Newsbar: Can we get real.


VANA/NLNA has been pushing a new premium chocolate range. One of my competitors do not like the offering. Several asked what I thought of their comments. They are not unbiased observers either, but I suppose no one is. I can say that I have no financial or any other interest in the Newsbar offering nor am I likely to have such an interest.

What I do think is that many of my clients should look at the premium chocolate market. Here are some facts:

) There is no market dominance, and small companies are successful in this market. A few players do not own it.

) Many of my clients are in an excellent location to sell such products.

) The cost of entering this market for them is not high. The risks are small. If it does not work, sell the stock and exit.

) It allows a merchant to trade items on almost any holiday eg there are Valentine's day chocolate, green St. Patrick's Day chocolate, easter chocolates, etc. So bring in people into the shop.

) The current growth rate of the Australian chocolate market is about 7.8%. Growth is expected to continue at that rate for the next five years.

Sounds good to me.

Now let us get to the objections to Newsbar.

Yes, it would be wonderful if:

) A well-known brand company in premium chocolates

) Would be prepared to offer many small-to-medium-sized size businesses that have no history in premium chocolates

) An exclusive deal

) A 50% margin on the chocolate range,

) Promise to follow it up with millions of dollars in TV and billboard campaigns.

How many such companies do you see offering such a deal?

The reality is you do not need in premium chocolates to have millions of dollars in marketing behind you. Many premium chocolate companies are pretty small. I have many clients in premium chocolates. Both they and their suppliers are not such huge companies. I am sure you have seen such small premium chocolate places too.

The quality of the product.

This is the big question, the most critical question. If people like it, then they will come back. It is one I cannot know as I never tasted it. This is the most crucial consideration.

I have seen chocolate producers parade their high-quality goods, and they were no such thing; people were not fooled.

Mass marketing is not the important point here, a bad product will bomb no matter how much advertising you pump into it.

Is the Newsbar expensive at $5?

This depends on the quality. A cheap mass-market chocolate bar is generally about $1 to $2. A premium chocolate bar ranges typically from $9 to $15. So, depending on what it is, will determine this question.

Are the Newsbar margins huge at 50%?

Well, it depends on your perspective. If you concentrate on lotto, newspaper delivery, magazines, etc., the answer is YES. Conversely, if you are in a market where 60% to 70% is standard, then NO.

For premium chocolates, 50% is acceptable. 

One point that you need to check is that the margins are what is quoted. Sometimes suppliers fudge margins, as readers here will know, I have discussed this issue before here.

Is the Newsbar name a good one?

No. It does not conjures up an image suitable for premium chocolates. I think of a bar where I spent a lot of time in, with complimentary newspapers. Not the sort of image required to sell a premium item. It will be a problem if you are looking to sell a $5 chocolate bar.

Does these chocolate bars have to save any business?

It does not have to, a product that sells well gives good returns and is not difficult to handle is a good product should be considered.

Few things can save a world does that mean we should reject everything else.

These are my opinions, and if anyone wants to discuss them further happy to take it further.

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