UPDATE 1-Nestle plans to sweeten its UK market share

* Nestle aims to gain share in UK confectionery market

* Looks to gain up to 0.2 percentage points a year

* Sees cocoa prices staying high for 6 to 12 months

(Adds further details from interview)

By David Jones

YORK, England, May 14 (Reuters) - Nestle (NESN.VX), the world's biggest food group, plans to grow its market share in the 4.5 billion pound ($6.6 billion) UK confectionery market each year despite rivals getting bigger and more competitive.

The KitKat and Aero bar maker aims to gain share although it faces a new Kraft (KFT.N) and Cadbury combination, and hopes to safeguard 2,000 UK jobs as the industry comes under intense pressure as its key raw material, cocoa, hits 32-year highs.

Nestle's head of UK and Ireland confectionery David Rennie plans to grow his share up to 0.2 percentage points a year from 16 percent although its rivals Kraft and privately owned Mars have made acquisitions to heap the pressure on the Swiss group.

"We aim to grow the business with steady market share growth of 10 to 20 basis points each year," Rennie told Reuters in an interview on Friday at its York plant in northern England that churns out one million KitKat bars a day.

Kraft took the lead in the UK market when it swallowed Cadbury earlier this year, boosting its relatively small 2 to 3 percent share to around 30 percent, while Mars after chewing up Wrigley in 2008 pushed its market share to 24 percent.

"The two moves have concentrated the players, but not concentrated the brands. Consumers still have a similar number of brands to choose from," Rennie said.

VERY COMPETITIVE

The strengthening of its two bigger rivals with more marketing muscle and distribution reach along with soaring cocoa prices have put a microscope on costs, but Rennie does not see big job cuts like those made in 2006 to remain competitive.

"Cocoa prices are very high and the market is very competitive but I am not looking to cut jobs to allow myself to compete," he said.

Cocoa prices doubling over the last three years to around 2,400 pounds a tonne LCCN0 have put massive pressure on the business with modest price rises unable to absorb the cost increase.

The commodity has been pushed higher by tight supplies from major growing nations like the Ivory Coast, an anticipated upturn in demand as the world comes out of recession, and speculative buying.

"Cocoa is at a historic high level and the indications are that it will stay high for a while, with no big decline anticipated in the next 6 to 12 months," Rennie said.

"There is massive pressure on the business and had we not done massive restructuring 3 to 4 years ago it would have been very tough," he added.

Nestle went through big restructuring since acquiring Rowntree in 1988. Four years ago it cut a third of the staff in York and now employs about 2,000 confectionery staff across York and three other sites.

"MAGNIFICENT SEVEN"

Rennie's focus is on his "magnificent seven" brands -- KitKat, Aero, Smarties, Milky Bar, Quality Street, After Eight and Rowntree's -- which account for 70 percent of his sales, largely produced from Nestle's four northern English plants.

With UK industry volumes largely flat in recent years, manufacturers have relied on price rises to drive the annual market in the UK by 2 to 3 percent.

Rennie is looking to KitKat, his fastest-growing brand with high-single digit percent annual growth, and new innovations to drive that growth. Rennie has helped create a multi-million pound brand in 9 months with Randoms, fruit-flavour shapes that are made in a Nestle Czech factory.

Randoms are now Britain's No. 2 sugar confectionery brand after Nestle's own Fruit Pastilles, outselling Mars's Starbursts and Kraft/Cadbury's Maynards wine gums.

Confectionery is a core Nestle business that makes up 11 percent of sales, and one in which it ranks No. 3 in the world after Kraft and Mars. The business contains two of its 30 billionaire brands -- KitKat and Nestle chocolate -- with annual sales of over 1 billion Swiss francs.

(Reporting by David Jones; Editing by Mark Potter and Quentin Webb)