Growth of emerging markets

Date: 21/07/2011

21 July 2011 – The high populations and increasing disposable incomes of Asia and South America have led to confectionery manufacturers aiming to increase their presence in fast growing emerging economies, in an effort to offset a slowdown in demand from developed markets, as shown by confectioners such as Thorntons, being forced to close their stores.

Recently, Nestle has spent €1.2bn for a majority stake in leading Chinese confectionery maker Hsu Fu Chi, and Barry Callebaut has signed a long term outsourcing agreement with Chocolates Turin, a leading Mexican Group.

Friedbert Klefenz, president of Bosch Packaging Technology and Solange Isidoro, vice president of Abicab (Brazilian association of manufacturers of chocolate, cocoa, peanuts, candy and byproducts) have also stressed the importance of emerging markets. “Bosch has invested in the expansion of several of its locations, notably in China and India,” comments Klefenz. “Production and consumption of confectionery in Brazil has increased in 2010 and is forecast to grow throughout 2011,” states Isidoro (see page 42).

Growth of confectionery is also being experienced in India, states a recent report from Euromonitor International.

Confectionery manufacturers are likely to continue to invest in emerging markets for the foreseeable future, either through new investments or via acquisitions. With the continuous increase in ingredients and transportation costs, it may be wise for manufacturers to consider the origin of their raw ingredients before choosing a location.