STEPHEN LEWIS takes an insider's look at the chocolate wars. A NAUGHTY but nice treat or a well-deserved indulgence? No: chocolate is big business. And each bar you buy is being counted and counted again by chocolate chiefs desperate to claim victory in the chocolate wars.

For 15 years, Nestl's best-selling KitKat has been top of the heap come Christmas-time, proud owner of the title Britain's favourite chocolate bar.

But this year - at least according to the annual survey of the chocolate industry by trade magazine The Grocer - it has been toppled from its throne.

Dairy Milk, made by Nestl's bitter (or should that be sweet?) rival Cadbury, has claimed the number one slot for itself. Even worse, KitKat has been muscled into third place by Mars.

Nestl isn't happy - and it is holding up two fingers to The Grocer, saying the magazine has got its figures wrong.

That's not a figure of speech, either. Furious Nestl bosses point out that this year, those mysterious industry insiders who compile lists of who is buying what bar of chocolate (and how much of it they're buying) have not counted the two-fingered version of the KitKat as a chocolate bar. Apparently, when it has two fingers, a KitKat is now a biscuit - according to The Grocer at least. Four fingers and it is a bar of chocolate.

It is all to do with where the chocolate bars are positioned on the supermarket shelves, explains The Grocer's marketing editor Simon Mowbray.

Most of the two-fingered KitKats are sold as multi-packs, he says. "And they are positioned in the biscuit aisle, not the confectionery aisle."

The Grocer's end-of-year top-of-the-chocs tables are based on independent data, Mr Mowbray insists, and give the best overall picture of what is happening in the confectionery industry.

Their figures show KitKat sales (excluding the two-fingered variety) of £107 million in the 12 months to October 7 this year. Add in two-fingered sales of £72 million and that still adds up to just £179 million, Mr Mowbray says - enough to lift the brand above Mars' £125 million but well below Dairy Milk's £196 million.

Nestl, however, have their own figures - and they don't bear much resemblance to those of The Grocer.

They claim sales of £265m this year for all brands of KitKat - £10 million up on last year - with their closest rivals Mars a distant second with £150-plus million.

They would say that, sniffs Mr Mowbray. Put those figures to Mars and no doubt they would disagree.

Nestl spokesman Paul Kirkwood, however, stands by his own company's figures. They include an estimate of sales through petrol forecourts, market stalls and even tuck shops, which The Grocer's figures don't take account of, he says.

Then the argument becomes rather surreal. When estimating sales of Dairy Milk, The Grocer lumps together the milk chocolate, Whole Nut and Fruit And Nut versions as a single brand, Paul complains. "They are separate brands, in our view," he says. "If you lump them together, Dairy Milk is in a stronger position. We feel they are using one rule for Cadbury, lumping their different varieties together, then when it comes to KitKat, separating them off!"

It all goes to demonstrate the old adage that statistics can be used to prove anything, provided you jiggle them properly.

But does it really matter? Surely, nobody is going to go in a sweet shop and say: "Can I have a KitKat please, because it's the nation's favourite chocolate?" True, agrees Paul - and you can almost hear the sheepish grin over the phone. But it is nice to be number one. "We're very proud of it. There are not many brands that can say they have been top of the class for 15 years."

Truth be told, it's all done with half an eye on the City.

As long as they taste good and they are both selling well, who else but a financial wheeler-dealer really cares whether KitKat or Dairy Milk is number one?

Despite the bitter rivalry between the chocolate giants, the real threat to KitKat may not come from either Cadbury or Mars, but from an entirely different quarter.

The chocolate industry as a whole is still big business, with sales - according to The Grocer - of £2.5 billion a year (£3.8 billion, according to Nestl). But it is being relentlessly squeezed by a new rival for kids pocket money - the mobile phone.

"Total sales of chocolate are down by 4.3 per cent on last year," says Mr Mowbray. "Chocolate confectioneries are now competing with an ever-growing range of sugar confectioneries and also things like mobile phones.

"More and more kids have got mobile phones and spend their pocket money on them."

Oh, fickle youth. Mums and dads, should start stocking up on KitKats and Mars bars this Christmas. It's time to re-educate the kids about the financial importance of a sweet tooth.

Updated: 10:25 Wednesday, December 19, 2001