Tasty innovation ensures resilience in cash-strapped, health-conscious Australia

03-Jun-2012 - Last updated on 04-Jun-2012 at 11:58 GMT

Australia's chocolate and confectionery revenues stills stacking up...

The Australian confectionery market has remained resilient in the face of economic struggles due to investment in product development from the industry, accoding to a report.

IBISWorld’s report 'Chocolate and Confectionery Manufacturing in Australia’ said that the industry had overcome volatile commodity prices and increased import competition by investing in NPD.

The report noted "a rise in consumption of healthy substitute products such as snacks, cereals, nuts, yoghurt and fruit had further squeezed demand.”

The advent of the health-conscious consumer has required chocolate and confectionery producers to be innovative with product lines and adapt to consumer demands, IBISWorld said.

Naren Sivasailam, industry analyst at IBISWorld, said: “The high level of value addition during the production process has enabled the industry’s major players to maintain high profit margins and perform well despite recessive economic conditions.”

IBISWorld data forecasts that Australia’s chocolate and confectionery will rise by 2.2% in 2011-12 and hit revenues of A$3.09bn. The sector has been growing steadily at this rate for the past five years and will continue to do so over the next five, it detailed.

Strong brand loyalty, product innovations and aggressive marketing strategies will underpin this growth, IBISWorld said.

“Consumers will choose to indulge themselves with inexpensive, feel-good luxuries such as candy, in an attempt to ease more pressing concerns such as mortgage or loan repayments,” Sivasailam said.

Steady but strong?

Euromonitor data shows that the BRIC countries are set to see considerably stronger growth than Australia.

It detailed that India’s US$1,034m chocolate and confectionery market is set to surge by 26.5% for 2011-12 – the strongest growth of the BRIC countries. China’s US$1,546m sector will surge 11.8% and Mexico’s US$1,104m industry by 4.1%.

Growth and revenue within Australia’s industry will mainly be generated by big brand names, IBISWorld said.

There is a high level of market share concentration due to an increase in acquisitions and organic growth among the major players, the report detailed – with Kraft Foods, Nestlé and Mars generating most revenue.

These names command high brand and customer loyalty, it said, thus ensuring tasty profit margins and surging sales.