Sweet market turns sour for smaller confectioners

By Catherine Boal

- Last updated on GMT

Related tags: Eu sugar regime, Confectionery, Food, Cost

Tough trading conditions in the confectionery industry have forced
UK group, Lees Foods, to look at ways of diversifying -
highlighting the tactics smaller sweet makers must adopt to ensure
their survival in an increasingly competitive market.

In its interim results, the Scottish macaroon and meringue maker posted a drop in profits from £346,021 (€513,995) to £228,783 (€339,844) despite a climb in sales from £6.74m (€10m) to £7.01m (€10.4m).

A disappointing showing in the confectionery market has now prompted the company to explore other profit-boosting tactics such as branching out into the catering sector with a possible move into hotels and restaurants.

Lees' chairman and managing director Raymond Miquel said: "To develop the business we have continued to introduce new products and open up new markets and this policy will continue. We would only acquire a company which could be profitable and give us the possibility of expanding in the food industry."

Lees blamed the fall in profits on the increased cost of rates, wages and energy which amounted to a total expense of £136,000 (€201,986).

Miquel said: "We have to absorb these additional costs as, due to the competitive nature of our business, it is difficult to increase prices to our customers."

Increasingly confectioners are struggling to compete when faced with rising manufacturing costs and retailers unwilling to pass on the expense by raising prices.

And things look set to worsen for producers in the fallout from the recent implementation of the new EU sugar regime.

Last week Cliff Luckhoo from the UK's Biscuit, Cake, Chocolate and Confectionery Association (BCCCA) told confectionerynews.com he feared an increase in sugar prices implemented by processor British Sugar would force costs down the chain, stopping at confectionery companies with little bargaining power.

Related topics: Markets

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