Katjes International CFO: Sugar confectionery consumption in Europe may have reached its limits
The company - which is on the hunt for sugar confectionery acquisitions in Spain and Italy – expects sugar confectionery volume growth to remain static in Western Europe.
Per capita consumption peaks
Speaking to ConfectioneryNews at the trade fair ISM Cologne last month, Stephan Milde, CFO at Katjes International, said: “A lot of the markets in Europe are already mature, which means that if your population isn’t growing then the only other way to grow is if you increase the per capita consumption…
“Most of [the markets] have found a level where you’re seeing that per capita consumption doesn’t grow that much.
“And hence, if [the] population isn’t growing and per capita consumption isn’t growing, then markets are stable.”
Sugar confectionery consumption per capita in Western Europe was at 2.7 kg in 2016, having stood at 2.8 kg in 2012, according to Euromonitor International.
It is projected to remain at 2.7 kg per capita every year until 2021.
Germany: Highest birth rate in 33 years
Milde said the German sugar confectionery market was mature and poised for limited volume growth in the near future.
However, he said Germany’s recent birth rate spike would eventually help the sugar confectionery market pick up in the longer term.
The fertility rate in Germany rose to a 33-year high in 2015 (1.5 children per woman) after years of decline, according to the country’s statistics office.
Germany is Katjes' home market, where it is present mainly with its namesake brand in the gummies segment.
Milde expects some manufacturers in Germany’s sugar confectionery will up wholesale prices in response to rising raw material costs, which would help the segment’s sales by value to increase.
Retail value sales per capita in Western Europe’s sugar confectionery market are forecast for a 0.8% compound annual growth rate (CAGR) decline from 2012 to 2020, according to Euromonitor.
France: Katjes sees growth, but birth rate slows
France is another core market for Katjes International.
The company owns French business Lutti, which specializes in sour confectionery. “That’s also a growing segment,” said Milde.
He continued: “France is a market that, in our experience, has been growing in single digits. Last year maybe a little bit slower, but in general, it’s growing and the main reason is the population in France is growing a little bit faster than it is Germany.”
The French population increased 0.8% year-on-year in 2014, but slowed to 0.5% last year, according to World Bank data.
France’s birth rate fell to its lowest level in 40 years in 2016 - 1.93 children per woman - as the population’s average age hit 41.2, data from the country’s statistical office (INSEE) and the CIA World Factbook shows.
Katjes acquisition shopping in Spain and Italy
The Katjes International CFO said the company was eyeing acquisitions to expand its reach in Europe.
“Clearly, white spaces for us are Italy and Spain,” said Milde.
“Hopefully, there will be one in the next couple of years, hopefully sooner, so we can also enter those markets.”
The CFO added: “We don’t want to stray away from our focus and that’s sugar confectionery. Those companies don’t need to be 100% sugar [confectionery]…but they should have at least a focus, let’s say 50% of the business on sugar confectionery.”
Katjes International secured a €60m ($67m) investment from a corporate bond in 2015, partly to help bankroll acquisitions.
It later snapped up Netherlands licorice maker Festivaldi – owner of the Harlekijntjes brand – and secured perpetual rights from Proctor & Gamble to sell and distribute Vicks cough drops in Europe and Russia.
Katjes’ namesake brand had a 1.2% brand share in Western Europe’s sugar confectionery market last year, while its Lutti brand held a 0.6% share, according to Euromonitor.
Katjes other main brands include Happy Mix, Granini and Gletschereis.