Confectionary Industry
The confectionery industry has historically been defined as a manufacturing sector comprised of firms primarily involved in processing candies, cocoa products and chewing gum[1]. Today, the confectionery industry has gone beyond previous limitations and has extended its’ range to include cookies, ice-cream, pastries, cakes and other sweet goods. Currently, chocolate based products are dominating the confectionery market as can be seen by their 71.1% market share[2]. Mondelez International Inc. is the leading vendor in the Canadian confectionery market with a 23.9% share of the market’s value[3]. In 2014, Hershey was the dominating vendor with a 25.6% share of the market, but currently they only possess a 16.1% share. Mondelez International Inc. was able to successfully take away market share from The Hershey Company[4].As of 2016, Mondelez International Inc. is the leading vendor in sales of the “Sweet Biscuit” category with a 34.38% share of the Canadian confectionery market[5]. Overall, food manufacturing industry is heavily regulated and Mondelez International Inc. falls under the North American Industry Classification System as 311310, 311340 and 311350 as they are engaged in confectionery manufacturing with sugar and chocolate[6].
In 2015, the overall market size of the confectionery industry was reported to be valued at $3202.9 million USD, whereas in 2014 the market’s reported value was $1446.7 million USD[7]. Over a four year period, from 2011 to 2015, the confectionery industry in Canada grew at a compounded annual growth rate (CAGR) of 2.7%. This rate of growth is unimpressive when compared to the growth experienced by the confectionery industries in USA and Mexico, which grew at a rate of 3.1% and 4.7% respectively[8]. According to Market Line, the value of the confectionery industry in Canada is expected to grow at a CAGR of 2.6% between the years of 2015 to 2020. In 2020, sales of confectionery products are expected to reach approximately $3650.3 million USD[9].
In recent years, the confectionery industry in Canada has experienced a slow-down in growth. According to Euromonitor, growth in the confectionery industry is driven by innovation as was seen with the introduction of Dark Chocolate products which caused growth in the industry at the time[10]. In order to combat the low levels of growth and drive sales, firms are continually innovating and developing new products that contain more natural ingredients and distinctive flavours. This is in order to satisfy the changing consumer trend of wanting innovative and healthier products. This shift in consumer preference towards products like cereal bars and biscuits which are perceived as healthier, has negatively impacted sales of confectionery products such as traditional chocolate and candies. Currently, the industry is experiencing a five-year low in the price of sugar, which provides leading firms with some freedom to experiment with new products in the market, without a significant distortion in their profit margins.
