The Ugly Duckling is a deeply strange and darkly framed story, even by Hans Christian Andersen’s standards. It features moments of real cruelty, potential child or chick kidnapping and an existential crisis. Its messages are complex and often contradictory – is beauty a thing to be desired or dismissed?

Emma Reeves has adapted the tale for this co-production by Tutti Frutti and the Albany, directed by Wendy Harris. Reeves has past form: her version of Jacqueline Wilson’s Hetty Feather was nominated for an Olivier.

The show’s aesthetics can’t be faulted. There’s a relaxed eccentricity to Catherine Chapman’s costume design and set, which quietly charms and engages the children, aged three years and up. The ugly duckling and his family are played by three charismatic actors, who wear furry sweaters, faded tweed and quirky accessories. Their story plays out in a dream-like park, with shadowy mountains and hazy skies. Bulrushes frame the stage and, when winter comes, the long grass glows with snow-white fairy lights and cloaked swan puppets (designed by Nick Ash) glide gracefully above the stage.

These pretty set pieces work well and there’s a particularly clever moment when winter is swept aside by an energetic spring clean. My three-year-old nephew Joseph is captivated by a dazzling scene set in the pond, the stage bathed in blue. As Danny Child’s ugly duckling learns to swim – and spins and twirls across the water – Joseph reaches out for the stage.

But this is a production of fleeting standout moments, which gradually splinters around the edges. The singing and dancing have real swagger: there are flashes of break-dancing and Tayo Akinbode’s original songs are bold and even a little angry. But these musical performances sit outside the show and rarely become a meaningful part of the story.

It all gets increasingly blurred, as offbeat characters flood the stage and a collection of confusing messages pile up. A goose appears and urges our duckling to bully his way to the top. A dog bounds on to the stage and sings a bruising song, in which he woofs about every animal’s desire to be loved (Maeve Leahy doesn’t hold back). A snooty cat (Daniel Naddafy) sidles up to our duckling and accuses him of being far too stupid to survive and, when our ugly duckling finally transforms into a swan, he is admired greatly for his beauty.

It gets hard to know who to listen to, quite what to think and what any of these characters are trying to say. The heart of the story – it’s OK to be different – is almost lost completely. It’s great to see so much pluck but perhaps this show has hatched a little early. My nephew Joseph fell completely for the dancing – but not for the duckling.

• At the Albany theatre, Deptford, until 31 December. Box office: 020-8692 4446. Touring until 4 February.