Spotlight: Revealing the health-conscious confectionery revolution
Chocolate pieces. Chopped dark chocolate closeup
Creating confectionery with a healthier edge, as well as catering for fast-rising vegan and dairy-free markets, poses many challenges, as Neill Barston examines
During the past year amid unprecedented conditions, there have been some fundamental shifts in consumer behaviour that are now driving confectionery manufacturers’ product development. As we collectively went into lockdown, many manufacturers benefitted from a comparative boom in snacks and sweets, as people returned to the comforts of familiar favourite treats to offer some ‘permissible indulgence’ amid challenging times.
It’s perhaps little wonder this was the case within many global confectionery markets, though equally interesting has been the notable rise in health and wellbeing product ranges over the past few years, which have accelerated during the coronavirus crisis. However, 2021 is being described as the ‘year of plant based’ as a category concept, which is underlined by a wider growth in vegan confectionery – which is expected to be worth $1.9 billion globally by 2027, according to Grand View Research.
As studies from Mintel reveal, Britain presently leads the way in vegan/ no-animal, new chocolate product launches, with the UK was responsible for almost one in five (17 per cent) of these new types of chocolate products (including the likes of HiP, Plamil, Moo Free Chocolates), followed by Germany (11 per cent).
Meanwhile, the US (six per cent), Australia (five per cent), and South Africa (five per cent) are responsible for one in 20 of these launches, demonstrating there’s further growth in this segment to be seen. Overall, in the last year, vegan ingredients chocolate accounted for just over one in 20 (six per cent) chocolate launches globally, up from five per cent the year prior. Significantly, health and confectionery aren’t necessarily natural bedfellows, given that many classic chocolate ranges are heavily associated with its key ingredient of sugars and fats, which remain essential element delivering tastes and textures.
Yet the continued rise of vegan, dairy free and more recently, reduced sugar options among sweets and snacks ranges is far from accidental, against a backdrop of an obesity crisis in many countries, which has clearly identified reduced fat/sugar options across food ranges as key to impacting on the situation. With this in mind, one of the most prominent launches of the past year has been Barry Callebaut’s plant-based dairy free M_ilk chocolate series, aimed squarely at the millennial and centennial market of especially environmentally conscious younger consumers.
As recent research from Innova Market Insights demonstrates, the growing ‘better for you’ segment is well established, with 91 per cent of consumers being influenced at least to some degree by reduction claims. According to its analysis, the ice cream market has been notably successful in this regard, with an emphasis on bolder on-pack calorie counts, including the rise of brands such as Halo Top, basing its success upon its low sugar status.
Beyond sugar, Innova adds that the issue of protein is the other macronutrient attracting most attention in ‘better-for-you’ sweet treats, and has been notably delivered in confectionery ranges such as Mars bars, targeting sports markets.
As far as ingredients are concerned, Myriam Snaet, head of market intelligence and consumer insights at Beneo, believes the pandemic has indeed had a key impact on the health agenda. She says: “It is impossible not to see the turbulence of 2020 continuing to influence confectionery choices this year. “Key trends we see impacting the sector include the continuation of comfort eating, the move towards healthier confectionery that supports consumers looking to balance indulgence, health and energy levels, as well as increasing demand for transparent labels.
Thankfully, functional ingredients are well placed to help food producers fulfil all of these consumer demands.” She explains that concern for longerterm health is also influencing purchasing decisions taken for children, with 75 per cent of parents globally saying it is ‘extremely’ or ‘very’ important for children’s products to have better nutrition.
In her view, with being health such a continued focus for old and young consumers alike, confectionery manufacturers will also have to make it easier for shoppers to swap to healthier options by using transparent communication, labelling and/or claims.
Using natural ingredients
As regards reformulation of products, Snaet highlighted new research conducted on its behalf by FMCG Gurus that found consumers are increasing concerned about the impact their food and drink has on the environment. One such example of healthy snacking is that of Nim’s Fruit Crisps, based in Sittingbourne, Kent, that enjoyed key success last year with a Queen’s Award for industry for its product innovation.
The business has risen relatively rapid, based on using entirely natural ingredients in the form of its air-dried fruit concept that consumers have quickly embraced. “I haven’t actually been surprised healthy confectionery has grown – it’s more a case of being pleased that it has, and it is part of the wider wellbeing and health trend that’s been with us for a few years now,” explains Bromley-based Nimisha Raja.
As the director reveals, the company’s evolution over nearly a decade has involved some steep learning curves, but she says the collective hard work – including making the key decision for in-house manufacturing has made a critical difference. “I’d originally set the business up as I had a sense there was a growing trend within the health market. Having previously owned a café I had many frustrated parents not knowing what to give their children in terms of healthy snacks – they wanted to give them apples, but the children just wanted sweet snacks, so I thought that by combining the two that we could be on to a winner,” she says of the initial concept.
Clearly, the past year has been especially demanding for the business, and the ‘double whammy’ of Brexit and coronavirus is posing her operations significant issues.
However, she says that despite the obvious headaches it is causing, it’s a question of continuing to have faith in her business model. She explains: “We didn’t have any choice but to carry on amid Covid-19, and were aware of the chances of failing, but it gave us the chance to see how we could possibly make our business better.
“We were able to gain a contract with M&S last year, after they approached us for air dried fruit crisps and they stuck with it instead of delaying the deal, which was really good for us,” she says, noting that setting up its own production facilities in Kent, and investing in its BRC operating standards certification, were crucial developments.
Creative solutions According to Raja, the firm has had to think creatively and engage with the wider food and drink sector to survive, including developing fruit infusions for the Craft Gin Club. While she admits, at first, their sheer novelty had some stores perplexed about the prospects for its healthy fruit-based crisps, yet consumers have become increasingly switched on to their potential.
Raja adds: “It has been really scary when you consider that you’ve invested everything into a business, placed not only your collateral, time and energy, but all your hopes and dreams into it, but we have actually done well. “We had anticipated that we would double our sales last year, but they were up by 25 per cent, so to be in that position and still be profitable during covid is something that we can be proud of – and that’s down to having a really good team in place.”
Another key British business operating within the vegan and healthier confectionery market is Plamil, which stands as one of the founding plantbased manufacturers. As one of the movement’s pioneers in the 1950s, the business has grown hugely over the past few decades, producing a broad range of products across the food sector that are exported around the world.
Speaking to Confectionery Production, director Adrian Ling explains that despite the dual challenges of Brexit and Covid-19 that are impacting on the wider sector, the company’s operations – particularly its online business remains strong, and is continuing to grow.
“There’s no doubt that the plant based and vegan world has grown exponentially. The perception that those diets are healthier is enormous by consumers. “We operate not only within dairy free, but we also have no added sugar chocolates, so we have noticed very strong growth in those types of products as well,” explains Ling, who believes that such sugar reduced options and healthier ranges will become firm fixtures in the wider confectionery sector moving forward.
As far as the UK is concerned, the past five years has seen a high-profile drive from Public Health England to cut sugar levels within categories including confectionery by 20 per cent. The results from its initiative showed that between 2015-2019, manufacturers failed to meet that figure – with chocolate ranges actually increasing sugar levels by 0.4 per cent during the period of the voluntary scheme. Does he feel such ventures could succeed again in steering the public towards healthier eating trends?
“Personally, I’ve never believed public health initiatives ever really affect anyone – in the same way that the Olympics in the UK never really inspired people to play sport. I think personal health responsibility is something that grows organically within individuals, through families and peer pressure.
“The vegan movement has happened because of social media. Within the segment, you don’t often see online posts that focus on animal or human rights, it is more about individual health. So, for consumers, it is most about what they perceive the benefits of eating a product are,” notes the director of some of the key industry trends impacting on the sector.
As Confectionery Production has previously covered, the company has undergone significant rebranding in recent years under its So Free banner, which it believes has been successful. This has seen the introduction of an ever-expanding range of vegan and no added sugar ranges that are reportedly being well received, though there have been challenges in gaining listings, as the company’s director explains.
“Where we have found the issues within our retailing is that the biggest boundary to get product on shelves are the gatekeepers – the buyers within the retail environment. “I am not convinced it’s a consumer reluctance of those buyers to put no sugar products on shelves, that may well be because there’s a huge vested interest within the industry to protect shelf space, and the whole category.
Brand image is very important for large confectionery manufacturers, and it’s difficult for them to introduce no-sugar products. Some have tried to this and have said it’s failed, but I don’t think it has been done wholeheartedly. “We have seen our direct-to-consumer sales through the internet go through the roof, as has our business-to-business segment of the market as well, but routes to market through traditional retail are remaining pretty stagnant,” adds Ling, who says that greater acceptance from traditional convenience store retailers will be significant in impacting on consumers long-term choices in terms of enabling greater access to healthier product ranges. Its own product development continues apace, including devising a new vegan orange flavoured chocolate spread, Plamilla.
On an encouraging note, he says the business is now working with a number of ‘disruptor brands’ that are looking for chocolate inclusions, and this has been a strong avenue for introducing no added sugar, or reduced sugar alternatives.
“Last year, despite Covid-19, we installed new production lines and that doubled our capacity, and we are currently looking to double it again, amounting to a fourfold increase in capacity within two or three years, which has been staggering, amounting to thousands of tonnes of production,” adds Ling, who says the business has recently enjoyed its strongest single month of trading.
This is despite of the complexities of handling Brexit, which he says has been damaging for British exports, meaning it is no longer viable for the company to supply shorter production runs to mainland Europe. In his view, only the UK’s eventual rejoining of the EU will remedy the additional costs and administration burdens that companies, including its own, are now facing. “We’ve seen many challenges out there, and it’s meant that co-operation with other companies is vital, which in turn is leading to innovation and investment, automisation, and all things that are helping us through Covid-19. I’m looking forward to the future of the business, as it’s hugely exciting working with all these new companies,” adds Ling, who says it’s the chance to bring some joy to consumers that has kept him in the industry, producing sustainable, and ethically produced ranges.
The trend for more healthier confectionery options is far from confined to Europe, with the North American continent experiencing growth in the segment.
For its part, Canada’s Ross Chocolates has been making an impact in recent years, delivering a healthier line in chocolates for the diabetic market.
As its sales director Phil Hemmings explains to Confectionery Production in an exclusive video interview, the business that was started by founder Bob Ross – himself a diabetes sufferer, had noted a lack of suitable confectionery lines in the mid 90s, which led him on a path to setting up his own company. After a number of early experiments with artificial sweeteners, the company’s latest ranges – which have been developed in recent years under new ownership, have seen a shift to stevia based solutions that have reportedly proved popular with customers.
“We’ve certainly seen a trend of obesity, and diabetes increase, as well as ageing populations that have pointed to health concerns that are needing to be address, so we’re seeing a movement towards living healthier lifestyles is more evident.
We are seeing that with some of the areas that are opening up for us – I have a presentation I am doing for a large US convenience store this week, which, as a sugar free chocolate company, isn’t something that I would have been doing a number of years ago, as these kinds of retailers are now selling a lot more fresh fruit items and sugar free product ranges that are out there, so it’s really changing,” explains the director, who notes that its ranges are now gaining more mainstream retailing acceptance alongside conventional chocolate aisles.
“I think the pandemic has had an impact on these trends – people are baking a lot more at home, and chocolate is part of that, and we have come out with a range of sugar free baking chips in response, and that’s an industry that has really taken off this past year.” As he adds, the company had worked hard to create the right blend of stevia for its ranges, which began with classic bar ranges, but have now been extended out to pouch-based product options that have gained a foothold in the regional market.
Another trend within the confectionery sector in the past few years has been the rise of outsourcing of production services – and this too potentially brings opportunities to address meeting the demand from consumers to access healthier ranges.
Rodney Steel, chief executive of the BCMPA, the Association for Contract Manufacturing, Packing, Fulfilment & Logistics, notes how businesses in this segment are playing their part. This has come in the form of assistance in sourcing a greater range of natural ingredients, as well as accessing sustainable packaging solutions that are part of the production chain.
As he explains, such factors are why outsourcing companies have often proved to be the vital partner for confectionery businesses, helping them to respond to the latest consumer trends and supporting their new product or packaging developments.
“The luxury end of the confectionery market has continued to grow over the past year and new product development has always been a staple of this sector,” comments Neil Humphrey, sales director at leading confectionery co-packer, Mailway.
“Our business often operates as a pilot plant for larger companies, helping to incubate ideas and bring new and interesting products and formats to market.” Within this product development, there is now a growing focus on nutrition, as Michael Farhi, owner of RJF Farhi, a manufacturer of chocolates and confectionery, explains: “Consumers are much more mindful of the ingredients that go into the food products they buy. This is especially true with chocolate as there is an emphasis on the quality of ingredients and the processes that go into making them.
The growth in palm oil free and vegan chocolates and confectionery are key examples of this and we have invested to ensure we can meet this need.”
Consumer mindfulness surrounding ingredients has also contributed to growth in other ‘free-from’ confectionery products too, such as gluten and dairy free options, he explains of an industry, which is clearly facing notable challenges, as well as exploring opportunities amid a notable time of transition within the industry.
“We have recently experienced an increasing amount of enquiries and business wins from manufacturers producing ‘free-from’ products,” says Gavin Withers, director of SGL Co-packing, who points out that meeting this need has brought its own challenges to co-packers and manufacturers. “Responding to demands for nut-free or any other allergen-free products requires changes to facilities to ensure no cross-contamination. The regulatory requirements to be able to put ‘nut-free’ labels on products are rigorous and sometimes necessitate investment in new packing lines and cleanrooms.
As the confectionery sector is also reporting increased interest in ‘functional ingredients’, which provide additional benefits beyond their basic nutritional value by containing enhanced protein levels or probiotics. A growth area has been in ‘nutraceutical confectionery’, products that provide a medical health benefit such as vitamins and dietary supplements, often in the form of chewable gummies.
One benefit of these latest developments is that they can help brands to create differentiation and generate greater value, says Michael Briggs, managing director of Marsden Packaging: “Confectionery is a highly competitive marketplace and the opportunity to develop products that offer consumers greater health benefits also moves these items towards the higher margin healthcare areas in stores.”
Alongside the ingredients, packaging has also played a key role in this greater focus on health in confectionery items. Pack formats have been adapted so that goods are in the right size and weight to hit calorie targets and help consumers treat themselves or enjoy a snack as part of healthier eating.
Sustainability has been an equally important factor in new pack developments to respond to consumers’ increasing environmental awareness. For example, Farhi has recently launched a range of plastic free snack boxes from sustainable board, Mailway has seen a move towards paper-based forms of packaging with several clients, and SGL reports a growth in carton use, as brands seek to move away from plastic packaging options.
The pandemic has also driven changes in pack styles, with smaller impulse purchases from traditional retail stores declining and larger sharing formats increasing. The huge growth in e-commerce has been another factor. “Retail pack and mail order formats have changed significantly with a much greater focus now on shipping direct to the consumer,” confirms Briggs.