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Sweet Outlook 2013: Part One

Future gazing in the confectionery industry

By Oliver Nieburg+

03-Jan-2013
Last updated on 03-Jan-2013 at 13:10 GMT

We take a peek at what's around the corner in 2013
We take a peek at what's around the corner in 2013

ConfectioneryNews.com takes a look at what to expect from the industry in the year ahead in this two-part article series.

Several business voices have indicated that the big five: Mars, Nestlé, Mondelez, Hershey and Ferrero, will start to outsource more production and begin to focus purely on sales and marketing operations.

Premium and social media

Also expect further social media engagement direct to consumers, which may spark a nostalgia trend, leading previously canned brands to make a comeback as Wispa did for Cadbury in 2008.

Confectioners may also use social media to promote premiumized versions of existing brands as consumers in developed markets demand high-quality products. Nuts, exotic flavors or higher cocoa content could be added to bring such products into premium aisles.

Manufacturers may also use gifting or premiumization to reduce reliance on seasonal products – which cost firms such as Nestlé last year.

However, some confectioners may seek to capitalize on previously untapped seasons such as Chinese New Year or Kwanzaa, an African American celebratory week in the US.

Health debate and regulations

One analyst last year called confectionery “the new tobacco” . Regulators may clampdown this year on foods perceived unhealthy amid growing obesity epidemics in nations such as the US, Mexico, New Zealand and the UK.

Sugar and fat taxes eased in Europe last year after Denmark abolished its so called “fat tax”, but such levies still exist in countries like Finland and Hungary, while the US state of Colorado currently taxes candy and soft drinks at 3%.

Calorie reduction pledges from big firms may also see product downsizing which could infuriate customers who feel cheated if retailers keep the same prices.

Chewing gum is also garnering the attention of regulators for other reasons. Mexico looks likely to implement a tax on gum in 2013 to pay for the cost of street clean-ups.

Taxes were also proposed in Northern Ireland and Wales toward the end of last year, and although not adopted, it shows that regulation appears a more viable solution to policy makers than degradable gum bases.

Legal case watch

Finally, keep an eye on a case that could threaten to shame major industry players, who are alleged to have run a chocolate cartel in the US between 2002 and 2007 that kept prices artificially high for consumers.

The case is due to proceed after previous attempts to block it by Hershey, Mars and Nestle. The firm's could be liable for $727m in damages.

Hershey may also face a case over alleged child labor abuses which could serve to threaten its reputation.

For part two, see HERE.

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