The confectionery market is expected to increase by US$61.69 billion from 2021 to 2026 at a CAGR of 4.75%, according to market experts Technavio.
The availability of a diverse range of products in new flavours is driving confectionery market growth, although factors such as distribution challenges may impact on the growth. Consumers – in particular children – are more attracted to various shapes, flavours and packaging used in the confectionery industry. Because of this, vendors operating in this industry are compelled to spend on their R&D to come up with product innovations related to shapes, flavours and packaging.
The growing influence of promotional activities and social media market is also contributing to market growth. Social media has become a trend everywhere for brand visbility and because of this, confectioners are creating brand-specific identities to target specific age groups on social media platforms. Confectionery products launched by Grupo Bimbo and Nestle, for example, are targeted at children and teenagers by using popular animation characters and video games.
However, distribution challenges continue to hinder confectionery market growth. Currently, there is pressure on manufacturers with regards to the prices and margins of their products as retail stores operate on a lower profit margin. There is also increasing expectation from retailers to manufacturers to come up with innovative merchandising units such as movable shelves.
Growing eagerness of retailers to avoid the decline in revenues resulting from gaps in inventory is a key factor in developing relationships with manufacturers.
Major confectionery companies identified include Aasted, Baker Perkins, Ferrero International, Mars, Mondelez International and others. Key regions for the confectionery market include APAC, with 31% of the market’s growth originating from APAC. China and Japan are key markets, where growth will be faster than in other regions.
Growing disposable income in emerging economies such as India and China will facilitate market growth over the forecast period. Although the outbreak of the pandemic has severely impacted on the market in the region, the initiation of vaccination drives by the government and easing of lockdown restrictions in the third quarter of 2020 stabilised growth of the market.
The market share growth by the chocolate segment will be significant during the forecast period. To keep up with shifting consumer preferences, companies in the market are launching innovative products with unique flavours such as hibiscus, lavender, ginger and alcohol. Reduced sugar variants of chocolate such as dark chocolate have significantly risen in demand as a consequence of growing consumer awareness about their health benefits.
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