South America’s confectionery market battles the economic storm of coronavirus
The South American confectionery market is one which has enjoyed a strong international reputation, yet as Neill Barston discovers, this year’s coronavirus pandemic has affected the region notably, as it has with other territories around the world
The combined nations of South America have long been hailed as having some of the finest strains of cacao used for producing high grade chocolate ranges. There are also numerous regional novelties within its wider confectionery markets that make these countries of special interest to the confectionery sector.
However, with a combination of complex political backdrops and wider economic turbulence worsened by the global pandemic, its markets have been notably affected. As such, financial evaluation of its production levels is extremely difficult amid the covid crisis, yet for context, the Latin American market was put at $16.4 billion in 2018 by research group Market Data Forecast.
Despite key operating challenges amid coronavirus, another issue that some nations have faced is that of uncertainties surrounding harvests. But it seems there’s a notable degree of optimism emerging with the region.
Speaking recently to Confectionery Production, James Le Compte, CEO of Ecuador’s To’ak Chocolate, explains the business is steadily navigating its way through present conditions.
He says: “Like every other company or person on the planet, we are doing our best in adjusting around the new reality. It’s the day-to-day matters like being able to get into our office in Quito, or not being able to have face-to-face meetings, that you notice.”
“With the pandemic conditions, our main bricks and mortar sales channels in retail have also not been open, which is another real issue,” explains the CEO, who adds that it is planning new product launches later this year as global conditions show signs of economic recovery amid the pandemic.
Elsewhere in the region, investment continues to drive the broader food sector forward, as seen with Belgian- based Tomra Food opening a new regional headquarters in Santiago, Chile, to enhance its support of companies operating in the processing and packaging sectors, including within confectionery.
This enhances its capacity to increase its share of the global supply of fruits, nuts, grains and seeds used widely within sweets and bakery manufacturing operations.
As ABICAB, the Brazilian Chocolates, Peanut and Candies Manufacturers Association, explains to Confectionery Production, companies in the sector are continuing to develop and expand their product ranges.
It notes that although chocolate consumption has gone down during the first six months of 2020 with the pandemic, the number of chocolate consumers has remained the same as in the first semester of the year before – around 73 per cent of the population, according to a study by Kantar World Panel produced directly for ABICAB.
“This shows that the Brazilian consumer loves chocolate. We all love eating chocolate,” says Ubiracy Fonsêca ABICAB´s president, who was recently re-elected to his role in helping drive the region’s sector and its export activities.
Furthermore, as ABICAB explains, Brazil’s confectionery industries have put in place solidarity efforts to support people affected by the coronavirus pandemic in the country. Among the measures adopted are the donation of products, such as Easter eggs, and money to purchase medical equipment, in addition to ensuring employment for workers.
The companies have also been taking steps to ensure the supply of chocolates, candies and snacks to the domestic market and exports in this period of crisis. “The industry’s priority is the safety and health of the population. During this period companies must put the human values of their organisations into practice, and many members are adopting solidarity measures that benefit collective growth”, adds Fonsêca, on the present situation.
Solidarity efforts The chocolate manufacturer Cacau Show donated BRL 1 million for the purchase of respirators by the government of the State of São Paulo and joined the group of large companies to contribute to the acquisition of essential equipment for care of people with coronavirus.
From a business perspective, the company focused on home deliveries to maintain sales during this period. Another chocolate manufacturer, Brasil Cacau joined hospitals in São Paulo, where the company’s headquarters are located, to encourage blood donations and support health professionals. To do so, the company offered chocolate Easter eggs to the first two thousand people who donated blood at Santa Casa, one of the public hospitals in São Paulo.
It also donated 8,000 Easter eggs to health workers at Hospital das Clínicas, based in São Paulo. Another notable measure was made by Nestlé do Brasil, which decided to suspend the dismissal of its employees, maintaining full payment of salaries. The company also reported that it works with retail partners to prevent the distribution chain from being affected by the pandemic.
This was followed by other measures such as Hershey’s do Brasil following its global guidance in removing all advertising showing human interaction with physical contact from circulation, to support institutional campaigns of isolation and social distancing. Peanut harvests In terms of the peanut market, which plays a significant role within the overall confectionery sector, conditions in Brazil produced a strong harvest season. Forecasts showed an increase in supply on the domestic market and exports in 2020, with a notable performance from the growth of planted areas.
This exceeded 200 thousand hectares, and productivity, with an estimated harvest of 700 thousand tonnes of shelled peanuts in the country, according to data from the State Government’s Agronomic Institute of São Paulo. “This year, we have a good harvest and a high quality product, two key factors during a time when, due to the coronavirus pandemic, there is a concern to ensure food supplies, especially more healthy products,” notes Fonsêca of the situation within Brazil. While there are clearly many tests ahead for the region’s confectionery markets, the positive momentum built over the past few years shows promise in continuing despite the ongoing pandemic affecting the world.