Region focus: New Zealand’s diverse confectionery market

Industry consultant Graham Godfrey, who is also on our editorial board, offers an assessment on his travels of the intriguing New Zealand confectionery market

New Zealand is a long way away, but is not a “small” country – ten per cent greater land area than the UK and 1600km long (UK about 1000 km) with the Cook Strait between the two islands. However with a population of only around five million, of whom about 2.7 million live in three major cities (Auckland, Wellington, Christchurch) it is otherwise quite thinly populated.

About 17% of the population are Maori and there is a growing percentage of Asian immigrants, particularly in major population centres. Recovery from the severe earthquakes of 2011 and 2016 and the recent severe floods and cyclone damage have impacted New Zealand significantly and the economy has recently fallen in to recession.

There is a clear realisation that recovery is in their own hands and the economy is likely to “bounce back” fairly rapidly. Although “distinctly Kiwi” most of the foods and particularly confectionery are similar to and in many cases the same as those in the UK market with some local flavours and Australian products.

There is a distinct split in the market, however, with much moulded chocolate and artisan products manufactured locally and most seasonal, bar lines, self lines and assortments imported. Virtually all sugar confectionery is imported from Australia. A typical supermarket display of chocolate would have most of the brands familiar to the UK market with about one half the shelf space for assortments, and self lines, and some premium moulded, mainly but not entirely imported (Ferrero, Guylain in addition to Cadbury and Nestle) about a quarter Cadbury moulded and a quarter Whittakers moulded.

In addition, there would be aisle end displays of children’s products such as mini eggs, again imported. Because of its remoteness – Australia is 4200km away – the country has a unique and pristine environment and consequently there are very strict and enforced biosecurity rules on imported items of all kinds, particularly foodstuffs. New Zealanders in general tend to be very “ecologically aware” and regard their unique environment as fragile and extremely valuable.

The remote location (hence transport costs) and small population produces real difficulties for many manufacturers sectors. In food, the costs of a small scale flexible manufacturing unit, able to produce wide product range (particularly seasonal products), are unsupportable in modern terms and although Cadbury and Nestle had long standing confectionery manufacturing operations (Chocolate and Sugar) in New Zealand, both have now ceased local operations and import product, chiefly from Australia, which can support scale manufacturing and resulting lower production costs which outweigh transport and distribution disadvantages.

Cost of living These factors result in the cost of living in the country being significantly higher than UK/Europe, but that cost is offset slightly by product quality across the food and confectionery sector often being higher, there is less minimum quality/low cost product in the market in general and in confectionery virtually no “own brand” products in supermarkets There is still a significant local manufacturing base in chocolate, notably Whittakers, that has been very successful in terms of promoting local manufacturing and not using vegetable fats (headlined as “palm oil”) in their chocolate, both of which factors appeal strongly to the New Zealand population.

Whittakers produces a wide (almost 40 varieties) range of solid and filled moulded products and has also introduced a plant based product into its chocolate bar range, but that product has not been widely acclaimed as it uses milled roasted oats in the formulation which does not give a flavour rendering close to dairy based milk chocolate and has a slightly powdery after taste. Some of the smaller local manufacturers have attempted the same route to plant based products with a similar mixed reception.

It is interesting to note that the product is labelled “Oat Milk” when it is based purely on a dry milled oat addition to a dar chocolate formulation rather than Oat Milk as such. In New Zealand there are a considerable number of smaller scale (by European standards) manufacturers of chocolate and sugar confectionery of largely niche and premium quality products, some using imported chocolate in their range of products. Many of these target the tourism sector (an interesting example is Makana Chocolate in Keri Keri). Several of these smaller companies emphasise “bean to bar” (and even Pacific Islands Cocoa) and very high quality locally manufactured chocolate products (for example The Wellington Chocolate Company) and succeed in obtaining supermarket distribution. It is well worth looking on the websites of some of these New Zealand companies, the variety of flavours and innovation is something of an “eye opener” after the UK market. Even the Australian sourced Cadbury and Nestle products have some very interesting and different ideas, again worth a look

Supermarkets reign

As with most markets, food and confectionery sales are dominated by supermarkets, but because of market size and population density there is not the structuring of stores into various market sectors familiar in the UK and Europe, particularly outside the major cities, and little own label competition with brands, at least in confectionery. Smaller towns will generally have only one supermarket, larger ones perhaps two or three in both cases servicing a significant rural area as well as the town itself. Possibly because of the “New Zealand Made” interest even some of the smaller local confectionery companies are found in the supermarket sector.

Although many of the products in the New Zealand market place are familiar to UK visitors, opportunities are severly limited for UK based companies due to distance, biosecurity regulations and distribution. The best, probably only, real option for smaller UK based companies might be to develop a co-operation with a New Zealand manufacturer with the right technical and commercial profile. Because the market is small, major capital investments are unlikely to be justified and most of the New Zealand confectionery businesses are already very creative, so market opportunities are likely to be restricted to genuine innovation which is compatible with market requirements.

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