Industry Outlook: Confectionery Industry Size and Trends

12.10.2021

Global Confectionery Industry Size

The global confectionery industry was valued at 313.5 billion USD in 2015. In the next five years, it grew at a compound annual growth rate (CAGR) of 4.96% per year to reach 380.46 billion USD. Until 2025, the global confectionery industry is forecast to grow at a CAGR of 3.36% per year and reach 484.43 billion USD.

The confectionery industry contains four distinct product types:

  • biscuits and crackers
  • chocolate confectionery
  • sugar confectionery
  • ice cream.

In 2019, biscuits and crackers recorded the highest share of the total value with 31%. Chocolate confectionery and sugar confectionery followed with shares of 30% and 22%, respectively. Ice cream accounted for a 17% share of the global confectionery industry value. 

pie chart that shows the global confectionery industry value by product types in 2019 in %

By region, Europe held the largest value share of the global confectionery industry with 24% in 2019. North America and Northeast Asia followed with shares of 22% and 17%, respectively.

Asia Pacific recorded an 11% share while South and Central America accounted for 9%. Africa held an 8% share in 2019.

The CIS countries and the Middle East held shares of 5% and 4%, respectively.

 bar chart that shows the global confectionery industry value by region in 2019 in %

Global Confectionery Industry Trends

High Sugar Consumption Concerns

The reduction of sugar consumption is a crucial trend that will continue to influence the global confectionery industry in the medium term.

High consumption of sugar is a known health risk. It is a major concern for governments and non-government organizations around the globe. As a result, some of the leading retailers in the UK banned the display of candy and sugary drinks on their checkouts.

In addition, the Food and Drug Administration (FDA) in the USA initiated a series of regulation updates. Their goal is to:

  • encourage people to buy healthier products
  • reform food industry standards
  • make it easier for consumers to make informed decisions
  • force food companies to disclose added sugar on food labels.

According to industry experts, after the new sugar labeling regulations come into effect in 2020, confectionery producers will have the opportunity to limit sugar content, while also enhance the flavor profile and texture of their products. 

Sugar Substitutes Take Over

With the increasing adoption of regulations targeting sugary foods and beverages, companies consider creating healthier products. Producers’ primary goal is to adhere to the new rules and reduce sugar in sweetened food and beverages while improving their offerings.

As a result, some producers use plant-derived ingredients as a natural alternative to refined sugar. For instance, monk fruit extract is a popular solution to limit sugar content in food.

Monk fruit contains natural compounds mogrosides that are 300 times sweeter than sugar. Furthermore, it not only has a low glycemic index but also contains no calories or carbohydrates. Confectionery companies have developed a process to capture the fruit’s sweetness for use in food and beverages.

Other popular sweet alternatives include stevia, xylitol, and erythritol. In fact, many producers mix monk fruit extract with other natural products such as inulin or erythritol to reduce the intensity of the sweetness. As consumers continue to avoid artificial sweeteners, natural ones like monk fruit extract and stevia gain traction.

Organic Confectionery Drives Industry Growth

Another growing segment in recent years is organic confectionery and organic chocolate, in particular.

‘Organic’ is among the most popular claims for new product launches. One reason for the acceptance of organic products is the complexity of the organic claim and the variety of concepts associated with it.

The term ‘organic’ usually supports values that consumers search for in the products they purchase. More specifically, people look for organic products because they associate them with sustainability and fair labor claims. Thus, consumers believe they are making an ethical decision by purchasing organic products.

They also perceive organic products as natural and healthier ones. In addition, the organic claim is also connected with the ongoing free-from trend, which further meets consumer needs for a better diet.

Since consumer interest in organic products continues to grow, there is no lack of opportunities for confectionery companies. As a result, brands, boutiques, and independent producers introduce confectionery that is both indulgent and organic.

Innovation in the Confectionery Industry

To stay competitive, confectionery companies must differentiate their offerings. Taste and flavor are among the most important factors of differentiation.

In particular, confectionery companies focus on creating products, infused with unusual and savory flavors. They satisfy consumer desires for new flavors by introducing confectionery goods combined with bacon, kaffir lime, curry powder, and peppercorns, among others.

Meanwhile, sour candies are also in high demand, along with products with crunchy textures and premium ingredients. In fact, one of the most desired flavors in recent years has been salted caramel, which is most widely used with chocolate confectionery.

However, the balance between innovation and tradition is still important. That is because some consumer segments still prefer plainer flavors such as vanilla.

Furthermore, nuts remain as one of the most popular ingredients in confectionery products. One of the main reasons for the success of nuts as key ingredients includes the perception that they are good sources of fat, fiber, and protein.

Based on nut types, hazelnut has always been well-received, yet pistachios and almonds also gain popularity. Companies tap into the trend by offering not only chocolates with nuts, but also nuts covered in caramel, cocoa, cinnamon, and more.

The industry has also seen the introduction of chocolate made with silver fir tree schnapps and cannabis-infused chocolate.

In Asia Pacific, the confectionary industry experiences the expansion of new and innovative flavors. Manufacturers experiment with exotic flavor combinations, different textures, shapes, and preparation methods. Examples include wasabi marshmallows and cocktail-flavored candy. Companies also mix various vegetables such as beans and purple sweet potato with chocolate and fruits such as peach and lemon.

Functional Confectionery

Many companies have engaged in the creation of fortified chocolate, gums, and other confectionery. They are ideal functionality carriers and allow companies to stand out among competitors. Furthermore, the development of functional confectionery products typically addresses specific health aspects.

For instance, gummies fortified with multivitamins are promoted to enhance children’s health. On the other hand, chocolate is usually positioned as an energy booster and formulated with antioxidants.

When it comes to gum, it is frequently advertised as cavity-fighting and good for maintaining oral care. In fact, functional gums are recognized as one of the most promising categories in the industry.

Brands have been actively using xylitol and baking soda as common ingredients in their gum, designed to offer oral health benefits. Moreover, sugar-free gums can also be associated with additional health benefits. Some examples include nutraceutical gums to boost energy, gums to enhance immunity, and gums used as a dietary supplement.

As for chocolate, producers incorporate ingredients like guarana, coffee, and protein. Thus, they introduce more energy-specific claims. Furthermore, companies also use marketing to promote the cocoa flavanols that occur naturally in cocoa beans as a functional ingredient.

Cocoa flavanols strengthen the body’s natural resistance to environmental stressors, maintain cardiovascular health, including blood pressure, blood circulation, and cholesterol at healthy levels, among other benefits.

Small and Sustainable Packaging

In terms of packaging, the confectionery industry moves towards smaller and more convenient sizes. That is due to the rising consumer awareness of portion control, the rise in health and wellness across the globe, and the reduction of average household sizes.

In response, sales of individually wrapped chocolate products have increased in recent years. Companies within the industry offer different options such as calorie-controlled packets and mini-sized bars and bites.

They also attempt to increase consumption occasions with snacking through introduction of interesting flavors. They encourage experimentation and also promote healthier alternatives or functional benefits.

Many brands also follow the World Health Organization guidelines in the development of their products. They create individually wrapped snacks that contain 200 calories or less. This calorie reduction aims to encourage mindful consumption.

In addition, confectionery companies move away from plastic and opt for more sustainable alternatives, including recyclable paper packaging. Previously, packaging was designed to protect the product and be ergonomically viable. Today, it also needs to be sustainable.

Consumers search for more environmentally friendly options, including less wasteful packaging and more recycled materials. At the same time, confectionery packaging must also keep the product fit for consumption and remain convenient and attractive for the consumer.

For both sides of the market, plant-based and biodegradable packaging has become a high priority. For companies, packaging is an important medium for communicating responsibility. It is also a means to attract more customers and provide convenience.

For instance, in 2019, Nestlé SA introduced a bar packaged in paper using a high-speed, flow-wrap technology. The company converted to the new recyclable paper wrapper, featuring a water-based coating to ensure long-term freshness and shelf life.

Premiumization

As global populations become more educated and wealthy, they can focus more on things beyond their basic needs. That affects the buying motives of more affluent consumer segments.

Thus, the products they purchase need to do more than serve their primary function. They also need to express consumer identity and give consumers a good feeling. Accordingly, most consumers look for a balance between products meant for indulgence and health.

Consumers want a little indulgence, but without the added guilt of sugar and fat. Therefore, companies must provide a combination of great taste but without too much calories or sugar.

Furthermore, indulgence products must not contain any artificial flavors or colors. After all, consumers search for more natural ingredients. Some of the fast-growing categories are sugar-free chewing gum and sugar-free boiled sweets. These confectionery products enable consumers to indulge in them but without the guilt of consuming unhealthy food.

Confectionery Industry Forecast

The confectionery industry is projected to continue its positive trend, driven mainly by the new packaging formats and demand for premium products.

Most important industry drivers, especially in developed markets such as the USA, Japan, and the UK, include marketing activity, product innovation, changing consumer tastes, and hectic lifestyles.

Since people in these markets are more susceptible to marketing, companies need to create brand loyalty through a global brand. Furthermore, in developed markets, consumers are more interested in premium chocolate and sweets. That is expected to continue in the medium term.

Price, packaging, ingredients, provenance, point of purchase, and brand experience are expected to remain the most important aspects that impact consumer perceptions of a brand. Furthermore, premium perceptions can be amplified by purchasing chocolate in boutiques instead of supermarkets.

In that matter, sales of specialist chocolate stores are likely to increase in the medium term. They are likely to become a favorite sales channel for many global players such as Ferrero and Lindt, which can be attributed to the increasing demand for premium products.

In addition, sales of niche chocolate products are also projected to drive the industry, especially in more developed markets. As a result, the global confectionery industry is likely to see a more fragmented competitive landscape.

 

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