The Australian chocolate and confectionery manufacturing industry has remained resilient despite a recessive economy, falling disposable incomes, volatile commodity prices and increasing import competition, says new research.
The advent of the health-conscious consumer has required producers to be innovative with their product lines and adapt them to changing consumer trends. In the five years through 2011-12, industry revenue increased at an annualised 2.2%.
Revenue growth is also expected to grow by 2.2% in 2011-12 to $3.09bn. Naren Sivasailam, IBISWorld industry analyst, said: “The high level of value addition during the production process has enabled the industry’s major players to maintain high profit margins and perform well despite recessive economic conditions.”
High brand and customer loyalty commanded by the major players have also contributed to high profit margins and sales growth. The volatility of key inputs such as cocoa and sugar has resulted in strong import growth, as producers have resorted to foreign markets to source their products.
As economic conditions improve, IBISWorld expects sustained consumption of chocolate and confectionery. Sivasailam added: “Consumers will choose to indulge themselves with inexpensive, feel-good luxuries such as candy in an attempt to ease more pressing concerns such as mortgage or loan repayments.”
Strong brand loyalty, product innovations and aggressive marketing strategies will drive growth as the economy grows from strength to strength following the global financial turmoil. IBISWorld forecasts that industry revenue will increase over the next five years.
The Australian chocolate and confectionery manufacturing industry is characterised by a high level of market share concentration. Although the industry has a number of small- to medium-size operators, the majority of its revenue is generated by the major players: Kraft Foods, Nestle and Mars.
This concentration of ownership is due to an increase in acquisitions and organic growth for the major players through continued product innovation, strong brand loyalty and aggressive marketing.
Source: IBISWorld industry
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