Product premiumisation and the sourcing of organic and ethical products will drive industry growth.
Melbourne, Australia (PRWEB) October 22, 2013
The Australian Chocolate and Confectionery Manufacturing industry has remained fairly resilient over the past five years despite a recessive economy, falling disposable incomes, volatile commodity prices and increasing import competition. The advent of the health-conscious consumer has required producers to be innovative with their product lines and adapt them to changing consumer trends. IBISWorld industry analyst Kosta Lev states “chocolate producers have been focusing their efforts on premiumisation, particularly with new product introductions and associated marketing strategies.” Consumers, especially in the developed world, have looked to trade up to more luxury food products with indulgences in higher priced products and premium brands. Over the five years through 2013-14, industry revenue is estimated to increase at an annualised 1.0%. Revenue is forecast to decline by 1.9% in 2013-14 to reach $6.2 billion, due to a temporary slump in demand.
The high level of value addition during the production process has enabled the industry's major players to maintain high profit margins and perform well despite recessive economic conditions. The high brand and customer loyalty commanded by the major players has also contributed to high profit margins and sales. According to Lev, “the organic and fair trade segment has been the standout performer in the industry during the past five years, driven by consumer preferences for ethical and sustainable methods of production.” As economic conditions improve, IBISWorld expects sustained consumption of chocolate and confectionery. Consumers tend to indulge themselves with inexpensive, feel-good luxuries such as chocolate and confectionery in an attempt to ease more pressing concerns (such as debt repayments). Strong brand loyalty, product innovations and aggressive marketing strategies will drive growth as the economy grows from strength to strength following the global financial turmoil. A potential impediment to the industry's future growth is the introduction of greater regulatory constraints in relation to product labelling and food safety, particularly when marketing to children.
The Chocolate and Confectionary Manufacturing industry is characterised by a moderate level of market share concentration, bordering on high. Although the industry has a number of small to medium-size operators, the majority of its revenue is generated by the major players, Mondelez Australia (Cadbury), Nestle Australia and Mars Australia. This concentration of ownership is a result of an increase in acquisitions and organic growth for the major players through continued product innovation, strong brand loyalty and aggressive marketing. Concentration also varies between product segments. Chocolate production is dominated by a few foreign-owned firms, including Cadbury, Nestle and Mars. Sugar confectionery and gum production, however, is more fragmented and therefore less concentrated. For more information, visit IBISWorld’s Chocolate and Confectionery Manufacturing report in Australia industry page.
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IBISWorld industry Report Key Topics
Establishments in this industry primarily manufacture confectionery, chocolate or cocoa products, with or without sugar. Chocolate is produced from roasted ground cacao beans that are combined with other ingredients like milk and sugar. Cocoa is a powder produced from cocoa seeds that have been roasted, shelled and ground. Sugar confectionery is produced by boiling, crystallising and moulding sugar or molasses into solid pieces that are usually coloured or flavoured.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
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Technology & Systems
Regulation & Policy
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