The top five companies in the confectionery industry – Mars, Mondelēz, Nestlé, Hershey and Ferrero - command around 50% of the global market, but Carle&Montanari-OPM says there is still room for smaller players.
Rise of the craft confectioner
John Hrivnak, sales director at the company’s US division, said: “We’re seeing more of them. It’s crazy.”
“My generation grew up with big producers; with big brands mass producing thousands of pounds an hour, 24 hours a day. Younger generations now want individually wrapped pieces for convenience in a pouch to throw in a back-pack. The mind-set now is complete diversity. Even the biggest brands have 10 versions of that brand.”
He said this had created opportunities for craft producers of premium confectionery. “Think of the craft beer industry - all the giant breweries are having declining sales and they’re losing out to hundreds of craft breweries opening up.”
However, Hrivnak said these smaller companies needed to make sensible investments in processing equipment or else risk bankruptcy within a few years.
“I have seen a couple of customers at the very beginning buy a larger capacity set of equipment, thinking that over five years they will surely grow into it – sometimes they don’t.”
He said companies could fall into the trap of buying equipment to cater for big supermarket orders when they still only had distribution in smaller retailers, leaving them with equipment to produce fast and cheaply, which was sometimes a mismatch for their existing premium retail customers.
“It’s prudent to start out on a small enough scale that you can try some things, stumble fail and shift and eventually grow when the market demands scale.”
Hrivnak said once companies started to have proven champion brands, they could look to larger-scale equipment.
“Don’t overybuy for five years from now. Buy something that starts small but is expandable and let your market and your profit allow you to invest in the next stage.”
He said very small scale equipment was unlikely to scale up, but once companies had an established market they could start with a scalable depositing machine, for example, that would allow them to make a variety of bars and tablets and eventually make additions to move to an automated molding plant.
“He could start out depositing two or three hours a day and deposit on sheets for example and stack the sheets, then at another time in the day he could run them through a cooler, then maybe at the end of the day in several stages he’s made 500lb of some product. That’s how most people start, batch unit operations that are not coupled together.”
Moving to automation ‘lego-style’
He said the company may then want to automate the depositor directly to a cooling tunnel.
“You can start out with a depositor running only five molds a minute and you could end up with a completely automated line at up to 25 molds a minute.”
He said a company may then look to automatic demolding instead of hammering out the product by hand.
“A plant like this that’s lego style; that’s expandable unit by unit and expandable in speed, would give a smaller guy everything he would want...But I wouldn’t start investing $700,000 in plant until I’ve proven that my product will sell.”