The further growth of chocolate confectionery in 2018 was supported by a strong economic environment and hence rising consumer confidence and demand for added-value products. Such value-added products included those with a health and wellness positioning, for example with healthier but more expensive ingredients such as cocoa rather than cheap sugar, as well as a focus on sustainability, for instance offerings featuring organically grown ingredients or fairtrade properties.
This growing share of products with health and wellness-related properties is also connected to another very important trend, which is the one towards premium products. Thereby, the category has been able to benefit from the strong indulgence trend, which is being supported both on the supply and demand side.
Average unit price in chocolate confectionery is expected to rise further over the forecast period, with this being not only the result of growing demand for added-value offerings but also the increasing price of commodities, including cocoa. The reason for this is rising global demand in combination with fluctuating harvests.
Ferrero Deutschland remained the leading player in chocolate confectionery in Germany in 2018, commanding nearly double the share of its two nearest rivals, Lindt & Sprüngli and Mondelez. Ferrero is expected to continue with its rather conservative approach, which means that changes to well-known and well-liked brands, for example Kinder, tend to be limited.
Second-ranked Chocoladefabriken Lindt & Sprüngli grew its share slightly in 2018. As a premium player, the company has been able to benefit from the premiumisation trend, although it has also focused on seasonal products, for example around Easter and Christmas time, through a growing range of different advent calendars, during which time there tends to be a drop in the price-consciousness of the average German consumer.
The example of Ludwig Schokolade, with its flagship brand Trumpf, shows that despite the fact that the leading players in the category are all multinationals, success is also possible for a domestic player. Towards the end of the review period the company was very active in terms of new product development, for example launching Trumpf Edle Tropfen In Nuss in two special editions (one with a CD featuring a crime thriller radio play and the other with vodka-based specialities in the context of the Football World Cup), as well as three tablets with Batida de Coco.
Gum remained a very mature and saturated category in Germany in 2018 with very few growth opportunities, resulting in both a value and volume decline and a fairly bleak outlook over the forecast period. Apart from new flavours, which are not regarded by many consumers as genuine innovations and so are often not able to boost sales to any notable degree, manufacturers do not have too many opportunities in the category to drive a meaningful increase in sales.
Growth in gum can typically only be achieved in niches, for example with products which are in line with current trends, especially the ongoing health and wellness trend. Gum will be able to benefit mostly from products aimed at oral health and dental care, for example by offering additional benefits such as teeth whitening.
As far as the different gum categories in Germany are concerned, the best performance, or rather the weakest decline, over the forecast period is expected from sugar-free chewing gum, which at least does not have a negative image with regard to widespread problems such as tooth decay and diabetes. For bubble gum and sugarised chewing gum, the future is rather bleak, with a further significant decline in value and volume terms looking inevitable.
Wrigley continued to dominate gum in Germany in 2018, accounting for more than three quarters of overall value sales. At the end of the review period the company was able to further strengthen its position, with a similar development also expected over the forecast period.
In Germany, and quite unusually when compared to most other categories in packaged food, private label is not, at least not yet, a real threat to Wrigley. On the one hand, Wrigley profits from very strong awareness and likeability among German consumers, while on the other its products are not so expensive as to encourage the average consumer to seek out cheaper alternatives.
The end of the review period saw the emergence of small start-ups like Das Kaugummi, which provides chewing gum in very simple packaging but also offers innovative new flavours. However, the long-term success of the company is unlikely, according to industry experts.
Sugar confectionery in Germany continued to be challenged by many different factors in 2018, thus posting a further decline in both retail current value and volume terms. The category also faces a bleak outlook over the forecast period.
Despite these less than favourable circumstances, all major players present in the category will continue to support their products and brands via various activities in order to at least defend their share of sales or even improve their position in the competitive environment. Such activities will include the launch of innovative new products as well as promotional support, often at or close to the point of sale.
The category’s decline will continue to put pressure on unit prices as another method to gain share, at least in volume terms, is the use of price promotions, which are quite frequently used in sugar confectionery in Germany. Even in the case of higher commodity prices or rising production costs, all manufacturers tend to be very apprehensive about increasing their prices to compensate for these negative developments as they do not want to run the risk of losing share to their competitors.
At the end of the review period, Haribo, the leading player in sugar confectionery in Germany, had to deal with increasing competition and a declining share of overall value sales, partly due to being late to react to the trend towards vegan products. Over the forecast period the company will have to try and win back lost share from its competitors.
Third-ranked Katjes Fassin continued to steadily grow its value share in sugar confectionery at the end of the review period. Compared to Haribo, the company has the advantage that its sales are growing from a lower base and therefore it is easier to achieve growth, especially in areas where thus far fewer products are present.
Compared to other categories in packaged food, private label is expected to continue to account for a rather small share of sales in sugar confectionery in Germany. Over the review period the combined share of private label in retail value terms was only the same as that of Haribo, with most experts agreeing that no significant change to this will be seen over 2018-2023.
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This industry report originates from Passport, our Packaged Food market research database.