Its report, ‘Opportunities in the Global Confectionery Sector’, May 2017, claims the global confectionery sector, valued at $156.4bn in 2016, is dominated by Western Europe (29.6%) led by growth in Asia- Pacific and Eastern Europe regions.
Rashmi Mahajan, associate project manager, Global Data’s consumer insights division, said Asia-Pacific is forecast to record the fastest CAGR of 7.2% during 2016–2021 and surpass North America to become the second largest market globally by 2021.
“Given that confectionery purchase is often impulsive-driven by the desire for an indulgent treat, demand is likely to remain strong in the coming years,” she added.
“The increasingly hectic and busy lifestyles of consumers means they are turning to indulgent confectionery products as a way to relax and unwind on a regular basis.”
According to the report, the US will continue to lead the global confectionery sector, while China is forecast to record the fastest growth globally during 2016–2021.
Russia is set to emerge as the fastest-growing market for confectionery in the Eastern European region with a CAGR of 5.5% during 2016–2021.
Brazil represented the largest market in Latin America, accounting for 74.1% of total value sales, while Saudi Arabia represented the largest market with 33.6% value share in the Middle East & Africa region.
“To curtail empty calorie intake from high sugar consumption in confectionery, major players such as Ferrero, Nestlé, Mars, and Mondelez have pledged to keep calories under 200 in individually wrapped candies by 2022,” said Mahajan.
“With global demand set to grow, manufacturers are focusing on expanding the global reach of popular local brands. For example, Nestlé voiced plans to globalize its ‘Baci Perugina’ range of Premium Italian Chocolate, while simultaneously introducing ‘Damak’, a Turkish Chocolate brand, into the US.
“A desire for products with functional benefits should prompt manufacturers to develop confectionery with vegetables for a healthier halo and broaden appeal as an anytime snack. Using ingredients of specific origin such as ‘Himalayan sea salt’ will allow premium positioning of confectionery products.
“Additionally, preference for ‘certified’ chocolate has led major players such as Ferrero to pledge to double its sourcing of ‘Fairtrade’ cocoa by 2020.
“Clean labeling will become more holistic to include the complete supply chain as demand for transparency grows. The scheduled changes to the nutritional facts labeling as directed by the EU (effective December 2016) and the US FDA (effective July 2018) will force manufacturers to reduce added sugars to make their products more label-friendly.”
The report states confectionery products with Health & Wellness attributes accounted for 15.8% of the overall global sector sales in 2016, a slight increase over 15.7% in 2011.
‘Free From’ represented the most prominent Health & Wellness product attribute across all regions while ‘Health Management’ was the most common benefit demanded by consumers across all regions.
Mondelēz emerged as the leading global player, owning three (Dairy Milk, Trident, and Milka) of the top four confectionery brands in a highly fragmented global market, where the top four brands accounted for a combined value share of 5.6% in 2016.
The overall market share for private label products in the global confectionery sector stood at 4.3% by value as of 2016, an increase from 4% in 2011. Western Europe had the highest market share for private label products with 8.3% of total confectionery sales in 2016, followed by Eastern Europe with a market share of 3.9%.
Hypermarkets & Supermarkets was the leading distribution channel for the global confectionery sector, with a value share of 42.3% in 2016, followed by convenience stores with a 30.4% share.
Hypermarkets and supermarkets channel sales led the distribution of confectionery in Middle East & Africa, Western Europe, Eastern Europe, and North America while convenience stores channel sales led in Asia-Pacific and Latin America.
Flexible packaging was the most commonly used packaging material in the confectionery sector, accounting for 75.9% of the volume share in 2016. Bag/sachet was the most commonly used container type, accounting for a 30.6% share in 2016. This was followed by film containers, which accounted for a 28.9% share.
“The push for ‘better-for-you’, premium confectionery is driving manufacturers to pair chocolate with decadent ingredients such as dry fruits, nuts, mango, fig, and vanilla. In line with the growing health trend, manufacturers are going back to the roots and using ancient grains such as quinoa, chia seeds, and licorice to add new texture to products to create healthier consumption experiences,” added Mahajan.
“The highly fragmented nature of the global confectionery sector has persuaded manufacturers to push the envelope to create products appealing to a wider audience. As a result, there has been a rise in products with ‘vegan-friendly’, ‘gluten-free’, and ‘no-GMO’ claims. Health & Wellness claims such as ‘free from’ and ‘organic’ are appealing to consumers looking for healthy indulgence.
“Clean labels have become a global standard as consumers demand more transparency, simplicity, and healthy attributes in food products. The emphasis on clean label has prompted manufacturers to focus on ‘natural’ ingredients.
“For instance, Nestlé is reported to have eliminated artificial colors and flavors from its ‘crunch’ and ‘butterfingers’ brands, while Mars has pledged to eliminate artificial colors by 2021.”
She said a growing desire for convenience has led to demand for easy to store and resealable packs. Brands are also entering proprietary licensing agreements to create exciting, visually appealing packaging for movie launches, allowing them to stand out in the crowded marketplace.
Rising awareness of the ecological distress caused by packaging waste will drive demand for environment-friendly packaging. Manufacturers will look to package candies and chocolate in larger bags or tubs for sharing (e.g. M&M's) and develop larger versions of products to enable consumers to share them during social occasions.
“This rising preference for ‘better-for-you’ snack choices is impacting the revenues of leading players, who are either shifting away from confectionery or reducing product prices (such as Mondelez) to offset losses,” added Mahajan.
“When Hershey registered a fall in sales in 2015 for the first time in more than a decade, it expanded into the snacks sector with the acquisition of Krave Pure Foods (2015) and launch of SoFit (2016).
“The new nutrition facts label requires manufacturers to declare the amount of ‘added sugars’ in a product and provide the percentage of daily value intake of each ingredient, to help consumers make informed choices.
“The major challenge for leading brands is to reduce sugar while maintaining the same taste and texture. For example, when ‘Cadbury Highlights Milk Chocolate with no added sugar’ was introduced few years ago, the product could not make an impact in the market as consumers did not like the taste.”