Hopes for growth in the South American confectionery market

Confectionery has an especially distinguished history in South America, though challenging economic conditions have affected some of its markets. Neill Barston reports

The South American chocolate and confectionery market has long been regarded as offering among the most innovative ranges within the global industry.

However, with challenging economic conditions of the past few years affecting the region, particularly within Brazil, domestic demand for confectionery has remained consistent with falling disposable income levels, according to research from Euromonitor International over the past couple of years.

The research organisation said that sales within the region had declined between 2010-2017, especially within sugar confectionery. This has also been impacted as consumer awareness has grown on development of healthier options.

In spite of such factors, ABICAB, the Brazilian chocolates, peanuts and candies manufacturers association), reported encouraging signs for the region’s global prospects within the industry.
According to the group, Brazilian confectionery and snacks exports increased by 7.14% in the first half of this year, reaching $255.1 million. The organisation said the increase confirms the trend that started last year, when exports reported a strong growth of 19.4% compared to 2016.

This trend for export growth is predicted to increase even further, according studies by Brasil Sweets and Snacks, an export project created in partnership by the Brazilian chocolates, peanuts and candies manufacturers association (ABICAB) and the Brazilian Trade and Investment Promotion Agency (Apex-Brasil).

In the first six months of 2018, exports of typical Brazilian sweets – made from peanuts, such as paçoca and pé de moleque – in addition to the traditional doce de leite (made with milk and sugar), cereal bars and chocolate presented a more expressive increase.

Exports of typically Brazilian sweets also reportedly grew by a figure of 9.9% in the first quarter, cereal bars grew by 5.8% and chocolate, by 2.7%, compared to the same period last year.
“In recent years, the Brazilian confectionery industry has been investing heavily in automation and technology and is reaping the results,” said Ubiracy Fonseca, president of ABICAB.
Meanwhile, CEO of Mondelēz International, Dirk Van de Put, explained that while there was a degree of market instability due to a number of factors including political issues, he was hopeful for long-term growth.

He said: “In Latin America, we delivered mid-single-digit growth. Mexico, led by strength in both biscuits and gum as brands like Oreo turned in solid results. Similar to many other companies, our Brazil business was meaningfully impacted by the trucker strike, which contributed to a high-single-digit decline in revenue. While positive on a longer-term basis for Brazil, we do expect continued volatility for the remainder of the year.”

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As Helen Pattinson, co-founder, Montezuma’s Chocolate, which sources its chocolate from South American sources, felt that the heritage of the confectionery sector in the region made it particularly special. She noted that the region’s cocoa is consistently rated within the top 10 locations within the world.

She said: “Generally West African cocoa is farmed much more intensively (than South America) and this is therefore reflected in the quality of the bean and the flavour. Conversely, a vast amount of South American cocoa is farmed by small family farms who have been farming cocoa for hundreds of years.

“There are three main types of cocoa tree and it’s considered that the Criollo is the best quality; it is far rarer than the other two more robust trees, the Forestero and the Trinitario. Very few countries use Criollo because it is much harder to grow but Venezuela is the largest grower. By contrast Forestero is the cocoa grown in the majority of African plantations.”

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