As the economy recovers, the growing trend toward premiumization will boost revenue growth
Los Angeles, CA (PRWEB) December 16, 2012
Over the past five years, the Global Candy and Chocolate Manufacturing industry has been resilient to the wave of health-consciousness that has swept through developed nations, causing consumers to be wary of sugar-rich foods, including candy and chocolate. “Industry firms have been successful in developing new products that appeal to health-conscious consumers, keeping demand buoyant,” says IBISWorld industry analyst Olivia Tang. “The industry even stayed strong amid low consumer spending in a distressed global economy.” Although candy and chocolate are considered discretionary goods, consumers saw these products as a small, inexpensive treat to provide temporary escape from financial difficulties and other struggles that paralleled the difficult economic period. As the economy recovers, consumers will gain more disposable income and increase spending on industry goods, especially premium chocolates, which are anticipated to facilitate a 1.3% revenue boost in 2012. As a result of these factors, revenue is expected to rise at an annualized rate of 2.0% to $117.6 billion during the five years to 2012.
While revenue grew steadily over the past five years, profit was volatile due to fluctuating commodity costs. Sugar and cocoa, the Global Candy and Chocolate Manufacturing industry's most basic inputs, experienced double-digit spikes each year for most of the period. For the most part, “major companies were able to pass on cost increases more effectively than smaller firms due to higher brand loyalty,” Tang says. “Even for these firms, though, the recession made it difficult to fully pass on these costs to customers, and profit was squeezed through 2009.” In response, manufacturers have invested in more technology to improve operational efficiencies, reducing dependence on labor. Major companies like Kraft Foods Inc., Mars Inc., Nestle SA, Ferrero SPA and The Hershey Company wield significant power in the global market and have the ability to dictate direction and trends. However, the industry has a vast number of niche, small- to medium-size players (especially in Europe) that are still able to operate globally. In 2012, for instance, about 9,788 establishments are expected to be involved in cocoa, chocolate or sugar confectionery manufacturing globally.
In the next five years, global economic conditions are forecast to continue improving, allowing consumers in both developed and developing countries to afford more confectioneries, notably higher-margin premium chocolates. Producers will benefit from the projected surge in per capita consumption of candy and chocolate in developing countries like China and Russia, while also continuing to introduce new products to saturated markets like North America and Europe. To drive demand in these mature markets, firms will develop healthy products and new flavors to reignite demand. For more information, visit IBISWorld’s Global Candy and Chocolate Manufacturing industry report page.
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IBISWorld industry Report Key Topics
Firms in the Global Candy & Chocolate Manufacturing industry purchase and process sugar, cocoa, cornstarch, nuts, fruits, emulsifiers and flavorings as inputs for chocolate and confectionary production. Final products include chocolates, chewing gum, hard candies, marshmallows, toffee, gummies among others, which are then sold to downstream wholesalers and retailers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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