What’s in store for 2018?
Katie Smith looks at what’s in store for the confectionery industry in 2018. While the quest for more natural products will continue, uncertainty around Brexit negotiations is likely to have an impact on investment plans.
While last year saw the end of EU sugar production quotas and uncertainty around Brexit negotiations, this year could see a somewhat bigger drive towards sustainability in terms of waste reduction and the rise of clean label.
Confectionery consultant Graham Godfrey believes this ‘Brexit uncertainty’ is going to have an impact on business plans. “I think investment will be held back not only because of ‘internal’ uncertainty, but also because the UK economy will start to suffer, and with it at the very least, disposable income,” he explains. “The collapse in the value of the pound is going to start to drive inflation, particularly where products are heavily reliant on imported ingredients, which is virtually all confectionery.”
This uncertainty, Godfrey believes, will limit opportunities for many confectionery companies. “Everything is going to stall because of uncertainty, including the chance of a change of UK government resulting in major economic change,” he adds. “I don’t think the cheaper pound is going to have a large effect because European companies will become increasingly disconnected from the UK marketplace and suppliers.”
However, confectionery consultant Andy Baxendale notes that while Brexit uncertainty continues to make ingredients more expensive, UK products have become cheaper for export markets. “Sugar tax could be a burden if imposed on confectionery,” he notes, adding, “This needs to be countered by strong representation from the industry to drive for better education at all levels and to reinforce the importance of balanced diets, including treats.”
Indeed, Marcia Mogelonsky, global confectionery analyst at Mintel, notes, “Of course, in confectionery a big issue will continue to be sugar and whether confectionery can retain its ‘permissibility’ as a sugary ‘treat’ for occasional consumption.”
A trend in the industry last year was the rise of clean label ingredients, with this set to continue in 2018. “Clean labels will continue to be big as consumers want more and more to know that the foods they eat are healthy. Growth in vegan/vegetarian sweets, for example, no animal gelatin, as well as natural – no artificial flavours or colourings – are also still important,” Mogelonsky explains.
Indeed, the quest for more natural products will continue together with clean label products, according to Baxendale. “We will see an increase in free from products, for example, gluten- free, gelatin-free and allergen-free among others.”
He adds, “Sustainability and ethical trading will continue to be important factors in the confectionery industry. Sustainability in terms of waste reduction and reuse was a major topic for big manufacturers in 2017 and it will remain so throughout 2018.”
In terms of sustainable packaging, Baxendale says plastic-based packaging for confectionery will come into the spotlight and prompt calls for either biodegradable or non-plastic alternatives. “Fluctuating oil prices will have an effect on film prices again, which has been prompted by growing political instability in certain areas,” he tells Confectionery Production.
Price is equally important for companies looking to upgrade their equipment. “Prices from European manufacturers need to compete with growing markets in China and India,” Baxendale adds. “There is a constant search among confectionery manufacturers for efficiency gains from their equipment – how far can this be taken? Will this effect jobs if machines/automation can replace staff to an even greater extent?”
Overall, Godfrey believes small companies will try to survive on novelty, but will find lower disposable income against market growth. “Large companies will continue to focus solely on cost reduction and the larger retailers will pressurise suppliers in order to hold market share in competition from Aldi and Lidl, who will continue to grow aggressively,” he concludes.