By: Choc O’Lait • email: email@example.com
The upbeat theme of last month’s TFAP Exhibition in Singapore was ‘Reigniting the Industry’. It is a message that the moribund confectionery and fine food category should certainly take to heart. The latest Generation duty free figures, revealed by TFWA President, Erik Juul-Mortensen, show that sales dipped 0.3% last year.
It’s the second disappointing year in a row for this important US$ 4.86bn business – in 2015 confectionery and fine food sales dropped 4%. Now it’s true that other product categories besides confectionery suffered an anus horribilis in 2016. Some pretty strong headwinds buffeted our entire business last year – from terrorist attacks to currency fluctuations.
Yet I’d argue that confectionery is also being affected by a weakening of consumer demand in many mature markets. According to a recent report by Mintel, volume sales of chocolate confectionery were flat in key markets such as the U.S and U.K last year, causing cocoa prices to fall to a four year low in February.
Sadly the picture isn’t much brighter in emerging markets. In China, retail volumes of chocolate fell 4% last year (Euromonitor). There were also poor domestic performances for the category in Brazil (-6%) and Russia (-2%). The one outlying market was sweet-toothed India, where sales grew by 13% between 2015 and 2016 (Mintel).
You are not likely to see it being discussed in the mainstream travel retail trade press, but the clear, long-term problem for the sector is the growing global movement against sugar. Sugar is being blamed for the rising obesity epidemic and NO amount of consumer research, category management and range rationalisation on the part of operators and brand owners will change that.
In fairness, confectionery suppliers are finally starting to respond to this consumer-led trend. If you walked round the aisles at last month’s Singapore show, for instance, you would have seen smaller confectionery pack sizes on display and more products containing healthier ingredients, such as fruit, nuts and even matcha green tea.
Meanwhile, in Europe, scientists at Nestle are developing a new, natural way of structuring chocolate – which will allow the Swiss food giant to reduce the amount of sugar in its chocolate bars by 40% by making sugar crystals hollow.
As for travel retailers, they need to concentrate more on the product sub-sectors that are growing at present. High-end confectionery, healthy snacks and dark chocolate products are all selling well. And, with a few notable exceptions, the fine food category is also underdeveloped at many international airports – despite it being an easy way for airports to give their commercial offer a true sense of place.
The confectionery category in duty free has a future, certainly. But it has to evolve with changing customer demands and expectations if it is to flourish.