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Kit Kat, Britain's bestselling chocolate bar, is losing its shine.

The jewel in Nestle Rowntree's crown has not fared well in Marketing's Biggest Brands survey compiled by Information Resources, with sales of the four-finger down 14.5% on last year. Combined sales of the four-finger and chunky variants of the chocolate wafer bar were down 7.3%.

Kit Kat quickly established itself as Nestle Rowntree's leading product two years after its launch in 1935, and has maintained its position ever since.

Forty seven Kit Kats are eaten every second in the UK and its 'Have a break, have a Kit Kat' tagline is one of the longest-standing, instantly recognisable slogans in UK advertising history.

But market leadership has not deterred Nestle from innovating and rolling out new formats. The launch of Kit Kat Chunky two years ago, a gutsy foray out of its familiar format, confounded sceptics and proved an instant success. Next month it will launch Kit Kat Kubes, bite-sized chunks packaged in a variety of bagged formats and promoted with a £10m campaign by J Walter Thompson.

But does this NPD damage consumers' affinity with the brand, particularly the finger format that adults have grown up with? Or is the value of the brand suffering as a consequence of price promotions?

In a cluttered market it has faced fierce competition, in particular from the recent global redesign of the Cadbury Dairy Milk brand.

Despite its recent decline, Kit Kat remains the nation's favourite chocolate bar and it built on its 'take a break' positioning earlier this year by spending £6m to urge the nation to enjoy Britain's Biggest Break, a 15-minute break on a Friday in March.

So what does Nestle Rowntree need to do to arrest Kit Kat's decline and ensure leadership for years to come?

We asked Mark Palmer, marketing director at organic chocolate brand Green & Black's, and TBWA\London planning director Neil Hourston, who used to handle Cadbury's ad account.

VITAL SIGNS
CONFECTIONERY VALUE SALES (MAJOR MULTIPLES)
                            2003           2002     % change
                        (pounds)       (pounds)
Kit Kat*               90,233,768     97,296,312         -7.3
Cadbury Dairy Milk     86,997,528     71,985,368         20.9
Celebrations           45,349,312     49,102,084         -7.6
Maltesers              44,935,596     39,702,464         13.2
Galaxy                 44,739,124     45,026,996         -0.6
Source: IRI.
*Kit Kat includes four-finger and chunky variants, year to June

DIAGNOSIS

MARK PALMER

The launch of Kit Kat Chunky was a masterstroke. It has delivered huge incremental volume by revitalising the brand franchise for teens and young adult males seeking a bigger impulse eat. Kit Kat is bigger and better as a result and the distinct positioning will have restricted cannibalisation of the range.

Despite this tremendous success, the decline in overall sales, including those of the classic four-finger variant, must be addressed.

For me, the controversial move out of foil packaging has not added sufficient value to offset the loss of those much-loved rituals that were surely an intrinsic part of the overall Kit Kat break. While Walkers has proved how superior packaging can modernise and transform a brand, was the issue of product freshness and quality ever one that truly bothered Kit Kat consumers in the way it did crisps buyers?

Recent advertising and promotions sensibly continue to dramatise the powerful 'break' equity, but I'm again left feeling the communication lacks some of the product magic and gentle charm and wit that has always run through the core of this much-loved brand.

NEIL HOURSTON

Kit Kat is a great British brand with a big, simple proposition and a product built to break on. Enough chocolate to give you a treat, enough wafer to stop you from falling onto the couch, putting your feet up and calling it a day.

The problem is, people are going to the corner shop less often than they used to. When they get there, the confectionery counter is creaking under the weight of new product offerings.

More worryingly, at the back of people's minds is the body beautiful that chocolate won't deliver. And surrounding the confectionery section are lots of new fridges and shelves packed full of non-chocolate snack options.

In the face of all this, Kit Kat is being uncommonly generous. It's drifted away from its product, to tell us that, in this modern world, we need breaks more than ever.

The thing is, we all know this already. And more and more we know this fast lifestyle is here to stay. Kit Kat needs to go with the flow, not swim against it. And it needs to remind us of the reasons, among all this choice, why only a Kit Kat will do.

TREATMENT

- Work on adding charm and gentle humour to the advertising, ensuring that the product is the hero of the 'break' experience.

- Introduce a limited edition 'tribute' pack to rekindle memories of the iconic foil packaging.

- Alongside the limited edition, create a national debate around the brand. Kit Kat is a national treasure - let the UK decide whether the packaging returns.

- Be more selfish - don't sell breaks, sell Kit Kat breaks.

- Stir up some controversy - get Britain talking about Kit Kat, and why it's better.

- Live the promise - use media creatively to create real-life better breaks for people.

- Be bold and brave with NPD to stand apart from the 'me-too' lines.

- Bring a sense of community to the Kit Kat break.