scheduled to commence on March 10, 2016, subject to timing of customs clearance.

The manufacturing equipment is currently in transit to the Madelaine facility following pre-commissioning in Europe to minimize commissioning risk. The pre-commissioning took place under Yowie supervision and successfully utilized the new Yowie capsule.

As Motley Fool reports, the company obtained a licensing agreement to manufacture Angry Birds chocolate to coincide with the release of a film of the same name in May this year. This product will be the first product to be manufactured from the newly commissioned line.

Yowie chocolates – based on the Australian mythical indigenous creatures – were introduced by Cadbury in 1997 and achieved sales of $100 million in the first two years, before being discontinued in mid-2005.

The brand then made a comeback in 2012 when the company was acquired by prominent mining executives, Waratah Resources’ William Witham and former non-executive director of Gleneagle Gold, Greg O’Reilly.

Yowie products were released in the US in 2014. According to the company’s half-yearly results for the 6 months to December 31 2015, revenues rose 1,094% to US$5.7m.

The large increase was the result of the company’s products across more than 4,000 Walmart stores in the US.

KitKat set to go 100% sustainable

KitKat is the first global chocolate brand to announce that it will use only sustainably sourced cocoa to manufacture all of its products, and will do so from early 2016.

The brand already uses only sustainably sourced cocoa, accredited by independent third-party bodies, in products sold in certain markets, but this new announcement extends the practice worldwide, including the United States.

Sandra Martinez, Head of Confectionery for Nestlé, said: “We’re delighted to be a flag bearer for the industry, as the first global chocolate brand to announce such a move.

Sustainable cocoa sourcing helps safeguard the livelihoods of farming communities and delivers higher quality cocoa beans. This announcement will only strengthen consumer trust in KitKat as a responsible brand.”  

The initiative, which coincides with KitKat 80th birthday, is part of what the company said is “Nestlé’s commitment to source 150,000 tonnes of sustainably produced cocoa by 2017 via the Nestlé Cocoa Plan.”

“The Nestlé Cocoa Plan aims to improve the lives of cocoa farming communities and the quality of the cocoa Nestlé purchases,” the company said.

Violet Crumble gets pulled off shelves

Nestlé Australia says that it has decided to voluntarily withdraw Violet Crumble 50g bars from sale because of a very small number of bars being underweight. 

According to the company, the production process for making Violet Crumble is similar to the recipes you make at home – every one comes out slightly different. Honeycomb needs a lot of TLC as it is very brittle and breaks easily during the production process.

Nestlé manages these breakages by producing product with an average weight well in excess of 50g. 

The company identified that a very small number of broken bars have been making it through their detection machines at Nestle’s factory in Melbourne and have been released for sale.

“We are working hard right now to ensure that all Violet Crumble bars comply with Federal Government regulations on net weight. We hope to return our Violet Crumble 50g bars to sale as quickly as possible,” the company said.

Magnum ice cream launches luxury chocolate collection

Unilever’s premium ice-cream brand Magnum is launching into confectionery with the release of a delicious new Chocolate range. The new Chocolate Collection is made with premium, Magnum Rainforest Alliance chocolate, and features the iconic Magnum chocolate crack.

Launching into most major grocery and independent stores from October this year, the release of the Magnum Chocolate Collection will offer Magnum fans a chance to indulge with decadent, beautifully packaged treats available in Blocks, Bars, Thins as well as Gift Boxes.

Manufactured under license by Kinnerton Confectionery, the Australian release coincides with a global launch spanning Germany, France, Portugal, Spain and New Zealand, along with the UK where MAGNUM Chocolates are expected to appear on shelf in select high street stores, including Selfridges and WHSmith, from mid-September, and Tesco from February 2016. 

“The premium chocolate segment is the growth sector for chocolate1 in Australia,” says Kinnerton Confectionery Australian Marketing Manager, Vruchi Waje. 

“Young consumers aged between 25-34 are the ones most likely to indulge in a block of chocolate2, however the current premium chocolate offerings lack stand out, and mostly appeal to consumers over 35 years.

The Magnum Chocolate Collection will be available in a variety of flavours across its Blocks, Bars, Thins and Gift Boxes, including Milk, Dark, White, Almond Truffle, Salted Caramel, Intense Raspberry, Double Chocolate, Almond Classic and Praline Crunch. 

 

Sweet Aussie favourite makes a comeback

After more than a decade away from our shelves, by popular demand ALLEN’S Jelly Tots are making a comeback.

ALLEN’S Jelly Tots –– last sold in Australia in 2004 – have been re-launched and revamped, this time with no artificial colours and with portion advice on packs.

The new ALLEN’S Jelly Tots are fun and juicy mini fruit-flavoured jellies, and the all new Tangy Tots are juicy fruit-flavoured jellies, with a tangy coating on the outside.

The packs have been re-designed to feature the names of real ingredients rather than confusing numbers, as well as digital QR codes that link to more in-depth nutritional information. They join the ALLEN’S 100 per cent no artificial colours range of family favourites. 

The move is part of Nestlé’s efforts to help Australians better manage their energy intake and understand the ingredients in their food.

Accredited Practising Dietitian and Nutritionist, Nicole Senior, said redeveloping the full range of ALLEN’S confectionery with no artificial colours and clean labelling was welcome news.

“Parents are looking for more natural ingredients and they are looking for labels that they can understand,” Ms Senior said.

Ms Senior said balance and moderation were key for a healthy lifestyle, and having portion guidance on pack was a helpful tool for parents.

“Treats are OK, in moderation. It’s important to understand portions, so that you can make good decisions when it comes to the foods you eat,” she explained.

Nestlé General Manager – Confectionery, Martin Brown said the changes to the ALLEN’S range were all part of Nestlé’s ongoing initiatives to help people improve their nutrition, health and wellness. 

“At the end of last year, ALLEN’S moved to 100 per cent no artificial colours across its entire range, to give our consumers certainty that any and all of their lolly favourites include only naturally-derived colours,” Mr Brown said.

Yummy & sweet goodies from CTC Australia

Product Name: Joojoos New Range: Grizzo Gummy Bears, Blugo Berry Clouds, Ruby Red Strawberry Clouds, Fantismo Fantasy Belts, Reddy Belly Strawberry Belts, Kalula Cola Bottles Sour, Wilbo Worms Sour, Par-Tay Sour mix, Mega Snakes.

 

Product Manufacturer: CTC Australia
 

Ingredients:
Grizzo Gummy Bears: Corn Syrup, Sugar, Gelatine, Sorbitol, Citric Acid (330), Artificial Flavours, Vegetable Oil, Carnauba Wax, Artificial Colours (102,110,129,133).
Blugo Berry Clouds: Sugar, Corn Syrup, Dextrose, Modified Starch, Gelatine, Sorbitol, Citric Acid (330), Pectin, Artificial Flavours, Sodium Citrate, Artificial Colours (133).
Ruby Red Strawberry Clouds: Sugar, Corn Syrup, Dextrose, Modified Starch, Gelatine, Sorbitol, Citric Acid (330), Pectin, Artificial Flavours, Sodium Citrate, Artificial Colours (124, 129).
Fantismo Fantasy Belts: Sugar, Wheat Flour, Corn Syrup, Refined Reconstituted Fruit Juice, Hydrogenated Soybean Oil, Acidity Regulators (296,330,331), Flavours, Iodised Salt, Emulsifiers(471),  Colours (102,129,133,171).
Reddy Belly Strawberry Belts: Sugar, Wheat Flour, Corn Syrup, Refined Reconstituted Fruit Juice, Hydrogenated Soybean Oil, Acidity Regulators (296,330,331), Flavour, Iodised Salt, Emulsifiers(471),  Colour (129).
Kalula Cola Bottles Sour: Sugar, Corn Syrup,  Gelatine, Sorbitol, Citric Acid (330), Tartaric Acid (334), Fumaric Acid (297), Artificial Flavours, Artificial Colours (150a).
Wilbo Worms Sour: Corn Syrup, Sugar, Gelatine, Sorbitol, Dextrose, Citric Acid (330), Tartaric Acid (334), Fumaric Acid (297), Pectin, Artificial Flavours, Sodium Citrate,  Artificial Colours (102,110,129,133,171).
Par-Tay Sour mix: Corn Syrup, Sugar, Gelatine, Sorbitol,  Citric Acid (330), Pectin, Sodium Citrate, Tartaric Acid, Fumaric Acid, Flavours, Colours (102,122,124,129, 133,150a).
Mega Snakes: Corn Syrup, Sugar, Modified Starch, Gelatine, Sorbitol, Gum Arabic, Citric Acid (330), Natural & Artificial Flavours, Vegetable Oil, Carnauba Wax, Artificial Colours (102, 110, 129, 133).

Shelf Life: 12 Months
 

Packaging: Hang Sell Bags and Display Box
 

Product Manager: Cameron Ogilvie
 

Packaging: Hang Sell Bags and Display Box
 

Brand Website: https://www.ctcaustralia.com/joojoos

What The Company Says: CTC Australia is re-launching their best sellers to focus on bringing consumers into a world full of fun and creativity. Featuring a range of cool, quirky characters like Par-Tay, Grizzo Gummy Bear and Fantisimo Fantasy belt, the new range is proving especially popular. The new range consists of Strawberry clouds, blueberry clouds, gummy bears, sour worms, sour cola bottles, sour party mix, fantasy belts, strawberry belts and mega snakes.