Issue #8: Looking for answers
Hello everybody, welcome again to an exclusive coverage of all that is good in confectionery this week and overall in June. Sales are slowing a bit down in Venezuela given that elections are taking place next month so there is a lot of insecurity hence the dollar has risen in value causing a lot of savings. It was to be expected but now that is here we are truly feeling the political and economic pressure that the population is under.
More than that I've been suffering a bit of logistical nightmares given that I've noticed some shortcomings in our capacity to fulfill a lot of orders that possess many SKUs. We always deliver... but not on time due to production constraints. Anyhow, that's just a bit of what I am dealing with and some food for though as I am sure many of you can relate to that problem.
So if problems are what you are looking to avoid right now, why not take a break and read on the latest confectionery trends? Give it a shot, the news are on me!
Sweet Spotlights ??
PB & Synergies
It's been a year already since Smucker's acquired Hostess (Yes the famous Twinkies manufacturer) in a deal that would allow the company known for its spreads to diversify its portfolio given the massive success of a product we already covered in the first issues, the Uncrustable.
Smucker's immediately realized the main shortcoming of their successful product, and that was categorization, given that Uncrustables are placed in the frozen aisle rather than in the bakery aisle. This prompted an opportunity to acquire poor-performing Hostess to create synergies in the categorization aspect and also power an innovation pipeline to give the Hostess brand more value and subsequently create a positive ROI for Smuckers. Here is what we know after a year:
Background:
The J.M. Smucker Co. acquired Hostess Brands in a significant deal worth $5.6 billion. As a result, Hostess is now part of the Smucker Sweet Baked Snacks division.
Recent Performance:
In the first full quarter after the acquisition (ending April 30), the Smucker Sweet Baked Snacks division achieved impressive results. Segment profit reached $70.2 million, demonstrating the brand’s profitability. Net sales amounted to $337.2 million, indicating strong consumer demand for Hostess products which was a worrying point for Smuckers.
Growth Opportunities:
Smucker's remains optimistic about Hostess’s future growth prospects. They have several strategies in place like an exciting innovation pipeline, joint merchandising with legacy brands (Leveraging existing partnerships for increased visibility), expanded distribution channels, and cost synergies of approximately $100 million by 2026.
Strategic Priorities:
Smucker’s will focus on successful integration in the long term ensuring a smooth transition for Hostess within their organization by aligning all of their systems and processes, streamlining operations for efficiency.
It seems that after years of decadence, Smucker's finally became the missing partner for Hostess success as they keep gaining momentum in the market and expanding their footprint under their umbrella company.
Not your...actually, yeah, your grandma's candy
Let's address the elephant in the room. I hate licorice, and I probably always will. I can tolerate a bit of Twizzlers here and there but honestly, I would never go out of my way to buy a packet of licorice candy. Nevertheless, one of my fondest memories is seeing how much my grandma loved munching on a whole packet by herself (Not even Strawberry... Just licorice flavored... the black ones), so I found it compelling when I read an article that claimed licorice is soaring in terms of sales. I figured, why not? After all, consumers are looking for distinct flavor profiles and unique experiences more than ever. Add versatility to the mix as licorice can come in a variety of flavors and packaging making it a mix-and-match heaven for confectionerys.
The global licorice market is projected to reach $2.155 billion by 2028 with a compound annual growth rate of 4.6%. This growth is faster than the overall confectionery market, which has a forecast of 3.2%. Licorice's distinct flavor, derived from the glycyrrhizin compound in its root, has a long history of popularity and continues to attract a broad consumer base through evolving flavor profiles and innovative combinations.
Several factors contribute to the market's expansion. One key driver is the increasing consumer preference for natural and plant-based ingredients. Licorice, being a natural product, aligns well with this trend, appealing to health-conscious consumers.
The licorice market is also benefiting from its versatility in various applications as I mentioned before. Beyond traditional confectionery, licorice is finding its way into new product categories like beverages, dietary supplements, and pharmaceuticals. This diversification helps to sustain the market's growth and attracts new consumer segments.
Another factor driving the market is the innovation in licorice flavors and product offerings. Manufacturers are experimenting with new flavor combinations and formats to cater to changing consumer tastes. For example, the introduction of licorice-infused chocolates, gummies, and savory snacks has been well-received by the market.
Europe remains the largest market for licorice, driven by strong demand in countries like Germany, the Netherlands, and the Nordic region. However, the Asia-Pacific region is expected to witness the fastest growth due to increasing consumer awareness and demand for natural products. In North America, the market is also growing steadily, with a rising interest in licorice's health benefits and natural appeal.
Despite the positive growth trajectory, the licorice market faces challenges, particularly concerning the sustainability of the licorice root supply. The article highlights the importance of sustainable sourcing practices to ensure the long-term availability of licorice. Some companies are investing in licorice root cultivation to secure a stable supply chain.
In summary, the global licorice market is on a robust growth path, and for a change, I am reporting about a bitter confection in the sweet spotlight section, aint that ironic?
Cocoa Culture ??
Cocoa Price as of 28/06/2024
We are experiencing something of a decrease in prices finally as we went under the average price line of the past couple of months but since prices have been so cyclical we might experience another rise. Constant local efforts from other cocoa harvesting nations to increase production have also yielded positive supply efforts as they seize on the opportunity to pick up the lack of African output.
A massive save for chocolate
Swiss scientists have devised a method to create healthier and more sustainable chocolate. This new process leverages the entire cocoa pod, including its often-discarded parts such as the husk and pulp, to produce what is being termed 'whole-fruit chocolate.' This approach addresses several key issues in the conventional chocolate-making process: high sugar content, saturated fat levels, environmental sustainability, and economic challenges faced by cocoa farmers.
Traditionally, chocolate is made from cocoa beans, with the rest of the pod being discarded as waste. This new method is revolutionary because it incorporates the husk and pulp, typically unused components. By doing so, the resulting chocolate product is lower in sugar and saturated fat, making it healthier for consumers.
From an environmental perspective, the use of the entire cocoa pod significantly reduces waste. The traditional chocolate production process generates a large amount of waste from the unused parts of the cocoa pod as only 10% of the bean is used. By utilizing the husk and pulp, this innovative method not only minimizes waste but also enhances the overall sustainability of chocolate production.
The socioeconomic benefits of this new method are also noteworthy. Cocoa farming is a labor-intensive process that often yields limited financial returns for farmers. By creating a market for the whole cocoa pod, farmers can diversify their income streams and potentially increase their earnings.
The success of this new chocolate product will also depend on consumer acceptance and education. Nevertheless, after a few initial focus groups, it seems that the new chocolate recipe that uses more cocoa products that substitute sugar is being well accepted. There is a need to inform consumers about the benefits of whole-fruit chocolate, including its health advantages and its positive impact on the environment and cocoa farmers, thus making a massive impact on the industry and chocolate as a whole.
领英推荐
Ghana be a long month
In April we saw an all-time high for cocoa prices at $12,261 a ton which saw a market enter a crisis mode to manage unprecedented costs for their manufacturing process. There has been no other way to counter the crisis but to elevate prices to gain higher margins out of fewer sales, seeing a 17% price increase in the overall industry in the last year.
The problem is, that we are not out of the woods yet. As chocolate is still categorized as a price commodity and many markets are facing a recession, companies will have to go to greater lengths to offset the costs of cocoa. In the meantime, they can combat this by:
Cutting back on cocoa: Companies should pivot to sell confections with less cocoa percentage or modify recipes to play with cocoa proportions
Innovation: Start investing in cocoa alternatives for the long run in order to secure a long-term option for cocoa products. Cocoa will not suddenly cease to exist, but it has certainly shown signs of instability in terms of its supply chain
Long-term partnerships: Establishing key relationships with cocoa suppliers and making joint investments in their supplying capabilities will help secure long-term cocoa stock
Go premium: Place yourself out of the box and find how to aggregate value to your chocolate in order to market it as a more premium product rather than being placed as a price commodity
Confection diversion: Diversify! ever thought about going into other confection categories? Well, now is the perfect time as you cut down on chocolate production and use the extra capital to invest in other manufacturing lines
Flavor Fusion ??
Dot, dot, dot...
Krispy Kreme has been quietly on the rise over the last few years with a very rapid international expansion and also striking massive deals like having their donuts for breakfast in McDonald's in the next few years which will massively increase sales volume and outreach. Right now they have operations in 26 countries around the world with plans to expand to even more markets. One of the most unconventional expansions was their arrival in Saudi Arabia where they have the most Krispy Kreme stores in the Middle East area.
Although with expansion, innovation must follow as well to adapt to new markets. Krispy Kreme just announced the international launch of their new Doughnut Dots which are mini spheric versions of their original donuts. They will come in 5 different flavors including their original trademark glazed doughnut.
A lot of you are probably thinking, where have I seen this before? You can't be blamed as they are fairly similar to Tim Horton's doughnut holes, which are one of the most profitable menu items of the Canadian franchise. Just like Krispy Kreme, Tim Horton's approached a very radical and fast international expansion, and indulgence items like their famous doughnut holes have allowed for extra margins at an international scale.
Offering the same product in a mini version is also a great diversification strategy as it can be perceived as indulgence reduction and hence promote more volume sales from people who perceive doughnuts as radical items for their diets. They look great in my opinion, and I will give them a try whenever I am back at Krispy Kreme.
Mint Oreo parlos
Oreo is no stranger to continuous innovation. I would say it is one of those brands that is incredibly close to the reinvention of their flavors to keep adding seasonal surprises and satisfying niche markets in pursuit of reaching all of their target audiences. One particular audience is always interesting to explore, and that is the mint chocolate lovers.
Oreo has already explored this path by releasing mint-flavored Oreos which has been a success in its own right as it secured a spot on Oreo's permanent SKU roster. It has been so popular that Oreo has decided to innovate on top of that category as well.
Mondelez announced that they would be releasing a new mint chip waffle cone flavored Oreo, which now has waffle cone inclusions into the mint-flavored creme. It is expected to be released in July to add a new flavor for Summer and to give all mint lovers a new and fresh experience.
I have never been a mint chocolate fan but it seems to be a more than popular combination, so If you are into it I recommend you check it out when it releases July 8th at your nearest convenience store or supermarket
Sugar Rush (Facts and Stories about your favorite snacks and candies)??
The Crown's Jewel
It's time to switch it up a bit and head back up to the old continent for one of the most famous confections and brands in history. This brand has transcended time itself and has positioned itself as a premium sweet that also appears as a premium gift, a premium detail, and a premium experience. Its packaging reflects its smooth elegance, almost making it seem like a treasure that you would just find lying there on a supermarket shelf. The brand exerts pride and uniqueness that comes from the same proud people of Italy who take much love in their craft to the point of creating an insuperable article in its category. Today, we are going to explore the history of the Ferrero Rocher.
Ferrero Rocher, one of the most iconic and beloved confectioneries in the world, has a rich history that begins in the small town of Alba, Italy. The brand was established by Pietro Ferrero, a pastry chef and founder of the Ferrero company, in 1946. Initially, Pietro created a hazelnut paste called "Pasta Gianduja," which laid the foundation for what would become Ferrero's flagship product. His innovative approach to using hazelnuts, which were plentiful in the Piedmont region of Italy, was driven by the scarcity of cocoa during and after World War II (Ring a bell for some of the articles we have been talking about?).
The Ferrero company truly began to flourish under the leadership of Pietro’s son, Michele Ferrero. Michele took over the business in 1950 and is credited with transforming it into a global confectionery powerhouse. One of his key innovations was Nutella, which debuted in 1964 and quickly became a global sensation.
In 1982, Michele Ferrero introduced Ferrero Rocher to the market. The product was an instant success, known for its distinctive gold foil wrapping and luxurious taste. Each Ferrero Rocher consists of a whole roasted hazelnut encased in a thin wafer shell filled with hazelnut cream, all coated in milk chocolate and chopped hazelnuts. The combination of textures and flavors set Ferrero Rocher apart from other chocolates.
The gold foil wrapping was a strategic choice that emphasized the product's premium quality and made it stand out on store shelves. This attention to detail in the packaging, along with its high-quality ingredients, contributed to Ferrero Rocher’s image as a luxurious confectionery.
Ferrero Rocher’s success can also be attributed to the company’s dedication to quality and consistency. The Ferrero family ensured that every aspect of production was meticulously controlled, from the selection of hazelnuts to the final packaging. This commitment to excellence helped establish Ferrero Rocher as a trusted and beloved brand worldwide.
The Ferrero company has also grown significantly, becoming one of the largest confectionery companies in the world. It remains family-owned, with Giovanni Ferrero, Michele’s son, currently at the helm. Under Giovanni’s leadership, Ferrero has expanded its global footprint through strategic acquisitions and continued innovation.
Ferrero Rocher’s history is a testament to the power of tradition, innovation, and quality. From its humble beginnings in a small Italian town to its status as a global icon, Ferrero Rocher has maintained its commitment to excellence and its ability to delight chocolate lovers around the world.
That is it for this week. Some exciting news and tips from the confectionery world as well as an exciting overview of your favourite Italian confection. As we are now entering Summer a few of you will have turbulent months filled with promotions and sales boosts especially if you are in the confectionery business. It is a sweet industry but a hard-working one. Don't forget to hit the beach, the mountain, or somewhere you feel at your most to get some well-deserved rest to refresh the mind and the soul. Also don't forget to praise yourself with some sweets or snacks to reconnect with your favorite brands and enjoy a nice break once in a while.
Digital Marketing & Executive Management - Chocolates St.Moritz
5 个月Thank you teacherrr!!! It means so muchhh ??
So proud of you, sweetie! Keep up the good work and the great writing!