Industry update: sweets sector looks to export for growth

With the confectionery market in Australia reaching saturation, growth is, and will continue to be, dependent on product innovation, differentiation and export.

In the period 2007-08 the confectionery manufacturing industry is expected to grow 2.8%, equivalent to a total sales revenue of $2312 million.

In a segment where over 70% of sales are the result of impulse, an increase in low-fat chocolate varieties, sugarless sweets and functional confectionery in particular is fuelling this growth, while line extensions have proven to be a popular method of igniting new interest in existing products.

Packaging innovation has also contributed to industry growth, including the reconfiguration of packaging sizes and formats, for example the economical multipacks available in supermarkets.

Comprising 62% of total confectionery sales, chocolate continues to be the confectionery sector’s major product category, followed by sugar confectionery comprising 29% of total sales volume.

IbisWorld reveal that approximately 40% of total chocolate sold is chocolate bars, with the top three sellers being Mars Bar, Kit Kat and Cherry Ripe.

While gum is currently the smallest product segment, generating approximately 9% of total industry sales, consumers spend approximately $162 million each year on sugar-free gum, highlighting increasing health concerns tied to sugar intake.

Focus on health

Increased health concerns have been countered in recent years by evidence that antioxidant-rich chocolate, particularly dark chocolate, has some health benefits.

Manufacturers have also responded to consumers’ health concerns by extending product lines to include reduced-fat or sugar-free products.

Despite increased health awareness, and continued growth in the organic and sugar-free confectionery segments, an increasing number of consumers are turning to premium chocolate brands as the quality of the raw ingredients takes precedence and an increase in disposable income makes specialty, imported chocolates more attractive than mainstream products.

Impact of globalisation

Globalisation is of particular interest to the confectionery segment, with imports comprising approximately 20% of the domestic market and being valued at $548 million.

Retailers are also increasingly looking to foreign suppliers in an effort to obtain cheaper products, placing pressure on Australian manufacturers as they compete with cheaper imports from countries like China.

However, Australian manufacturers are also seeking growth through export opportunities in Asia, with close geographic proximity and Asians’ rising disposable incomes making them attractive export targets.

One of the biggest factors threatening the industry’s future growth is the current push by Australian supermarkets to expand their range of private-label products.

Subscription

If you would like to receive FOOD Magazine’s weekly e-newsletter, subscribe here.

If you would like to receive FOOD Magazine, subscribe here.

Leave a Reply

Your email address will not be published. Required fields are marked *