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Disruption in the candy market

  • Global confectionery market
  • Changes in the market dynamics of the candy industry
  • The future of candies

 

‘Candy’ is an all-time favourite among most throughout the world, especially during the festive season consumers indulge in their craving for candies as an additional dessert delight. The global candy is also called confectionery, its market has three major segments: chocolate confectionery, non-chocolate or sugar confectionery and gums. The chocolate candies contain cocoa or chocolate-based products, which includes chocolate bars, moulded chocolates, chocolates covered bars/candies, etc. The sugar candies include boiled candies, lollipops, pastilles, liquorice, jellies, chew toffees, caramels, mint, etc. Moreover, gum covers all types of bubble gums, chewing gums and dental gums. 

According to the Euromonitor International, the global market size of the confectionery is currently valued at US$194 billion and is dominated by Europe, which is followed by Asia-Pacific. A growing population, incessant increase in disposable incomes and spending capacity, growing urbanisation and changing consumer behaviours and preferences are prime facets that are influencing and driving the global candy market. According to the Allied Market Research, the worldwide confectionery sale is expected to reach US$232 billion by 2022, this will grow at 3.4% CAGR. The Asia-Pacific region would exhibit the highest growth rate during the same period, with a CAGR of 3.6%. Candies are most popular among kids and they are the major target consumers for the candy makers. But there is also a growing demand from the young population. According to the USDA Economic Research Service, millennial households devote more of their at-home food spending on candies across income levels than the older generation. A widening target consumer base and a rising trend of gifting confectionery items, product innovations to bolster changing consumer tastes and dietary habits are further driving the demand. According to the Euromonitor International, globally, the per capita consumption will reach one  kilogram of sugar candies and chocolate confectionery each in the year 2018. In Europe, the per capita consumption of confectionery is nearly more than seven kilograms, whereas in the US the candy consumption will go beyond three kilograms per person in 2018. Furthermore, many Americans consume candies more than two or three days in a week, averaging 40 calories per day.

Changing market dynamics

  • Focus on health caused a shift towards healthier ingredients: the rising health concern for diseases like diabetes, obesity and related ailments are forcing consumers to change their lifestyle as well as to reduce the sugar intake. A high sugar content results in severe health issues and is a major concern among consumers, which has propelled candy makers to reduce sugar or use sugar replacer and natural sweeteners in their products. Hence, product innovation was imperative for sustainable growth. Further, governments world over are also coming up with policies to prevent rising health concerns. For instance, the UK government’s sugar reduction programme, which set out a goal to cut down 20% of sugar in food by 2020. The British government also announced a sugar tax on soft drinks in 2018 and the candy industry may be slammed in the future as per industry experts. Addedly, people have started paying attention to the ingredients in candies. According to the Nielsen data, 45% of the global consumers prefer a product which contains natural ingredients, this is followed by a preference for no artificial colouring (44%), no GMOs (Genetically Modified Organism [43%]) and no artificial flavours (42%). Thus, candy manufacturers have to come up with a healthier solution like sugar-free, low calorie, functional or natural sugar ingredients in candies. As per the American Sugar Alliance, currently, the sugar cost has reduced to less than 1% in candy bars’ vis-à-vis 4% in the 1980s.
  • New pack strategies by candy makers: health focus of consumer not only fostered a paradigm shift in the ingredients, but also in the packet size. Candy makers have started adopting new packing strategies with convenient packs such as a smaller size of candies as calorie packs or multipacks or flexible packs. The small healthier size of candies, with reduced calories, have gained preference among consumers. The world’s top candy manufacturers; Mars, Ferrero, Nestle and Lindt came up with a five-year target in 2017 to keep half of their confectioneries containing 200 or fewer calories range. They would also achieve printing of calories in front of packs for 90% of their confections by 2022. These companies have gained faster growth in low-calorie confectionery segment than the conventional confectionery makers. The innovative packaging which distinguishes products by its unique wrappings, like the 3D wrapping or having a QR code on the label for an online game or contest to engage buyers offers a great opportunity to attract consumers.
  • Product innovation both in the premium and the healthy offerings: candy makers are investing in R&D of products in order to provide unique innovations for indulgence, especially for young generation and making it fancier through exotic ingredients like quinoa and chilli, natural and organic ingredients, non-GMO, vegan with no gluten and devoid of refined sugar, without changing nutritional values. The functional candy or super candy is also gaining popularity across the globe. It is enriched with supplements with extra nutrients like vitamins, minerals, calcium, turmeric, etc., candy provides the best solution for both quelling of sweet craving and added health benefits.  Green tea chocolates, wasabi marshmallows, pickle candies, kiwi and celery gummies, energy chews are just a few names in the list of candies, which satiate adventurous taste buds of consumers.
  • Distribution and retail market expansion: confectionery items are mostly sold through various channels like supermarkets, convenience stores and grocery stores. The consumer base is growing for the candy industry amid urbanisation, economic growth and increase in disposable incomes. The low tier cities and rural area have a greater market potential due to the expansion of better retailing infrastructure availability now. These distributors and retail stores also act as a global marketing tool for candy makers, which are increasing their brand awareness among consumers of confectionery products.
  • Innovative marketing strategies: some candy companies are bringing a whole new marketing strategy for their products. They accentuate indulgence through the promotion of stories behind products like a bean to bar, farm to table, 70% cocoa and cereal in breakfast (bar) to encourage guilt-free buying idea and convey that buying these products are good for the world rather than emphasising on calories or sugar content. They are redefining food as an experience and are attempting to reduce the guilt associated with the consumption of sweets. Some candy start-ups are promoting their products specifically for occasions like weddings, success cocktail parties and baby showers with specific packaging and flavours.  

Future of candy

According to the IBIS World, currently, around 13,600 business are active within the confectionery market worldwide and are collectively responsible for the direct employment of over 450,000 people. The industry will benefit from the demand emerging from markets like India, Philippines and Chile. The growth is expected to be faster among these three countries or about 3.5x faster than the rest of the world by 2023 (Source: Euromonitor International), with chocolate consumption volume of around 25 million metric tons worldwide. This is due to a low base for emerging market as Europe and the USA, which make up ~ 50% of the worldwide consumption will reach a saturation level, Indians eat about just 0.1 kilogram per capita or 10x less chocolate.

Televisory believe that innovation will continue to dominate products, which can satisfy the consumers’ liking for sweets with added health benefits. New product ideas like inclusion of juices and vegetables to provide vitamins, inclusion of exotic flavours like sour cherry, black raspberry, acai, alphonso mango, senga strawberry, fusions of flavours like chocolates with spices or peppers, superfruit with dark chocolate, combination of sweet and savoury nuances or adding alcohol like vanilla rum or spirits infused chocolates are on a rise. The involvement of biotech advances could also transform candy in the future. Top candy makers are researching and rolling out new molecular formulas for new type of sweeteners like monk fruit extract which is 150x sweeter than sugar, plant extract Stevia sweetener which is 200x sweeter than sugar, Mushroom molecules to create bitterness blocker which help food taste sweeter resulting sugar reduction of more than 40% in product, hollowed sugar structure which tastes the same but has fewer calorie (Source: CB insights).

The global confectionery sale is poised for sustainable growth in the coming years and the future looks promising for the candy makers. Pricing pressure for key ingredients’ cocoa, sugar and dairy product may be a challenge. However, the demand arising from both young generation and untapped areas and product innovation will assimilate a wellness-focused world that could ensure a headway in the foreseeable future.

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