Case Study on Thorntons plc - Essay Example

By 1939, Thorntons had 35 shops all over England and a factory in Sheffield that baked confectionery products. The firm's profitability and expansion continued such that in 1988, it was listed in the London Stock Exchange. Thornton family members were involved in the management of the business until the resignation in August 2006 of John Thornton, the last family member on the Board. Thornton family members, however, continue to hold a 22 percent stake in the company. As of the end of its fiscal year on 25 June 2005, the company had 395 stores, 198 franchise outlets, and 26 Cafs all over the U.

K and Ireland, over 4,200 employees, an annual turnover of 188 million, and net profits before tax of just over 8.15 million (Helmscott, 2006). The company is based in Thornton Park, a 65-acre site in Alfreton, Derbyshire. Thorntons is one of the key players in the candy and confectionery industry, a sub-sector of the global food and beverages industry consisting of companies that manufacture, process, package, market, and/or sell candies and confections, including chocolate and chewing gum. Business Insights/Datamonitor (2005) reported that the global confectionery sector had an annual turnover of 122 billion growing in value at 3.

9 percent yearly. The biggest group in the sub-sector are companies that sell chocolate confectionery products, which accounts for 53.8 percent of total turnover value, followed by sugar confectioneries, sweets and candies (32.8 percent), and gum (13.4 percent).The U.K. confectionery market, one of the biggest in the world, had total sales of 4.53 billion in 2005 growing at approximately 4 percent each year. A few companies led by Cadbury Schweppes, Mars, Nestl, Kraft, and Wrigley dominate in the U.K. market.

Thorntons (188 million in sales) is in sixth place, followed by Barry Callebaut, ADM Cocoa Hull, Dunhills (Pontefract), and Renshaw Scott (with a turnover of 58 million) (Swetenhams, 2006).Characteristics of the Confectionery Industry SectorThe confectionery sector had its heyday in the 1970s, as sales trebled whilst food expenditures doubled in the decade. By the late 1980s, annual sales growth slowed down to 2 to 3 percent, characteristic of a mature industry. The market in the early to the late 1990s was therefore becoming saturated whilst manufacturers continued to expand production and retail outlets to match what was until then perceived as booming demand.

The 1980s also saw a wave of acquisitions that produced two industry giants: Cadbury Scweppes and Nestl.Confectioneries are non-essential foodstuff but are regularly purchased by a very high proportion of the population as an indulgence, a gift, or a