Michal Meissner joined California-based Jelly Belly as vice president of international sales in January from household cleaning products firm Summit Brands, following a stint as Mars’ head of sales in Russia.
‘China is one of the priority markets for anybody’
Speaking to ConfectioneryNews at the International Sweets and Biscuits Fair (ISM) in Cologne last month, he pinpointed Jelly Belly’s priority overseas markets. “For us it is mostly large countries with a larger disposable income because with a premium sugar confectionery – a gourmet bean – we do have to target more affluent, larger markets so it makes economic sense. China is one of the priority markets for anybody.”
Jelly Belly operates a sales office in Shanghai and its only manufacturing facility outside the US is based nearby in Thailand.
Chinese sugar confectionery retail value sales are forecast to grow ahead of the world market in the next five years, according to Euromonitor International.
‘1.7bn people have a lot of weddings’
“Gifting is huge in China. If you go to China and look at the retail, the majority of confectionery is gifting,” said Meissner.
He said the company was making inroads at events where consumers would conventionally first look to chocolate. “Weddings are big. 1.7bn people have a lot of weddings and they like the variety and the color of Jelly Belly for the event.”
Jelly Belly has also introduced flavors to cater to Chinese tastes such as green tea and lychee jelly beans.
Meissner added that international retailers such as Carrefour and Walmart were growing their presence in China. But he said existing retail relationships would not necessarily win Jelly Belly listings in the country. “It’s quite often separate. So it’s not automatic that your listing in Walmart USA will get you to Walmart China– it’s a local buyer decision.”
Country Insights: China's sugar confectionery market
Retail value sales in the overall Chinese sugar confectionery market stood at $9.5bn in 2014. The segment is expected to register a compound annual growth rate (CAGR) of 6.7% up to 2019 - 1.2% faster than the world market. Nestlé leads the Chinese sugar confectionery market through its majority stake in the Hsu Fu Chi brand with a 5% share. The second bestselling brand is Perfetti Van Melle’s Alpenliebe (4% market share) followed by Fujian Yake Food’s Yake brand (2.8%).
Source: Euromonitor International
All companies on standby in Russia
What about Latin America?
Jelly Belly international sales head Michal Meissner said that many Latin American countries had their own very competitive confectionery production with some markets such as Brazil imposing high taxes and duties on imports. “Our strongest growth will be in Mexico, so in all Latin America, Mexico will be the target,” he said.
Jelly Belly has no plans to set up additional sales offices overseas. It sees potential in Russia, but is wary of economic instability.
“Russia is a huge confectionery market – it’s not just big – it’s huge. It’s always been on the top list for any confectionery manufacturer,” said Meissner.
But he warned that purchasing in power in Russia had been hit by a depreciating rouble and price declines in oil and natural gas, resources crucial to Russia’s economy.
“In the current economic and political situation in Russia, I think all companies are on standby to see how this is going to evolve. The situation in Russia is more severe than in the last 25 years.”
He said the Russian rouble depreciated about 50% in 1998, which brought Russian economy to its knees for three years before it recovered. “This situation today is much more serious. It’s a political leadership crisis and we don’t know how it’s going to be revolved,” said Meissner.
Country Insights: Russia’s sugar confectionery market
Retail value sales in the Russian sugar confectionery market amounted to $2.3bn in 2014. The Russian sector is expected to grow below the world market (+5.5) at a CAGR of 2.5% up to 2019. The top three brands respectively are Perfetti Van Melle’s Chupa Chups, United Confectioners’ Rot Front and the namesake brand of Roshen, a firm owned by Ukrainian president Petro Poroshenko.
Source: Euromonitor International
We asked what would need to happen for Jelly Belly to expand further in Russia. “They have to stabilize the currency to a level where there is still some purchasing power. For everybody, it’s a major issue,” said the export chief.
Meissner said his former employer Mars faced similar issues even though it had manufacturing in Russia and local sourcing. “What’s very interesting about the former Soviet Union and Russia is that they never fully developed agriculture, so it’s very difficult to source milk in Russia, they just don’t have enough cows so a lot of stuff comes outside of the border.”
He continued: “Most of the plants that were producing chocolate in the former Soviet Union were based in today’s Russia and most of the plants that were producing sugar are in Ukraine, so technically Russia by itself has a real shortage of sugar products. “
He said that most sugar products were coming from the Ukraine in a tradeoff for Russian chocolate – a deal disputed by conflict in Ukraine.
Beanboozled & the power of YouTube
Jelly Belly’s Beanboozled brand – which combines conventional flavors with surprising ones like vomit – is among the company’s platforms for international growth. The product was launched four years ago but has risen in popularity through consumer uploaded YouTube videos. “It’s broken cultural barrier. It’s not only the Unites States - you see people doing it in Europe, you see it in Asia and in countries where maybe they don’t even know what Jelly Belly is,” said Meissner. “There’s nothing a manufacturer can do to get this kind of result even if they try to fake it – it’s the consumer who does it.”
Impulse in Europe
Jelly Belly also sees further room for growth in developed markets. “For Jelly Belly we still have work to do in Europe in Germany,” said Meissner.
Jelly Belly operates a sales office in Hamburg, Germany.
Meissner said: “There’s still places and stores where we’re not present and this next step is going to a little bit more mainstream. You look at the impulse business, which Jelly Belly hasn’t explored so much yet. There’s definitely a lot of room to grow.”