Exclusive: Caobisco Congress addresses major confectionery industry challenges

Major topics surrounding the delivery of enhancing sustainability across the confectionery sector were placed in the spotlight for this week’s Caobisco Congress held in Brussels, Belgium, reports Neill Barston.

With the confectionery industry facing renewed pressures over ingredient pricing surrounding cocoa price volatility, uncertainty surrounding anticipated delays to incoming EUDR environmental laws, and additional issues over delivering improvements to product packaging that have added further tests for the industry.

In response, the agenda for Tuesday’s event at the Thon Hotel in the Belgian capital included delivering healthier product options, addressing supply chain challenges, expanding trading opportunities and maintaining sugar imports and broader trade with Ukraine as it seeks a path to EU membership.

Opening the event, Muriel Korter, director general of Caobisco, asserted that collaborative action was required to ensure the future sustainability of the industry.

She said: “Now, many of the ingredients that go into our beloved products come from outside the European Union. Some, like sugar or hazelnuts, are not produced in sufficient quantities within Europe. Others, like cocoa or tropical fruits, simply cannot be grown here due to climate.

“But even when these ingredients come from further away, our companies are committed to making sure that these ingredients are produced in a sustainable manner. And I mean sustainably in every sense: economically, socially, and environmentally. But on our own, we can only do so much.

“To ensure we have access to high-quality and safe ingredients that are grown sustainably, without deforestation, and that meet both European and international standards, it’s crucial that we work hand in hand with our supply chain partners, as well as with governments—both here in Europe and in the countries where our ingredients come from—to create the right legal framework that guarantees sustainability across the board.”

She added that the array of confectionery produced in Europe, from its chocolate bars and sweets, through to pastries, are more than simply treats, they are a celebration of Europe’s diversity, culture and craftsmanship.

Furthermore, she noted that demand for EU product ranges has continued to grow, despite myriad background challenges and economic turbulence around the globe. The sector in the region  is represented by more than 99% of small and medium-sized enterprises, many of which are family-owned businesses with a rich history of excellence.

With some 300,000 jobs linked to the industry in Europe and 13 million tonnes of products, its significance to the region is clear, but noted that regulatory frameworks across the industry should not become too overbearing in order not to negatively impact on trade deals.

pic: Littlebox/Romain

Industry trends
Among the morning’s other presentations, Tristan Hover of Euromonitor International gave an overview of present confectionery trends.

Speaking on the sector’s efforts to explore healthier options, he said there had been a number of key factors in the industry, including examining sugar reduction, or presenting no sugar options that ‘had their own complications,’ in terms of product development. He also noted that there had been a continued rise in gluten-free ranges within confectionery were also becoming increasingly prominent to meet dietary requirements.

He said: “When we ask consumers what factors they look for on food and drink labels, for some year we have seen that sugar is mentioned as number one – people are looking for limited or less sugar. It’s a very relevant topic given that certain diseases are increasing, and people are thinking of health.

“People are going away from classic meals, but the implication is that if they are doing that more and more, at some point these snacks need to become healthier, or at some point their doctor will tell them to change their diet. There’s also another area of free-from preservatives that we also see, which is being tackled by premium products, as this is something that also comes with a price.

“When it comes to sustainability, the most trusted claims that we see in the industry are around products being recycled as well as being natural, but also free-from artificial ingredients. There are brands such as Trolli that are offering ranges that are without artificial flavours, and these are hyped on social media,” he explained of companies’ approaches to how they deal with meeting changing consumer demands.

Furthermore, UK-based Gregori Caignan, of Mars Wrigley, offered his perspective on some of the tests facing the industry, having gained significant experience in regulatory compliance for the business, working with major brands including M&Ms, Extra chewing gum and Skittles Candy.

He explained to Confectionery Production that there were a wide range of challenges for companies in examining reformulation of products. In particular, he observed that efforts within industry, including within Mars, had been made to specifically explore products that were up to 30% reduced sugar, but that there had been little enthusiasm from consumers, with many such items being withdrawn from sale.

pic: Littlebox/Romain

This factor remains significant – the disconnect between surveys suggesting shoppers have greater awareness and desire to seek out healthier product options, yet in reality, are continuing to mostly favour classic confectionery options that they have known and enjoyed for decades.

Supply chain resilience
Another significant area of coverage for the morning session centred on seeking resilience within supply chains for the confectionery sector. These have come under major strain over the past year, with cocoa prices having risen to $12,000 a tonne on Futures markets in New York and London this April, followed by a downward trend in the second half of this year that has once again seen a renewed spike in recent weeks.

The impact of this has been felt by the big six confectionery manufacturers, with revenues being affected through paying more for their core chocolate ingredients, with a similarly challenging situation within sugar markets – as prices in both the US and Europe experiencing major upturns.

Notably, the panel discussion on these topics included contributions from Leonard Mizzi, head of unit, director general for international partnerships for sustainable agri-food, Gert van der Bijl of the Solidaridad group, Augustin Fornell, deputy ambassador at Mission of Ecuador to the EU, and Thierry Noesen, of Belvas Chocolates.

The session also featured Aldo Cristiano, head of institutional affairs and sustainability at Ferrero in Germany, who has been especially active in delivering key policy areas for improving the company and sector’s performance with his previous role as president of Caobisco.

As Confectionery Production reported earlier this year from Brussels, Aldo stated that businesses, including his own, had been diligent in approaching upcoming major regulations on the horizon including the landmark EUDR frameworks, which he said that the industry stands ready to work with nations in implementing its new systems that are designed to bring about greater transparency, reduce deforestation, as well as supporting human rights within supply chains.

Aldo Cristiano (right), speaking at the Caobisco congress. Picture: Littlebox/Romain

Significantly, as previously reported, the topic of EUDR has continued to loom large in the EU, given the European Commission’s proposals to delay the introduction of the scheme, which will use advanced satellite mapping in a bid to ensure companies are deforestation free in their supply chains. But with considerable political wrangling occurring within the past few weeks alone, the next month will determine whether the system is implemented by the end of next year, or whether it simply reverts to its original plan of starting at the end of December 2024.

Food standards
Notably, the event turned its attention to food standards within the sector, and in particular how the industry deals with the significant issue of processing products with an awareness of a growing factor of consumer allergies.

The panel included Dr Athanasios Moschos, of Leonidas, Panagiotis Chasiaridis of the European Federation of Allergy and Airways Diseases patients’ Associations (EFA), and Jan Ellens, of the Netherlands-based NVWA consumer product safety authority.

It also included Ben Remington, of the Remington industry consultancy group, who explained that he had responded to a  request from Codex standards in 2019 to look at food allergen thresholds, which was a combination of 15-20 years of research in the clinical community and risk assessment community looking at how much food protein it takes for someone with a food allergy to have a reaction.

“We started to gain thousands of data points from hospitals and research clinics and from individuals with food allergies, so we were getting to a point where we saw consistency with results, and getting to a point where it was workable for the food industry – we had seen it in Australia, but hadn’t seen it globally to be harmonised across countries.

“When you dig into the data, you look at what milligramme amount would cause 5% of people to have a reaction, or even 1%, so we are trying to strike a balance between trying to protect as many people with food allergies as possible, while actually having workable systems for the food industry or for international trade.

“So we started to see that balance being found at around the 2mg food protein mark for peanut, milk and egg that would have a reaction for around 5% of people with allergies – but if you go down to the 1% level it starts to become unworkable for industry,” he noted, believing that significant progress had been made on the topic, adding that he was hopeful that the standards under the food Codex, linked to the Food and Agriculture Organisation and World Health Organisation would provide a solid framework for allergy policy within food market development.

EU trade with Ukraine
For the afternoon, the panel discussion trained its attention on how the EU could continue to champion exports to other nations including Ukraine and elsewhere around the world.

The session included input from panellists including Peter Creaser, Australia’s minister counsellor for agriculture to the EU, who explained how his own country had tackled trade with the rest of the world, and expressed optimism that a deal with the trade bloc could be attained in the not too distant future.

Tobias Bachmüller (pictured in the image below), managing shareholder of the Katjes confectionery group commented that he would welcome closer relations with Ukraine, particular in terms of sugar supply, which has this year suffered a setback, as political groups within the EU parliament have lobbied to restrict the flow of supplies, despite there being a deficit within the EU.

Tobias Bachmuller, Katjes (left). Pic: Neill Barston

“There’s a sugar deficit now, and when you have this, it’s very simple, there are higher prices – we only have three or four big suppliers of sugar in Europe, that’s all.

“So our general interest is to have more suppliers, especially neighbouring ones, or even from Australia, or Mercosur. On a general level, in Germany we mainly export machines and industry good, so we should take their goods if they are strong in agriculture, which is only fair,” explained Bachmüller.

Also on the panel was John Clarke (pictured below), trade policy expert, who recently served as director for international affairs at the EU Commission, who offered his insights into how the organisation had sought to forge export relations.

John Clarke, former EU trade negotiator says the bloc has work to do in driving its trade policy forward. Pic: Neill Barston

“I think that the EU’s trade policy has been quite successful over the past decade, and for 11 years in a row, Europe has been the world’s biggest agri exporter, with ever bigger trade surplus that ran at €70 billion last year. It’s not simply exporting high value products like champagne and infant formula, it’s across the board – wheat, pork and dairy, and confectionery has been very powerful export market. The success has been seen in the fact the EU has 40 trade agreements with 80 countries, more than anyone in the world – the reason for this is that these agreements have been ambitious, with no exclusions, and tariff liberalisation.

“The model has been quite good, but the model is running out of road, as trade is no longer seen as an end in itself, it’s now rather than a means to an end, they are now seen as a vehicle to promote non-trade policies, notably exporting the Green Deal and avoiding carbon leakage. That has led to quite a pushback from its trading partners in India, Indonesia and to some extent Australia – which collapsed last year, as it was being asked to take on onerous sustainability commitments and not being rewarded for it with free market access,” who added that there were a whole range of parallel legislations on the environment, and corporate sustainability directives that impact on imports directly, and have proved too much for some partners to accept.

He said the latter point was having ‘a chilling effect’ on EU policy, and growing anti globalisation sentiment across Europe, and right wing populism has ‘taken the farming sector hostage’ in creating what he termed an ‘unholy alliance’ on the streets  (with farmers protesting against the Mercosur trade deal with South America, which was another significant factor to consider.

For his part, Serhii Tereshko, deputy head of mission of Ukraine to the European Union felt the Caobisco event had offered a strong platform to express his country’s position on its ongoing ambitious for close trading relationships with the EU, noting its desire to become a full member of the trading bloc.

Serhii Tereshko, deputy head of mission of Ukraine to the EU (pictured centre, alongside Tobias Bachmuller of Katjes (left) and former EU trade negotiator John Clarke (right) spoke to confectionery production at the event. Pic: Neill Barston

Speaking to Confectionery Production, he said: “Ukraine is not going to be a disruptor of the EU market, it is willing to be a complementary partner of the EU, based on real needs of that market. That is why we invite our partners, including those within the EU to look through the figures on those needs of their markets in order to take the best opportunities that Ukraine can suggest.

“We are ready to be very flexible and constructive in approaching the internal EU market, and avoid situations where disruptions may occur. But when, without any justification, our trade has been limited, this is very bad for Ukraine, but it also hurts the EU in terms of consumption and stability.

“We are hopeful of the situation, and we are looking to the work of the new college of the EU Commission to start immediately on day one that they take office, with regards to establishing mutually beneficial and stable rules for our mutual trade, given the realties of industry pressures, and taken into account that we are a candidate country for EU membership that approximates with new legislation and takes up the requirements of the EU internal market,” explained the senior diplomatic, who explained that the country is looking forward to negotiations with the European Union, and remained hopeful that mutually beneficial outcomes for import and export would be arrived at in the short-term.

He added: “We would like to hear that European stakeholders in a wider sense are listening to the market in a comprehensive way and that free trade is not necessarily a ‘zero sum game’, so I believe that Ukraine is a partner where we can achieve a win-win situation. The EU market is in need of Ukrainian sugar, and our country is also a very large consumer of European commodities for industrial goods that are used extensively by Ukrainian farmers in their own production. So the increase in trade is something that is really beneficial.”

Event exhibition
In addition to the wide-ranging discussions, the congress also featured an exhibition element, with several key related businesses offering insights into their operation.

Among them, was ICE, the intercontinental exchange that formed nearly 25 years ago with the aim of digitising energy markets and providing price transparency.

Toby Brandon, Chief Operating Officer of ICE Benchmark Administration (IBA) (below, right), explained that the organisation attended the Caobisco Congress primarily to connect with the chocolate and confectionery industry, and talk to them about preparations for the EUDR. IBA, a subsidiary of ICE with a majority independent board, is launching the ICE Commodity Traceability Service (ICE CoT).

He explained: “ICE CoT is a service that companies can use to automate the process of submitting, storing, testing and sharing due diligence information under the EUDR. The whole point of ICE CoT is to remove the friction in the cocoa supply chain and support regulation compliance by using a central platform that’s got credible and consistent data, standards, processes and methodologies.

“Without a tool such as ICE CoT, cocoa and chocolate could get stuck in a raft of red tape or regulatory paperwork when exported to or within the EU. We hope to keep cocoa and chocolate supply chains efficient and flexible and enable buyers and sellers to buy from anyone and have a choice of suppliers. We were at the event with Space Intelligence, our geospatial deforestation map provider, to show the attendees our progress on the services’ development and explain the full ICE CoT functionality which covers all of the main requirements mandated under the EUDR.

“Obviously, the hot topic is the potential delay – we are monitoring the EU Parliamentary process and the trilogue very closely, and we’re ready to launch if the delay doesn’t happen.”

He added that as the organisation has been designing, building and testing the service, it has worked very closely with cocoa traders and processors, who are typically the suppliers to Caobisco members and are on the sell-side. Notably, he acknowledged that it was important for it to engage with the chocolate brands and industry who are the buy-side to make sure that it incorporates their needs into ICE CoT, which can support all users with their due diligence systems required by the regulation.

Evening celebrations
After the conclusion of the presentations, attendees for the congress enjoyed an entertaining evening that included a networking reception, featuring samples of chocolate and confectionery from across Caobisco’s diverse membership within Europe.

The event was rounded-out by an evening meal that offered participants the chance to reflect on what had proved an engaging event that addressed the many fundamental challenges facing the industry – with the next few months set to prove a particularly decisive moment in terms of emerging major legislation concerning sustainability.