South African confectionery
26 July 2011 – South Africa has one of the largest and most well established confectionery markets on the African continent, notes a recent report by Leatherhead Food Research. Unlike many of the region’s other countries, South Africa has a sizeable market for chocolate confectionery, since income levels and therefore consumer spending tend to be higher than the regional average, whilst the country also has a fairly developed retail food industry.
The market also features a large number of western brands, owing to the presence of major confectionery multinationals such as Kraft/Cadbury and Nestlé, many of which manufacture domestically. Sales of confectionery in South Africa are also thought to have been aided by the football World Cup which took place there in 2010.
Value sales of confectionery in South Africa were worth ZAR10.44bn in 2010, a figure which has increased by more than 19% since 2006. The market’s largest sector is chocolate, which increased in size by 17.2% to ZAR5.27bn between 2006 and 2010. The chocolate sector accounts for a leading 50.5% of the overall market, a figure which has declined slightly from almost 52% in 2006. Sugar confectionery accounts for an additional 41% of total sales, with chewing gum making up the remaining 8%.
In volume terms, the South African confectionery market is dominated by the sugar confectionery sector. In 2010, volume sales of sugar confectionery were worth 104,000 tonnes, equivalent to almost 56% of the total market and up by 9.5% from levels in 2006. As is the case elsewhere in the African region, sugar confectionery is popular with large sections of the less affluent sections of society on account of its low price. The chocolate sector accounted for an additional 34% of total market volume in 2010, ahead of chewing gum (10%).
Per capita consumption of chocolate in South Africa amounted to 1.3 kg in 2010. Although low by standards in Western Europe and North America, it is thought to be considerably higher than many of the country’s African neighbours. At 2.1 kg, per capita consumption of sugar confectionery is slightly higher. Multinationals such as Kraft/Cadbury and Nestlé both manufacture confectionery domestically in South Africa, as a result of which the country is thought to be a major exporter.
The chocolate sector is dominated by bars and blocks, which account for over 40% of total market volume, ahead of boxed and bagged assortments (30%). South Africa also has a sizeable market for countlines, which are believed to account for up to half of overall market value, while the market also features chocolate novelties and selflines such as Smarties. In recent years, South African consumers have shown an increasing demand for chocolate packaged in bags, which are suitable for sharing occasions.
The sugar confectionery sector is dominated by marshmallows, which account for around a third of overall market volume. Other popular sweets in South African include gums and jellies, as well as mints, toffees and caramels.
There is also evidence that sugar free products are making headway in the market. In the chewing gum market, sugar free varieties account for a sizeable 95% of overall sales.
One of the market’s leading suppliers is Kraft Foods. Its recent acquisition of Cadbury has given the company around half of the South African chocolate market, plus ownership of a major production facility located at Port Elizabeth. Major Cadbury chocolate brands present in South Africa include Dairy Milk, Flake, Sweetie Pie, Crunchie, Milk Tray, Tumbles, Tempo and Caramello Bears, the latter of which is targeted at children. It also supplies the Dream and Bournville block chocolate brands, which compete in the white and dark chocolate sectors respectively. Owner Kraft had been present in South Africa prior to the Cadbury deal, and announced in 2011 that it was to purchase cocoa beans from West African farmers in order to convert the Dairy Milk brand to Fairtrade.
Cadbury also dominates the gum market, with a share in the region of 55%. The company supplies brands such as Dentyne, Stimorol and Clorets, and increased its share of the market in 2006 when it acquired Dan Products for £33m. Kraft/Cadbury also has a strong presence within the South African sugar confectionery market, where it produces Eclairs, Hall’s and Clorets, the latter two of which compete in the medicated sweets sector.
Another multinational present in the South African confectionery market is Nestlé, which accounts for approximately 15% of chocolate sector. The company supplies major countline and selfline brands such as KitKat, Bar One, Aero, Rolos and Smarties. The company is also present in the bars and blocks category, where its brands include Crunch, Classic and Milkybar white chocolate. In 2006, however, the company sold off its South African sugar confectionery business (which included brands such as Jelly Tots and Wilsons and had annual sales worth over ZAR100m) to Tiger Brands.
Cadbury’s main competitor in the chewing gum market is Wrigley, which accounts for over 30% of sales. The company, which is now owned by Mars, supplies brands such as Eclipse, PK, Orbit and Airwaves, and has recently announced plans to launch the 5 range of chewing gum in South Africa. Another Wrigley brand is Skittles, which competes in the sugar confectionery market. Mars, meanwhile, is present in the chocolate sector, where it supplies countline brands such as Snickers, Twix and Bounty. Confectionery is produced at the company’s site in Cape Town.
Perfetti Van Melle is also present in the South African confectionery market, accounting for around 5% of chewing gum sales. Another multinational is Ferrero, which has recently expanded its operations in South Africa. This included opening a new head office in Sandton, as well as a new manufacturing site near Johannesburg. Ferrero supplies brands such as Kinder chocolate and Tic Tac mints.
The market’s leading domestic supplier is Tiger Brands, which accounts for around a fifth of the chocolate sector and almost half of the sugar confectionery market. At around the same time it took control of Nestlé’s sugar confectionery business in South Africa, it also acquired Bromor Foods from Cadbury, in a deal worth ZAR1.16bn.
The company’s main confectionery brands include Beacon Slab chocolate, Anytime boxed and bagged chocolates, Superfine (a premium chocolate which was launched in 2006), Beacon Allsorts (leader of the liquorice sweets sector), Maynards gums and Sparkles bagged sweets.
South Africa also has a sizeable market for own label confectionery. The own label sector accounts for 6% of the chocolate sector, rising to almost 15% for sugar confectionery.
