ISM 2016: German sweets industry stable in 2015 - slight decline in export business
In the run-up to ISM, the world's largest trade fair for sweets and snacks, the Federal Association of the German Sweets Industry e.V. (BDSI) is looking back on a mixed year in 2015. The production volume more or less stagnated (+0.2%), the turnover increased by 2.6%. The volume of the export business declined for the first time in years. Increasing market pressure amid tough national and international competition along with ever greater state regulation and bureaucracy and especially the high costs for raw materials are taking their toll on the profits of many of the over 200 industrial manufacturers of German sweets and snacks. The prices for the import raw materials cocoa, almonds and hazelnuts climbed to a record level in 2015. One of the reasons for this development was harvest failures or shortfalls due to weather conditions as well as the substantial increase in global demand. The industry remains optimistic however and expects significant stimuli from this year's International Sweets and Biscuits Fair (ISM), especially for the export business.
Sweets industry offers a wide range of products for individual consumer requirements
Under the motto of the German Parliament's resolution "Reinforce healthy diets, appreciate food," among other things a national strategy for the reduction of the amount of sugar, salt and fats in the finished products is being demanded. In total 2 million Euros of the Federal budget for 2016 have been allocated to finance this project. The German sweets industry is making its contribution towards this political and social development by offering product variations in addition to the classic sweets or is developing innovative products that conform with the changed consumer requirements. The current scientific cognitions are also continually taken into account in this connection. "Today, the consumers already enjoy a very broad offer of a wide range of products so that they can put together their diets according to their individual desires and needs," said Bastian Fassin, BDSI board member and Chairman of the International Sweets and Biscuits Fair Task Force (AISM). "Of course, the German sweets industry is open to new approaches, as long as these are based on scientific findings. In spite of all efforts to develop new recipes, the decision still ultimately lies with the consumers, because they only buy what they like eating. This is particularly true for the products of the German sweets industry, because here taste is the key criterion."
Economic development of the sweets industry in 2015
According to BDSI estimates, the over 200 industrial manufacturers of German sweets and snacks were able to slightly increase their production volume in 2015 by 0.2% up to around 3.99 million tonnes. In terms of value, the production rose by approx. 2.6% up to around 12.58 billion Euros. The BDSI estimates are based on the official figures from the German Federal Statistical Office.
In terms of volume, the domestic offer* (= production + import - export) increased by around 0.8% up to just under 2.64 million tonnes in 2015, whereas the domestic sales volume for the same period increased by an estimated 3.2% up to around 8.86 billion Euros.
(* The domestic supply is calculated without semi-finished products and raw ingredients.)
In 2015, the volume of the export business for sweets and snacks declined slightly for the first time in years. Overall, an estimated 1.96 million tonnes of sweets and snacks were exported. This corresponds to a decline of 0.9% compared to the previous year. The export turnover rose by 2.6% in 2015, amounting to approximately 7.22 billion Euros. The reasons for the decline in the volume of export include in particular a drop in demand from some of the neighbouring European countries, but also the Rouble crisis in Russia. The quality of the "made in Germany" sweets is still valued very highly abroad. With an export share volume of around 49% (previous year also 49%), almost every second tonne of German sweets is destined for export. Around 80% of all sweets exports go to European Union member states. Approx. 20% of the exports go to countries outside the EU, in particular to the USA, Switzerland, Russia and Australia. The trade with China, South Korea and Canada grew in 2015.
In 2015, the average consumption per capita of sweets, snacks and branded ice-cream amounted to an estimated 32.48 kg or the equivalent of 109.16 Euros. Thus, in terms of volume it remained pretty stable in the ten-year comparison (2005: 31.38 kg).
According to the statistics, every German person consumes 670 kg of food (excl. drinks) every year. The share of sweets accounts for less than 5%.
Employment figures: In 2015, the German sweets industry remained stable employing around 50,000 employees, which makes it the fourth largest sector in the food industry.
Outlook for the financial year 2016: Sweets industry remains optimistic
The year 2016 will bring the sweets industry opportunities, but also challenges. The industry is assessing the employment situation and the overall good consumer mood in Germany positively. The tense situation in the important raw material markets and the intense retail concentration as well as the increasing bureaucratic demands placed on the companies are the issues that are causing the manufacturers the greatest concern.
At the beginning of the year, the industry is thus showing reserved confidence. As growth opportunities are almost exclusively abroad, the German sweets industry would like national and European policies to promote the industry more strongly as a sector with high export potential and considerable added value for Europe. The framework conditions for export must be improved by making export procedures simpler and leaner and in particular by making it easier to access the market by formulating trading and preferential agreements with practical rules of origin. Unfortunately, at the moment, the approaches of the national and European politics are moving in the opposite direction.
The German sweets industry is always aware of the desires and needs of the consumers and develops manifold product concepts accordingly. Products personalised using new technologies are lying high in trend, i.e. filled chocolates with a forename imprinted on them, muesli and chocolate made following a personal recipe or 3D imprinted products.
The major trends on the sweets market continue to be products for consumers with special dietary needs. These include, for example, sugar-free sweets or sweets with a reduced sugar or fat content, which are often already frequently offered as an alternative to traditional products that have already been on the market for many years. The offer of sweets that are suitable for vegetarians or vegans also continues to expand. Furthermore, sweets that are lactose-free or gluten-free can be found in any well-organised supermarket.
The range of snack items is also becoming increasingly differentiated, offering ever greater variety in terms of flavour and taste – whether in the case of nuts or fried and baked products. There is additionally a high demand for variations of popular nut/fruit mixtures, for example with cranberries.
A majority of sweets and snacks are available in different portion sizes. Sealable packaging or larger packets of individually packed products are a further trend for 2016.
The use of sustainably produced ingredients in sweets and snacks is being intensively promoted by the industry and will remain a priority in the future too. This is especially true for cocoa, the key ingredient of chocolate.
Differing development among individual product groups
According to estimates by the BDSI, the production volume of chocolate products declined slightly in 2015. In total approx. 1.1 million tonnes of chocolate products were produced in Germany. This corresponds to a volume decrease of 0.4% compared to the previous year. In terms of value, production rose by around 3.4% up to a total of 5.44 billion Euros.
For the manufacturers of chocolate products, the Easter and Christmas business in 2015 remained more or less stable at the previous year level. The exports of chocolate products declined slightly in 2015. In comparison to 2014, 1.6% less chocolate products manufactured in Germany were exported.
The per capita consumption of chocolate products in 2015 was estimated to be 9.57 kg.
The manufacturers of biscuits can look back on a year with slight growth. The production of biscuits increased in volume by 0.2% based on estimates by the BDSI. In total, 725,000 tonnes of biscuits were produced.
In terms of value, the production experienced a growth of 1.6% up to approx. 2.24 billion Euros. The seasonal business with autumn and Christmas biscuits was satisfactory overall in spite of the at times very warm temperatures.
Similar to the domestic market, the exports of biscuits showed a positive development with a growth rate of 3.4% in volume and 6.2% in value.
The per capita consumption of biscuits in 2015 was estimated to be 7.32 kg.
Sweets and confectionery
The manufacturers of sweets and confectionery recorded a slightly positive development in 2015. The production volume rose in comparison to 2014 by an estimated 1% up to 575,000 tonnes. In terms of value, the production of confectionery rose by 1.2% up to around 1.72 billion Euros.
The development of the exports of sweets and confectionery was positive in 2015 with a growth rate of 3.8% in volume and 6.3% in value.
The per capita consumption of confectionery was estimated to be 5.75 kg in 2015.
The manufacturers of snack items were able to carry on the positive trend of the previous years. According to the estimates of the BDSI, the production volume rose by 1.3% up to around 286,000 tonnes. In terms of value, the production was able to notch up growth of 2.1% up to around 927 million Euros.
The category comprising salty snacks has been considered to be a strong growth segment on the German market for years already. The manufacturers of snacks are expecting the major sporting events in the year 2016 (the European Football Championships in France and the Summer Olympics in Rio de Janeiro) to bring important additional impulses.
The per capita consumption of snack items was estimated to be approx. 3.71 kg in 2015.
Chewing-gum is still very popular with the consumers: In 2015, the overall turnover of the German chewing-gum segment was approx. 638.1 million Euros (end consumer prices). That corresponds to a share of 21.9% of the overall turnover of the German non-chocolate segment. The non-chocolate segment describes the "sweets category" excluding chocolate, salty snacks and biscuits.
(*Source: Nielsen Answers 2015, Total Germany, Oct/Nov/Dec estimated)