Timeline
The Candy Papers: Confectionery industry year in review 2017
Confectionery remains a growing industry in 2017.
Global confectionery retail sales are projected to rise +2.7% this year to reach $186bn, according to Euromonitor International.
Global confectionery
- $186bn retail value sales in 2017
- +2.7% versus 2016
Chocolate is propelling growth on the global stage with a +3.3% rise value sales forecast for the year. Sugar confectionery sales are also strong (+2.4%), while gum remains flat (+0.9%).
But in the first half (H1), non-chocolate was the growth driver in the world’s largest confectionery market, the US, according to IRI data.
Haribo Gold Bears, Starburst and Sour Patch Kids helped non-chocolate dollar sales grow +4.5%, while chocolate grew just +2.5% in the US in H1.
The biggest news of the year
A good year for…
It was a positive year for many confectionery players outside the big five of Mars, Mondelēz, Nestlé, Hershey and Ferrero.
Lindt continued to outdo the overall chocolate market with organic sales growth of +3.6% for the first half-year 2017, driven by its rising US presence.
Haribo is also growing rapidly in the US and announced plans to construct its first US factory.
Yildiz Holding’s pladis business recorded double-digit revenue growth in 2016 to reach TL 14.3bn ($3.5bn). It now hopes to make a big push in premium chocolate with Godiva by taking the brand into mainstream supermarkets.
Mondelēz in 2017
- -5% - drop in net revenues in H1
- $140m – estimated loss due to malware attack
- -8.5% revenue decline in North America in Q2
- -5.3% revenue decline in Europe in Q2
A tough year for…
But some major players had a harder time in 2017.
Nestlé’s confectionery division was its slowest growing business segment for the first nine-months of 2017.
Hershey is expecting full-year 2017 net sales growth of around +1.25%, below the +3.3% rise Euromonitor expects for the global chocolate confectionery industry this year.
Mondelēz reported a -13% drop in 2016 revenues at the turn of the year. It only returned to growth in Q3 2017 after sales declines continued in H1.
People on the move
The Oreo and Cadbury owner announced in August its CEO Irene Rosenfeld would retire. The company named Dirk Van de Put, the former president of McCain Foods, as her successor.
Ferrero was also in a period of transition following the death of Michele Ferrero, who died in February 2016 aged 89.
The company’s managing director for Central and Eastern Europe Lapo Civiletti become group CEO on September 1, 2017, as family member Giovanni Ferrero stepped aside as CEO to become group executive chairman.
There was another change at the top at Nestlé, which appointed CEO Mark Schneider from health care group Fresenius in January, prompting analysts to speculate Nestlé may quit confectionery in favor of better-for-you categories.
M&A: Ferrara becomes Ferrero
The Swiss group later said it was committed to global confectionery, but announced plans to sell its $900m US confectionery arm, which includes Butterfinger and Crunch, by the end of the year.
In biggest candy deal of the year, Ferrero shored up its position in US non-chocolate by acquiring the Ferrara Candy Company from private equity firm L Catterton.
There was further M&A activity among industry suppliers, including:
- Bühler Group acquiring Austrian equipment supplier Haas
- Cémoi snapping up US private label firm Chris Candies
- Barry Callebaut deals for US firm Gertrude Hawk Ingredients and Italian specialties business D’Orsogna Dolciaria
- Ecom’s deal to acquire German cocoa grinder Euromar
R&D and NPD
Confectionery become more experiential, personalized and texture-orientated in 2017.
Katjes’ 3D printed selfies were a big attraction at ISM – the world’s largest confectionery trade fair.
Hamburg-based startup Pechkeks snapped up the fair’s New Product Showcase prize for Misfortune Cookies. It calls the gothic-themed, jet black cookies, containing sardonic messages, the ‘dark twin of the fortune cookie’.
In the US, Hershey’s Reese’s Crunchers won National Confectioners Association’s Sweets & Snacks Expo 2017’s Best in Show Award. Mars’ M&M’s Caramel took the prize for best chocolate, while Jelly Belly’s Krispy Kreme Gift Box bagged the best non-chocolate innovation award.
Among the products set to enter the US, are Hershey’s Gold, Ferrero’s Tic Tac Gum as well as innovations from Mars Wrigley Confectionery such as Snickers Peanut Butter Crisper, Skittles Sweet Heat and Extra Chewy Mints.
In May, five US candy players - Mars-Wrigley, Nestlé USA, Ferrero, Lindt and Ferrara Candy - pledged for half of their individually-wrapped products to be 200 calories or less by 2022. They also committed to front of pack calorie labels for 90% of their best selling products by the same date.
The fourth estate of chocolate
Ruby joined milk, dark and white as the fourth variant of chocolate in September 2017. Creator Barry Callebaut – which launched the couverture in Shanghai - says the pinkish red chocolate with berry flavors is naturally colored from the ‘ruby cocoa bean’ and anticipates major brands will launch ruby SKUs to hit shelves in 2019.
Cocoa: Price crash and deforestation
Chocolate’s core commodity has previously been tied to extreme poverty and child labor, but in focus this year was its link to deforestation.
A report by NGO Mighty Earth in September alleged the chocolate industry’s “laissez-faire” approach to cocoa sourcing was responsible for vast swathes of forest loss in Côte d’Ivoire and Ghana, threatening endangered species
Major industry players came together with the Ghanaian and Ivorian governments two months later to sign the Cocoa & Forests Initiative, pledging not to source from certain protected areas.
Cocoa prices plunged to a four-year low on the London futures market in Q1.
Ivorian regulator Conseil Café Cacao (CCC) – which sets its prices against the London market – dropped its guaranteed minimum farm gate price per kg by -29% leading NGOs to warn already impoverished farmers may be worse off. CCC maintained the CFA 700 ($1.26) price for the 2017/18 main crop (1 October to 31 March).
It came as industry-led sustainability platform CocoaAction – featuring nine companies including Mars, Mondelēz and Hershey – reported baseline data for its first year of intervention.
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