Mintel has valued the Brazilian sugar and gum confectionery market at $5.2bn (R$ 10,2bn) in 2011, up 24.4% from 2007 and expects a 5% annual growth rate in the next three years as Brazil plays host to the World Cup and Olympic Games.
‘Moment for indulgence’
Speaking to ConfectioneryNews.com, Jean Manuel Gonçalves da Silva, senior food analyst at Mintel based in Brazil, said “People have more money…It’s a moment for indulgence – not a time to worry about health.”
According to Mintel, Brazilian consumers want to eat healthily but are not prepared to sacrifice taste.
Gonçalves said that healthy confectionery may be a future growth opportunity, but manufacturers first needed to convince consumers that taste will not be comprised.
He said that while growth rates for chocolate were higher, sugar confectionery and gum was also enjoying an upsurge through improved product quality and more sophisticated distribution channels.
Trends: Tropical and dessert flavors
“We are seeing a trend [in gum and sugar confectionery] that the industry is switching to the young adult population. Before it was made for children,” said Gonçalves.
He added: “A lot of companies are exploring tropical flavors” Products with pineapple, coconut or acai were gaining traction and carry added appeal when used in a mixed blend, he said,
Another trend is dessert flavors.”Instead of lime – it’s lime pie or passionfruit pudding,” said Gonçalves
One potential concern for gum and sugar confectioners is that consumers could be put off by price hikes.
Mintel’s research showed that the average price of sugar and gum confectionery between 2007 and 2011.has risen much higher than other products in the confectionery category such as chocolate and cookies.
“Production costs have risen…Before labour was very cheap, but now it is very expensive,” said Gonçalves.
He added that energy prices had also risen, while import and export taxes as well as VAT had gone up.
According to Gonçalves, sugar costs had also had a huge impact with prices doubling in the past five years.
Brazil imports more chocolate than sugar confectionery because people are attracted to origin products such as Belgian chocolate, said the analyst.
“If you ate an imported chocolate, it means more than an imported candy,” he said, adding that people didn’t expect the same quality for sugar confectionery.
Mondelez - 56%
Arcor - 10%
Riclan - 9%
Perfetti Van Melle - 8%
lindtFerrero - 7%
Approaches and market share
Kraft Foods spin-off Mondelez International leads the Brazilian gum and sugar confectionery market with a 56% share, followed by national player Riclan and Argentine firm Arcor, according to Mintel.
Gonçalves said that multinationals like Mondelez tended to focus efforts on one product and would invest large sums on marketing their biggest sellers.
In contrast, national companies concentrate on discounting, work with many products and have little to invest on brand development.
“It would be better if they worked with their leading brand,” said Gonçalves, but warned the cost may prove a barrier to many small firms.