Britain's retailers sold £264m of Easter eggs last year, according to the market research firm Mintel, and Euromonitor expects a 3.5% rise this year. But the taste for seasonal treats is unlikely to translate into profit – particularly for smaller, artisan chocolate makers, which are becoming an endangered species.
Supermarkets often use Easter eggs as loss leaders to tempt customers into their stores but offers have become drastic this year as retailers face a bleak environment of weak spending.
Marcia Mogelonsky, analyst at Mintel, said: "Sainsbury's and Tesco are trying to kill each other to get people into the store. Profit margins [on many Easter eggs] will fall because the price of everything has gone up, but if they can get shoppers in to buy the other products at normal prices, it will be worth it."Sainsbury's has a buy-one-get-two-free offer on Cadbury's Creme Eggs. Tesco is selling three small Nestlé Maltesers and Smarts eggs for £3, half the normal price. Asda and Morrisons are offering medium-sized Cadbury eggs for £1.
Angus Kennedy, editor of the trade title Kennedys Confection, said: "Thirty years ago, there used to be about a hundred manufacturers in the UK but there are only a few left. The industry is caving in, really. If you talk to any manufacturer who isn't Mars, Nestlé or Cadbury, they're going to tell you it's tough."The chocolate industry is dominated by three foreign-owned multinationals – Switzerland's Nestlé, the US firm Mars and Cadbury, which succumbed to a takeover by the US food group Kraft last year. The number of local players is dwindling. One chocolatier, Derby-based Derwent Lynton, was bought by rival Zetar a week ago after making operating profits of just £114,000 on sales of £4.2m. Another manufacturer, Elizabeth Shaw, shut its Bristol factory in 2006 and was taken over by a Norwegian firm in 2009.
The price of cocoa beans, a key ingredient in chocolate, is trading 10% higher than a year ago, although down from its record high in February, amid concerns about political stability in Ivory Coast, responsible for 40% of global supplies. Sugar has risen about 50% in the same period, while a similar rise in oil has driven the cost of manufacture up further. And many retailers are choosing to absorb much of the January's 2.5 percentage point increase in VAT to 20%.