Global confectionery sector seeks a kick-start after ongoing supply challenges dent some international markets

There’s no getting away from the fact that the past couple of years in the wake of the Covid-19 pandemic have served up a significant raft of challenges for the confectionery, snacks and bakery sectors on an international level.

From rising ingredients costs within core cocoa and sugar markets, that has caused considerable global disruption, through to unstable conditions brought about by ongoing wars in Ukraine and Israel, which have brought about further supply chain instability that has placed many industries, including the wider food and drink sector under notable strain.

For businesses within the UK, there has also been the added pain of the impact of Brexit – which continues to be the ‘elephant in the room’ that no major political party has wanted to touch in all seriousness, such has been the comparative failure of the project to bring about any meaningful trading improvements for British firms.

The present Conservative administration – which if the polls of the past year are to be believed, are more likely than not anticipated to be heading for the exit door, had promised significant trade deals with the rest of the world to replace a reduction of trade with European counterparts. The harsh reality is that this has only happened to a limited degree.

So it remains to be seen whether an anticipated changing of the political guard will improve conditions for the raft of businesses that had enjoyed trading with the EU, and have all but given up due to the additional costs of trading with added paperwork, cost and logistics time that has rendered such trade non viable in many instances.

Conditions on the continent have also been comparatively tough – with Germany’s BDSI reporting that the chaos of the pandemic has given way to fresh major challenges of an energy crisis arising from the war in Ukraine that has placed great strain on the confectionery and snacks sectors that have traditionally been a real strength for the country.

Another indicator of how challenging events have been is the recent announcement from Barry Callebaut that it is set to make up to 2,500 redundancies in its global operations, as demand for premium products comes under pressure amid a cost of living crisis in many territories around the world, which has resulted in an atmosphere of caution. The Swiss-headquartered business struck an upbeat tone as it struck a major financing deal to ensure its future activities, which it believed would have a notable positive impact.

Despite such testing conditions, there appear some bright spots of hope, particularly with  larger players, as Confectionery Production reported with the likes of Lindt & Spungli making a €100 million investment into confectionery manufacturing facilities in Switzerland.

Another notably major development of the past week has been Koelnmesse’s plans for €3billion worth of investment in its international operations, which have been boosted by its new Confex conference facility capable of catering for shows of up to 6,000 people, which underlined Germany’s continuing strength in the events market, which had previously been hit so devastatingly during the pandemic.

As we’ve reported in recent months, it seems the US is continuing to pave the way for revival in the sector, with a number of companies in America confirming major investment in manufacturing facilities, including Ferrero and Mars Wrigley, as well as Hershey, which confirmed plans for opening its first new production site in 30 years which is anticipated to be completed this year. So, as we move further into 2024, there may well be some hope on the horizon after a testing time for many markets around the world.

Neill Barston, editor, Confectionery Production

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