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Polarisation in value proposals set the pace in 2018
As witnessed throughout most packaged food categories in Costa Rica during 2017-2018, polarisation in value proposals continued to set the pace amongst chocolate confectionery. On the one hand, the 2017 entry of Cooperativa de Productos de Leche Dos Pinos (which launched the local brand Gallito from Mondelez during late 2016) represents most economy value proposals targeting local mid- and low-income consumers, using nostalgia and a renewed brand image to increase its sales potential, which include new products’ hybrids with its related ice cream portfolio to increase awareness and reinforce top-of-mind positioning.
Local and regional brands continue to leverage on higher quality proposals
During the 2017-2018 period, there was a noticeable developing movement that aims to position high quality and smaller scale local chocolate confectionery proposals at the top of the rising trend towards high-quality chocolate amongst local high-income consumers and tourists. This scenario leverages on Costa Rica’s brand position (as an ecological country) to provide additional momentum to more natural and premium alternatives that include organic certifications and other types of denomination of origin and high-quality claims associated with local cacao bean varieties and the pre-Columbian origin of chocolate as part of a re-discovered indigenous heritage.
Further specialisation is expected to gain additional momentum by 2023
Even though it is anticipated that local leader Dos Pinos will continue to push its entry level brand Gallito as the main chocolate confectionery reference available in Costa Rica (which will continue to target lower-income consumers including children), the demand from local mid- and high-income consumers is expected to continue growing in sophistication over the forecast period, by targeting young adults and more informed members of the population. A higher number of natural and pure proposals will set the pace of new developments by 2023, where the use of more premium types of cacao beans as well as the promotion of specific growing zones and organic plantation claims will hold additional relevance amongst the more affluent local population as well as amongst tourists.
Local player Dos Pinos leads chocolate confectionery
After purchasing local confectionery brand Gallito from Mondelez during late 2016, the leading domestic dairy player Cooperativa de Productos de Leche Dos Pinos, RL, managed to maintain its leading position and quickly improve the sales performance of its chocolate confectionery, using a combination of brand activation strategies capable of taking advantage of already consolidated economy-of-scale manufacturing and logistics processes. Gallito remained focused on suiting the budget capabilities amongst mid- to low-income local consumers and children, providing low-priced alternatives that can be bought in individual packaging across most traditional grocery retailers, as well as in bagged presentations found through modern grocery retailers.
International and smaller scale local players lag behind in sales
The leading global manufacturers Mars (Snickers, M&M’s, Milky Way), Mondelez (Milka, Cadbury) and Mercasa (Hershey`s) followed in ranking in 2018, also benefiting from their recognised manufacturing and distribution capabilities, which leverage on a regional/globalised marketing context and the support of strong local distribution networks. These allow their products to be available across most modern and traditional grocery retailers throughout the country at relatively competitive unit prices.
Low levels of innovation merge with new launches and packaging updates in 2018
Given the overall maturity of gum in Costa Rica, this category maintained a low innovation profile over 2017-2018, with major global brands investing in maintaining their competitive advantage by relying on new extensions that promise longer-lasting flavours and more convenient and modern packaging formats. On the one hand, most adults in Costa Rica do not consider gum an essential food; on the other hand, bubble gum and chewing gum have lost their popularity amongst children and teenagers, as this is often considered an unhealthy habit that can cause tooth cavities and digestive issues (due to additional stomach acid production).
Flavour updates and multiple functional claims continue to set the pace
As witnessed in previous years, gum offers continued to move in line with additional levels of brand extensions, using exotic fruit flavour combinations and fresh breath claims as their main selling points, mostly targeting local teenagers and the young adult population. In this context, the main specific feature that continues to gain momentum amongst gum consumers, remains associated with longer-lasting flavour claims and fresh breath, which moves away from previous years’ focus on whitening formulas that most likely did not meet the long-term expectations of consumers.
Additional benefits and more exotic flavour combinations anticipated by 2023
As the demand for gum continues to lose ground over the forecast period, particularly amongst local children and teenagers, major global players are expected to continue focusing on creating value amongst young adults (particularly millennials), through new functional features and innovative flavour alternatives, including the use of exotic and functional fruits and herbal blends. In this context, it is expected that a new generation of products made with all natural functional ingredients (based on extracts of essential oils), will be capable of capitalising on the growing trend towards natural health and wellness products.
Mondelez maintains its dominant position in 2018
Mondelez Costa Rica Ltda retained its consolidated competitive advantage in gum in Costa Rica during 2018, where it continued to benefit from consolidated manufacturing and distribution capabilities. This allowed it to reach vast levels of brand penetration through most modern and traditional grocery retailers in the country, where its main brand Trident remained omnipresent.
Higher-end international brands follow in value terms
The remaining value share within gum in Costa Rica remained relatively fragmented, being characterised by different imported brands’ proposals such as Orbit, Ice Cubes and the recently introduced Mentos, competing for sales based on specific features (particularly long-lasting fresh breath), more convenient plastic jar packaging and innovative flavour combinations capable of addressing the main functional expectations of their target base of mid- and high-income young adult local consumers. Under this scenario, most of these specific proposals are expected to continue gaining ground over the forecast period, taking advantage of free trade agreements with the US, capitalising on their capability of providing more competitive unit prices while leveraging on the rising popularity already anticipated in relation to more functional proposals with more appealing flavour profiles.
Gallito relaunch continues to set the pace during 2018
As witnessed in chocolate confectionery, the acquisition of local confectionery brand Gallito by regional leading dairy player Dos Pinos from historic category leader Mondelez during 2017, continued to consolidate as the main category trend during 2018. This scenario continued to provide additional exposure to Gallito brand amongst a broader base of mid and low-income buyers, while finding additional room to grow by addressing mid- and high-income millennial consumers with nostalgic marketing campaigns and by maintaining local children’s interest based on these products’ wide availability and their low unit prices.
Imported specific products continue gaining share of mid-income consumers
Another major trend that continued to gain momentum across sugar confectionery was related to the increasing availability of more affordable imported proposals, capable of providing additional levels of innovation (such as new flavours and packaging formats), while increasing in availability though modern grocery retailers. Global player Walmart introduced its private label line Great Value during 2017, adopting a more premium positioning in relation to traditional regional brands such as Gallito, Colombina, Super and Diana, but still being more affordable than other imported options such as Brachs, Skittles and Perugina.
Natural developments and reduced alternatives expected to gain momentum
As a broader base of the local mid- and high-income population continue to adopt healthier lifestyles over the forecast period, their demand for more traditional high sugar content confectionery options are expected to continue losing ground amongst locals, moving further towards dehydrated fruit options developed for both children and adults. Under such a scenario, major manufacturers are anticipated to focus on developing alternative confectionery options based on real fruit juice and sweetened with less sugar and other types of natural sugar substitutes (such as stevia and xylitol) targeting children and younger adults.
Mondelez retains leadership in 2018
The leading global player Mondelez, maintained its competitive edge in sugar confectionery, based on the good performance of its medicated confectionery brand Halls, which in spite of facing multiple imported brands aiming to gain penetration with this specific area over the review period (such as Riccola and Vick), managed to maintained its privileged top-of-mind position based on broad levels of availability and very competitive unit prices. Mondelez continued to benefit from consolidated manufacturing and distribution capabilities (which include its leading role within other complementary categories such as chocolate confectionery and gum), allowing it to reach vast levels of brand penetration through most modern and traditional grocery retailers across the country, where its main brand Halls often remains closely displayed to gum brand Trident.
Dos Pinos ranks second
Ranked second, the local player Cooperativa de Productos de Leche Dos Pinos, RL has managed to improve the logistics and marketing reach of the local traditional brand Gallito, after closing an acquisition deal with Mondelez in late 2016. Gallito remained focused on suiting the budget capabilities amongst mid- to low-income consumers, providing low-priced alternatives that can be bought in individual packaging from most traditional grocery retailers, as well as in bagged presentations found through modern grocery retailers.
Regional and international proposals remain fragmented
The remaining value share within sugar confectionery in Costa Rica remained relatively fragmented, being characterised by low-priced imported brands such as Diana, Willy, Colombina and Super, which compete for sales based on pricing and availability (similar to Gallito). On the other hand, there is a vast array of specific products that target more affluent consumers.
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The Confectionery in Costa Rica market research report includes:
Analysis of key supply-side and demand trends
Detailed segmentation of international and local products
Historic volumes and values, company and brand market shares
Five year forecasts of market trends and market growth
Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
What is the market size of Confectionery in Costa Rica?
What are the major brands in Costa Rica?
With economic recovery far from guaranteed, are consumers cutting back on impulse and indulgence food items like confectionery?
How are manufacturers addressing consumer concerns over health and obesity?
What does the future hold for ethically sourced products?
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Increasing segmentation and new value proposals during 2018
Functional ingredient updates and new value for money proposals set the pace
New added value proposals and Walmart’s Great Value range gain presence
Modern grocery retailers keep gaining ground
Convenient, affordable and healthier options growing in popularity
Sales to Foodservice
Further consolidation based on additional economy of scale savings New auto service model attracting consumers Technological innovations and new distribution centres set to further consolidate foodservice sales
Table 1 Foodservice Sales of Packaged Food by Category: Volume 2013-2018 Table 2 Foodservice Sales of Packaged Food by Category: % Volume Growth 2013-2018 Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume 2018-2023 Table 4 Forecast Foodservice Sales of Packaged Food by Category: % Volume Growth 2018-2023
Table 5 Sales of Packaged Food by Category: Volume 2013-2018 Table 6 Sales of Packaged Food by Category: Value 2013-2018 Table 7 Sales of Packaged Food by Category: % Volume Growth 2013-2018 Table 8 Sales of Packaged Food by Category: % Value Growth 2013-2018 Table 9 GBO Company Shares of Packaged Food: % Value 2014-2018 Table 10 NBO Company Shares of Packaged Food: % Value 2014-2018 Table 11 LBN Brand Shares of Packaged Food: % Value 2015-2018 Table 12 Penetration of Private Label by Category: % Value 2013-2018 Table 13 Distribution of Packaged Food by Format: % Value 2013-2018 Table 14 Distribution of Packaged Food by Format and Category: % Value 2018 Table 15 Forecast Sales of Packaged Food by Category: Volume 2018-2023 Table 16 Forecast Sales of Packaged Food by Category: Value 2018-2023 Table 17 Forecast Sales of Packaged Food by Category: % Volume Growth 2018-2023 Table 18 Forecast Sales of Packaged Food by Category: % Value Growth 2018-2023
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Why buy this report?
Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.