Food Bites Sugar-Based Confectionery Snacks and Confectionery Annual Market Quantification March 2011

Industry context 2 Sugar confectionery is made up of a wide array of sweet confectionery, commonly known as sweets. This analysis includes boiled, éclairs, gums and jellies, liquorice, lollipops, marshmallows, other sugar confectionery, panned, as well as toffees and chews. The main ingredient used in the manufacture of sugar based confectionery is sucrose. Through varying the types of ingredients used, boiling temperature and shaping methods, confectioners are able to make a wide range of sugar treats. In South Africa, boiled sweets are the most lucrative market within sugar confectionery with over one quarter of both volume and value totals. Niche offerings within this category include liquorice, other sugar confectionery as well as éclairs. There is a relatively higher concentration of small regional players in this category than in chocolate, bars and gum, possibly because of lower entry barriers. Independent wholesale is the dominant distribution channel used to distribute sugar confectionery in South Africa with over a third of the volumes sold through this channel. General retail and wholesale are also very popular distribution channels with over 50% of the industry’s volumes channelled this way. Similar to other confectionery products, regional distribution is concentrated in densely populated areas.

2010 Category Shares 3

Top 3 Analysis Boiled sweets decline 4 Boiled sweets continue to play a major role in the sugar confectionery category with 26.7% contribution to total volumes in Growth in the boiled sweets market averaged -0.6% per annum over the past four years. In 2010, the category shrunk by 2.9% and is yet to recover to the peak achieved in saw a drop in per capita consumption of 3.3% with South Africans consuming 9.5% less of boiled sweets than they did in The growth trend in the boiled sweet category is typical of products in the maturity stage of the product life cycle and focus should be directed at keeping consumer interest through activities such as flavour and packaging innovations. There is a growing trend towards sugar-free sweets and it is expected that this will rejuvenate the category, going forward.

Top 3 Analysis Conservative outlook for toffees, caramels chews 5 Caramels remain a niche offering within the toffees, caramel and chews category with 7.3% contribution to the category’s volume, down 1.0% from its 2009 share. The category maintained its position as the second most popular product in sugar confectionery. It contributed 16.3% to total volumes and 14.9% to market value. Toffees, caramels and chews showed healthy growth of 5.1% in 2010 but the category is expected to grow at much slower rates in the medium term. The increase in ingredient prices was noted as one of the factors that will curb higher levels of growth in the medium term as the cost of imported toffee ingredients continues to climb. Local manufacturers face stiff competition from cheaper Indian and Brazilian imports which are preferred by some outlets who focus on the bottom line

Top 3 Analysis Limited growth for gums and jellies 6 Gums and jellies are expected to return to 2006 levels by The category remained stable from 2009 with 1.5% growth recorded and is excepted to show higher growth levels in Per capita consumption was at 315.9g, up 1.1% from 2009 levels. General retail continues to be the main distribution channel for gums and jellies with 42.3% of the industry’s output distributed via this channel. Volume channeled to wholesale chains shrunk by 10.1%, while independent wholesale maintained its volume with a marginal growth rate of 0.9%. Regional distribution remains concentrated to high population density areas with Gauteng, KwaZulu-Natal and Western Cape contributing close to two thirds of the total volume. The good performance of this category is attributed to the health benefits of jellies communicated to consumers by most manufactures.

Food Bites Sugar-Based Confectionery For more information, contact: Jan Wegelin Research Manager Tel: (011) Mobile: