Major brands remain dominant in the US confectionery market

Despite market challenges of increasing ingredients prices and shifts in consumer habits, the US confectionery market is proving resilient. Neill Barston reports

The US confectionery business has continued to hold on to its coveted place as the world’s largest single sweets market, worth a total of around $35 billion in the past year.

While there remain a number of challenges being posed to the sector, ranging from a drive to create a greater range of healthier options, through to ingredients price rises, the past year has seen considerable product innovation.

The present pattern of growth is expected to continue, with industry forecast data projecting the market could top more than $50 billion by 2025. However, factors such as increased trade tariffs with China could affect upcoming results.

With rising cocoa prices, the American chocolate market has already been impacted, which has led to some manufacturers considering amending portion sizes. This has partly been influenced by changing consumer habits over greater dietary awareness.

According to Euromonitor International research group, Hershey and Mars remained relatively resilient, retaining the top two rankings for the chocolate segment in 2018.
There has also been strong movement from Italian-based Ferrero, reaching third in the rankings last year since its $2.8 billion acquisition of Nestlé’s confectionery operations for the American market. This led to the company re-launching the traditional favourite Butterfinger brand with an improved recipe.

Another key development has been Barry Callebaut’s global launch of its ruby chocolate – billed as the fourth category of chocolate, which has already gained an award for innovation in the US last year.

An analyst at Euromonitor International said: “The dominance of milk chocolate is being challenged as new chocolate types are becoming popular. The release of Mars Wrigley Confectionery’s white chocolate M&M’s and Twix dark chocolate in 2017 are examples of brands that are following the consumer demand for healthier and higher-quality products. Dark chocolate has become an important growth driver within confectionery as it is perceived to be better for you than milk chocolate.
“With cocoa prices climbing to their highest point in 16 months and ongoing shortages of truck drivers pushing up transport costs, companies like The Hershey Co have had to cut back on the production of some products,” added the analyst who said the company had opted to cease making many seasonal products.

Sugar Confectionery in the US

In addition to its growth within chocolate markets, Euromonitor confirmed Ferrero now stands as one of the big three players in sugar confectionery in America.

Other key brands for the market include Ferrara Candy, Haribo, Morinaga and Perfetti Van Melle, which have also reported increases in market share during the past year. The Euromonitor spokesperson continued: “Innovative and unique flavours have emerged as a significant driver of growth, with consumers looking for something new on a more frequent basis. Brands across snacks are experimenting with many different types of flavours and textures to uncover new areas of interest for consumers. One such trend that is proving popular is spicy flavours. Hot & Spicy Cinnamon Oreos, Hot Tamales Fire and Ice, Mango Chile Nerds, and Sour Patch Kids Fire setting the trend.”

According to the research group, as the millennial population continues to enter and take over the workforce, they will be able to spend more as their incomes grow. Consequently, sugar confectionery companies are now developing healthier options, focusing on e-commerce, and providing constant innovation as they look to capture the attention of this vital customer base.
There have of course been challenges within the segment, with Hershey reportedly experiencing comparatively modest growth for its sugar confectionery ranges. The company has traditionally been a leader in the category, with well-known brands like Ice Breakers mints, Twizzlers liquorice and Jolly Rancher hard and soft candies.
However, these brands struggled significantly over the review period as Millennials and Gen Z consumers are increasingly turning to competitors like Haribo and Hi-Chew.

Brand growth

For its part, Jelly Belly reported a strong performance over the past year, with four key product lines being launched.
This included its Harry Potter line, aimed at the holiday season gifting market, and the brand’s candy cones updated a favoured product series.
In addition, the company said a fifth generation edition of its popular BeanBoozled series “upped the ante on our game of lookalike flavours,” and further cemented its position in the sugar confectionery segment.

“Our most successful line year over year is the Jelly Belly line. We remain committed to growing this line with introductions like the Recipe Mix. We also put a lot of energy behind the Harry Potter line, which more than doubled in sales with the introduction of new jelly bean, chocolate and gummie items,” explained Rob Swaigen, vice president of marketing for the company.
With Sweets and Snacks Expo around the corner, he believed the show would offer plenty of other product initiatives.

Swaigen added: “We know that the emerging generations are enthusiastic about exploring food and flavours, and our product allows them to do that like no other. We also see a growing trend in of familiar flavours showing up in unexpected places. We recently launched a mix of jelly beans based on popular donut flavours that taps into this trend.”

Meanwhile, Sylvia Buxton, president and CEO of Perfetti Van Melle North America, explained there had been strong expansion for the business.
This included new product launches of its Airheads gummies line and Mentos CleanBreath mints.
She said: “Perfetti Van Melle is always innovating its confectionery, to continually surprise and delight our consumers. In 2018, we saw our business grow more than seven times faster than the non-chocolate/mints/gum category.
“Our on-shelf items continued to grow – up 9 per cent – while the category overall was down by 3 percent, and we saw an increase in our share of households purchasing. Among Amazon’s top sellers for 2019, Mentos Gum was first and Airheads was third.”

Similarly, premium chocolate brand Guittard also reported strong fortunes over the past year, with the business expanding its portfolio across Europe, gaining a major distribution deal for the territory proving a significant milestone.

Gary Guittard said: “Coming into 2019 after our 150th anniversary year, it’s a very exciting time for Guittard Chocolate in the US as well as in the wider markets of the UK and Europe. As well as concentrating on constantly developing and improving our chocolates for our customers, one of our big focuses right now is on sustainability. Sustainability is at the heart of everything Guittard does and everything we strive to do.

“As part of moving our existing Cultivate Better sustainability programme forward, we’ve recently expanded our flavour quality work across Ghana, Ivory Coast, and Indonesia. I believe we are seeing the incremental degradation of cocoa flavour and this project has been spearheaded to counteract this. These new Flavour Labs are part of an effort designed to address the problem of an industry-wide shift toward breeding cocoa for high yields and disease resistance and therefore our goal with this initiative is to protect and preserve the unique flavours of each country’s cocoa. This is a project we are participating in alongside The World Cocoa Foundation, USAID, Swisscontact, and the Millennium Challenge Account, and we will be working with breeders, extension agents, cooperatives, and farmers.”

With Sweets and Snacks Expo around the corner this month, there will doubtless be plenty of surprises within a market at the forefront of global confectionery developments.

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