Confectionery in Hungary

Prospects

Hungarians look to premiumisation due to economic stability

With economic stability, a low unemployment rate and increasing disposable incomes, Hungarians looked to premium products that offered them a greater level of indulgence for their chocolate confectionery purchases. This was evident in the rising unit price of chocolate confectionery in 2019, supporting higher current value growth compared to volume.

Increasing demand for higher quality and healthier aspects to chocolate

Along with premiumisation is the demand for healthier or perceived healthier chocolate confectionery due to the rising health and wellness trend in the country, resulting in a search for higher quality products that contain fewer additives or claim to be organic. Producers are therefore launching new exotic or unconventional flavours (to Hungarians) such as mint, chilli, or orange to tablets, with the latter being one of the most popular categories within overall chocolate confectionery.

Hungarian artisanal producers perform well at International Chocolate Awards

In line with the search for premium, high-quality products, local artisanal producers of chocolate confectionery performed well at the International Chocolate Awards held at the end of 2018 in Florence, Italy. Hungarian producers won a number of prestigious awards including ChocoCard and Harrer Chocolat (Peru 72% Charapita Chili) in the flavoured bar section for their use of high percentage cacao content and interesting flavours, while chocoMe’s Petit 21 (bite-sized milk chocolate squares with a praline and coffee filling) won a Silver Award in the category of milk chocolate ganache/truffles.

Competitive Landscape

Players look to offer higher quality and interesting flavours

Chocolate confectionery continued to be led by Mondelez Hungária Kft, gaining further value share for its popular leading brand Milka. Local consumers continued to show a preference for multinational products, despite the presence of smaller local brands, with the former enjoying in-store promotions and frequent advertisements.

Nestlé continues to gain ground with new premium launch

Third-ranked Nestlé Hungária Kft continued to gain value share in 2019, with its popular brand Boci performing well with its filled tablets. Its multinational brand Kit Kat ranked much lower.

Established brands introduce new flavours and twists to tried and tested products to retain interest and broaden appeal

To create further interest amongst consumers, producers of chocolate confectionery further expanded their portfolios at the end of the review period, intensifying competition in an already congested category. Therefore, chocolate pouches and bags witnessed the launch of Bites for Mars, Twix and Snickers brands.

Prospects

Chewing gum continues to dominate due to breath freshener attributes

Gum in Hungary continued to be dominated by chewing gum with bubble gum remaining a niche that suffers from a lack of innovation and visibility in retailers compared to chewing gum. On the other hand, chewing gum continued to record higher current value growth compared to the previous year due to unit price increases, with stable retail volume growth.

Diversity of packaging formats offers convenience to consumers

A number of packaging options are emerging in Hungarian gum, with consumers taking advantage of bulk packs that allow them to keep a number of smaller gum packs in different locations such as the car or in their bags offering easy accessibility. In addition to traditional sticks, gum is now offered in plastic containers in pellet form, as well as flexible pouches.

Self-checkouts pose challenge to promotion and display of gum

The rapid emergence of self-checkouts in modern grocery retailers is beginning to challenge the marketing efforts of players as they look to find suitable alternative locations to place their products and gain greater visibility due to lack of space by the self-checkout area. Traditionally, retailers placed smaller products such as snacks and gum alongside the conveyor belt as consumers unload their shopping to be scanned by the cashier, encouraging impulse sales when they are more likely to be noticed and purchased.

Competitive Landscape

Wrigley strengthens domination of gum

Wrigley Hungaria Kft continued to dominate gum in Hungary in 2019, strengthening its position by gaining further value share. The player offers the leading five brands in chewing gum; Orbit, Winterfresh, Airwaves, Orbit White and Orbit Fruit Flavoured Gums with the latter continuing to record the highest current value growth after its entry in 2016.

Halls banks on success in sugar confectionery to attract consumers of gum

Already present with its Halls brand in medicated confectionery and mints, Mondelez decided to launch the brand in chewing gum in June 2018, hoping to capitalise on the success it enjoys in other categories. The player has not been present in the category since 2017 after the exit of Trident.

Natural sweetener xylitol taps into health and wellness trend

With the rising health and wellness trend in Hungary and the search by local consumers for reduced sugar levels in the packaged foods they purchase, a number of brands have emerged in chewing gum that have taken a different strategy from sugar-free chemicals. Xylitol from Lotte Group recorded strong current value growth in 2019.

Prospects

Prices set to increase further with rising public health tax

The public health tax (or “crisps tax” or “fat tax”) in Hungary is being further increased in 2019 which will result in another rise in unit prices. The tax was introduced to the country in 2011 in an attempt to reduce the consumption of non-essential packaged foods that were deemed to be too high in sugar, fat and salt, with the end consumer paying through higher prices on the products they purchased including sugar confectionery.

Players looks to reduce sugar content of their products

The rising health awareness in the country in addition to the public health tax on sugar confectionery deemed too high in sugar, has encouraged players to offer an increasing number of products with reduced sugar or sugar free content, not only as a way to avoid having extra tax added to their confectionery which can impact sales amongst lower-income consumers and may push them to choose healthier snack options outside of the category such as dried fruit, but also to appease the concerns of parents who are more likely to choose reduced sugar variants for their children. In addition, they are searching for healthier ingredients that may be included in the products such as medicated confectionery Verbena, which offers sugar-free confectionery in addition to vitamin C with Eucalyptus and Menthol flavour.

Healthier aspects of medicated confectionery appeal to consumers

Players present in mints and medicated confectionery, with a high presence of multinationals, are the most active in their communication strategies, with the latter in particular able to promote their “healthier” aspects with sugar free variants and their innovation in flavours. Medicated confectionery brands such as Ricola can advertise their use of certain herbs as a key ingredient which gains consumers’ attention, especially those who are more concerned about health and wellness and want to reduce their sugar intake.

Competitive Landscape

Multinationals lead fragmented competitive landscape

The fairly fragmented category of sugar confectionery continued to be led by multinational players led by Ferrero Magyarország Kft with its popular Tic Tac brand, Mondelez Hungária Kft with Halls medicated confectionery and Haribo Hungária Kft. The remainder of the category is comprised of a number of smaller brands in addition to private label lines offered by popular modern grocery retailers such as Coop, Spar, Lidl and Aldi.

Aldi launches vegan jellies to enter health and wellness space

Already present in toffees, caramels and nougat with an ongoing strong performance, Aldi launched a new range of fruit gummies in February 2019 to enter the health and wellness space, with a vegan range called Sweet Land. The new range does not include ingredients from any animal source, is free from enhancers, preservatives and artificial colourants and does not use palm oil in its production.

Branded sugar confectionery amongst strongest performers

While private label continues to offer local consumers a range of affordable sugar confectionery, it did not perform as well as its branded counterparts, with Hungarians appreciating well-known multinational names. Haribo Hungária continued to gain value share in 2019 due to the ongoing strong performance of its second-ranked Haribo brand, and the success of pastilles, gums, jellies and chews in Hungary, while its lollipop brand Maoam continued to gain share and record strong value sales growth.

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