Focus: While the confectionery sector remains resilient, barriers to industry recovery still exist

Despite confectionery markets having proved relatively resilient amid the pandemic, notable barriers to recovery remain, as reporter Nicholas Wallace writes

The confectionery industry has weathered Covid-19 lockdowns better than many sectors, even seeing a rise in consumer demand across Europe. But producers of fresh bakery products have been hit hard, as have baked goods and confectionery firms that focus on catering.

Even as vaccines mean a return to normal life is now in sight, industry leaders say the long-term effects of lockdowns could take several years to overcome.

In Europe, “the consumption of confectionery and of sweets increased due to Covid,” said Thomas Matosek, president of the European Candy Kettle Club, a group of suppliers to the confectionery industry that runs the annual Candy Kettle Award for innovation in the sector.

He believed the demand spike is the result of the conditions people have been forced to live under this past year: “People cannot go on holiday, they cannot go out for dinner, they cannot enjoy other things,” he said. Instead, “they buy more sweets to enjoy their evening at home.” Matozek said companies focused on catering had a harder time of it, as did those selling premium products in outlets seeing reducing footfalls, such as airports.

Furthermore, the strong retail demand seen in Europe was not witnessed all over the world: Latin America, for example, saw demand fall. In Europe, confectionery products “belong to the basket of basic goods” that “people keep buying during a crisis,” said Matosek. But elsewhere in the world, “people try to save money, and candies and confectionery products don’t belong to their basket of basic foods.”

Sector challenges

But a rise in retail demand does not mean it has been plain sailing for European confectionery. “Although the sales of sweets in the German food retail sector rose, these increases cannot compensate for the slump in exports and in important sales channels such as travel retail, or folk festivals and Christmas markets,” said Solveig Schneider, head of communications at German confectionery industry association BDSI.

She said 65% of German confectionery firms reported being in a worse situation at the start of 2021 than a year earlier, and roughly 800 jobs have been lost in Germany across the sector. Sweet bakery products are a different story from sweets and chocolates. “We saw that fresh bakery was hurt more than packed goods or cookies on the shelf,” said Johan Sanders, president of the Federation of European Manufacturers and Suppliers of Ingredients to the Bakery, Confectionery, and Patisseries Industries (Fedima).

The reasons for the decline in fresh bakery sales are various. One is that some consumers mistakenly believed freshly baked food presents a significant Covid risk.

Another reason is that people are not seeing friends and family: “You typically share a cake,” said Sanders, “Those occasions do not occur anymore.” Instead, people buy things they can eat alone. “We saw a trend into smaller serving sizes: if people don’t gather and you don’t meet each other, you buy your muffin.”

However, sales of individual portions were affected too – albeit less than cakes to share – since people working at home no longer buy treats on their way to work. Even where demand was strong, Covid-19 restrictions made meeting that demand a challenge for producers and manufacturers.

Schneider said the main difficulties facing German confectioners now are costlier logistics and labour shortages, caused by workers having to take time off sick or to care for children during school closures. She added that closures of vocational schools were also making it more difficult to hire skilled workers. Border closures also hit exports hard during the early days of the pandemic.

To keep factories open, manufacturers were forced to limit contact between employees, such as ensuring different shifts do not meet each other, and allowing staff to quarantine themselves at home after any possible exposure. There were also “big problems in the supply chain,” said Matozek, such as refrigerated containers being stuck in foreign ports.

Some challenges were overcome with new technologies: “The confectionery producers had to learn how to keep operating their facilities,” said Matosek.

For example, lockdown restrictions made it more difficult for machinery suppliers to provide support to sweet manufacturers, especially when it required travel. To solve the problem, companies started using mixed reality (MR) headsets, which overlay interactive virtual elements on top of whatever the wearer sees in front of them.

These allow on-site maintenance crews to get remote help from machinery suppliers, with Matosek noting that other new technologies are enabling new confectionery designs, such as 3D printed chocolate. Technology advances, including Barry Callebaut’s 3D chocolate printing, could be key in reviving markets Vaccine rollout With vaccines now being rolled out across Europe, there is hope that the pandemic will end soon. But industry leaders say there will be long-term consequences for the confectionery business.

For one thing, even if everything returns to normal immediately, 2021 is already a bad year for many companies, said Sanders. “People will not double their eating pattern in the second half of the year,” so losses so far cannot be recouped in the current accounting cycle. But other consequences are expected to linger for several years.

Sanders explained that while travel should pick-up, people will probably continue working more from home more than before Covid-19. Also, students will probably take more classes online – reducing the number of treats they buy from bakeries. As a result, it will take until 2025 for sales to recover 2019 levels, he predicted. Product innovations that cut food waste, such as enzymes allowing baked goods to stay fresh for a day or so longer, could help bakeries stay afloat while the market recovers, Sanders commented. In any case, the industry is eager to see normal life return.

Schneider said that while the German confectionery industry supports its government’s efforts to vaccinate the country’s population against Covid-19, “more compulsory coronavirus tests and a constant on-and-off lockdown, however, are not a solution” because “companies can no longer bear any additional burdens.” She said that once the crisis is over, it will take time for the industry to recover.

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