Sector Trend Analysis - Confectionery Trends In China

April 2018

Executive summary

With its large population and rising middle class, China is certainly an interesting market for companies seeking to export. However, increasing awareness of health and nutrition has hindered retail sales of confectionery products over the last few years (2012 to 2016). This negative perception of confectionery products can, however, be reduced with new focus on high-end indulgences with quality ingredients, or "better for you" products that have reduced sugar or functional ingredients. Chinese consumers are seeking confectionery products with better ingredients, superior taste, and more attractive packaging.

Although sugar confectionery has historically been the most popular category, it is expected that chocolate confectionery will experience the most growth during the forecast period (2017 to 2021), particularly in the "chocolate with toys" sub-category. These types of chocolate, which are marketed toward children, often contain a smaller portion of chocolate than other products, making them more appealing to parents who want to treat their children, but in moderation.

According to Mintel's Global New Product Database, 3,537 confectionery products were launched in China from 2012 to 2016, with an average of 707 product launches per year. The top five claims during this time period include, "for children," social media, halal, functional, and low/no/reduced sugar.

Contents

Consumer trends

Chinese consumers are increasingly educated on health and nutrition and consequently, consumers’ spending behaviour is reflective of that. Consumers are moving away from conventional products with artificial ingredients, and seeking to indulge in sweets less frequently, but when they do, they are increasingly likely to splurge on high-quality premium products. Consumers are also more interested in products that have health and wellness claims, such as reduced sugar, high in protein, or natural ingredients. Functional ingredients, such as caffeine, may also play a role in persuading consumers to pay a premium for certain high-quality products. Chewing gum, particularly the sugar-free varieties, have been more popular than bubble gum because of their functionality for oral health and fresh breath.

Retail sales

Of the three main confectionery categories, sugar confectionery has historically been the most popular in China, representing 67% of total confectionery in 2016. Chocolate confectionery represented 18% of total confectionery in 2016, while the gum category represented approximately 15%. Although sugar confectionery is expected to continue as the largest category, it is anticipated that the chocolate confectionery category will grow in value at a compound annual growth rate (CAGR) of 7% from 2017 to 2021 and take over some market share, reaching 20% of total confectionery by 2021.

Historical confectionery retail value sales in China, US$ millions
Segment 2012 2013 2014 2015 2016 *CAGR (%)
2012-2016
Total confectionery 13,436.1 14,709.9 16,159.8 15,679.1 15,724.6 4.0
Sugar confectionery 8,935.4 9,625.9 10,467.5 10,320.7 10,463.1 4.0
Chocolate confectionery 2,231.8 2,581.1 2,944.6 2,909.1 2,907.4 6.8
Gum 2,269.0 2,502.9 2,747.6 2,449.4 2,354.2 0.9
Source: Euromonitor, 2017.
Forecasted confectionery retail value sales in China, US$ millions
Segment 2017 2018 2019 2020 2021 *CAGR (%)
2017-2021
Total confectionery 16,006.4 16,624.3 17,449.0 18,521.2 19,806.3 5.5
Sugar confectionery 10,719.4 11,148.9 11,653.6 12,284.5 13,016.9 5.0
Chocolate confectionery 2,966.1 3,099.5 3,293.0 3,557.6 3,891.1 7.0
Gum 2,320.9 2,376.0 2,502.5 2,679.0 2,898.3 5.7
Source: Euromonitor, 2017.
Historical confectionery retail volume sales in China, ‘000 KG
Segment 2012 2013 2014 2015 2016 *CAGR (%)
2012-2016
Total confectionery 2,093,136 2,186,499 2,320,498 2,203,078 2,118,965 0.3
Sugar confectionery 1,833,646 1,902,876 2,021,986 1,931,197 1,862,840 0.4
Gum 147,525 154,664 161,318 140,688 129,211 −3.3
Chocolate confectionery 111,965 128,958 137,194 131,192 126,914 3.2
Source: Euromonitor, 2017.
Forecasted confectionery retail volume sales in China, ‘000 KG
Segment 2017 2018 2019 2020 2021 *CAGR (%)
2017-2021
Total confectionery 2,082,409 2,073,594 2,081,479 2,104,696 2,142,707 0.7
Sugar confectionery 1,834,755 1,827,289 1,831,168 1,846,807 1,873,498 0.5
Gum 122,815 120,909 122,090 124,819 128,740 1.2
Chocolate confectionery 124,838 125,396 128,222 133,070 140,469 3.0
Source: Euromonitor, 2017.

Sugar confectionery

Sugar confectionery is the largest category overall. Although it has experienced a value compound annual growth rate of 4% from 2012 to 2016, sale volumes for this category have increased at a much slower rate of 0.4% over the same time period. This is most likely due to increasing concerns regarding health and nutrition among Chinese consumers and a trend toward decreasing sugar consumption, and the subsequent negative perception of sugar confectionery products.

The strongest growth within sugar confectionery was with mints, which had a value compound annual growth rate of 11.3% from 2012 to 2016. This may be due to their functionality for fresh breath, and because they are an alternative to mint chewing gum.

Sugar confectionery is expected to experience a slow volume compound annual growth rate of 1% from 2017 to 2021. The stronger value compound annual growth rate of 5% will most likely be thanks to an increasing unit price because of premium products that are either higher quality or perceived to be healthier, such as confectionery products with reduced sugar or made with nuts and real fruit. It is expected that more companies will begin selling these types of varieties in the future.

Historical sugar confectionery sales in China by sub-sector – retail value in US$ millions
Sub-sector 2012 2013 2014 2015 2016 *CAGR (%)
2012-2016
Sugar confectionery 8,935.4 9,625.9 10,467.5 10,320.7 10,463.1 4.0
Toffees, caramels, and nougat 2,940.6 3,164.1 3,395.1 3,283.0 3,299.5 2.9
Boiled sweets 2,448.6 2,593.8 2,737.3 2,644.1 2,628.4 1.8
Other sugar confectionery 1,522.9 1,629.5 1,873.9 1,836.4 1,823.6 4.6
Pastilles, gums, jellies and chews 1,135.9 1,246.2 1,363.5 1,414.1 1,491.9 7.1
Lollipops 519.3 571.2 617.5 630.4 658.8 6.1
Mints 214.2 245.3 277.9 299.0 329.2 11.3
Medicated confectionery 153.9 175.8 202.3 213.6 231.7 10.8
Source: Euromonitor, 2017.
Forecasted sugar confectionery sales in China by sub-sector – retail value in US$ millions
Sub-sector 2017 2018 2019 2020 2021 *CAGR (%)
2017-2021
Sugar confectionery 10,719.4 11,148.9 11,653.6 12,284.5 13,016.9 5.0
Toffees, caramels, and nougat 3,385.2 3,553.5 3,734.1 3,941.2 4,165.2 5.3
Boiled sweets 2,647.6 2,700.8 2,779.7 2,895.7 3,049.1 3.6
Other sugar confectionery 1,816.3 1,843.5 1,892.0 1,971.7 2,075.7 3.4
Pastilles, gums, jellies and chews 1,566.6 1,649.4 1,735.0 1,829.5 1,928.0 5.3
Lollipops 689.8 725.5 764.5 810.9 861.9 5.7
Mints 362.8 403.4 451.6 509.9 578.6 12.4
Medicated confectionery 251.2 272.8 296.8 325.6 358.3 9.3
Source: Euromonitor, 2017.

Chocolate confectionery

Of the three main confectionery categories, chocolate confectionery has experienced the strongest retail value growth over the last five years (2012 to 2016), with a compound annual growth rate of 6.8%. The volume growth for this category was not as strong, growing at a slower compound annual growth rate of 3.2% from 2012 to 2016. This could be explained by the fact that although consumers are purchasing less chocolate confectionery, they indulge in premium or high-end varieties when they do purchase these products, rather than ordinary chocolate products that contain artificial ingredients. With a growing middle class, Chinese consumers are increasingly willing to splurge on products that they perceive to have better ingredients, superior taste, and more attractive packaging. With the many food safety scandals in China and expanding cross-border internet retailing platforms, consumers are also more likely to pay a premium for imported products, which are increasingly available and are often perceived to be safer.

Although it has a comparatively small sales base, the "chocolate with toys" sub-category was the most dynamic, with a value compound annual growth rate of 33.1% from 2012 to 2016.

Historical chocolate confectionery sales in China by sub-sector – retail value in US$ millions
Sub-sector 2012 2013 2014 2015 2016 *CAGR (%)
2012-2016
Chocolate confectionery 2,231.8 2,581.1 2,944.6 2,909.1 2,907.4 6.8
Boxed assortments 963.6 1,153.5 1,343.8 1,292.7 1,255.2 6.8
Tablets 578.7 629.6 688.1 674.4 662.9 3.5
Count lines 383.4 432.8 477.4 465.5 468.3 5.1
Chocolate pouches and bags 230.4 263.6 293.6 288.9 283.7 5.3
Chocolate with toys 75.7 101.6 141.7 187.6 237.3 33.1
Source: Euromonitor, 2017.
Forecasted chocolate confectionery sales in China by sub-sector – retail value in US$ millions
Sub-sector 2017 2018 2019 2020 2021 *CAGR (%)
2017-2021
Chocolate confectionery 2,966.1 3,099.5 3,293.0 3,557.6 3,891.1 7.0
Boxed assortments 1,257.8 1,292.0 1,355.0 1,449.6 1,576.6 5.8
Tablets 665.6 685.0 719.9 774.5 850.3 6.3
Count lines 476.7 503.3 542.2 592.9 653.3 8.2
Chocolate pouches and bags 285.1 293.8 308.4 330.9 361.6 6.1
Chocolate with toys 280.9 325.3 367.4 409.6 449.3 12.5
Source: Euromonitor, 2017.

Gum

Over the past five years (2012 to 2016), the gum category has increased in value at a slow compound annual growth rate of 0.9%. This weak growth could be explained by a growing awareness of its negative impacts on health and the environment, as well as competition from mints. However, this category is expected to recover during the forecast period, with a stronger value compound annual growth rate of 5.7% from 2017 to 2021. Marketing strategies that focus on the benefits of gum on oral health may contribute to this stronger growth. From 2012 to 2016, the most popular type of flavour for gum was fruit flavours, followed by peppermint, lemon, herbal, and then spearmint.

As with the other confectionery categories, gum has seen an increase in unit prices, which is most likely due to the trend toward premium products.

Because of concerns regarding weight management and sugar consumption, it is expected that the sugar-free sub-category will continue to be the best performing sub-category during the forecast period. For this same reason, it is expected that bubble gum sales will continue to increase at a slower rate than the other types of gum.

Historical gum sales in China by sub-sector – retail value in US$ millions
Sub-sector 2012 2013 2014 2015 2016 *CAGR (%)
2012-2016
Gum 2,269.0 2,502.9 2,747.6 2,449.4 2,354.2 0.9
Chewing gum 1,994.0 2,218.0 2,452.8 2,186.1 2,101.2 1.3
Bubble gum 275.0 284.9 294.8 263.3 253.0 −2.1
Source: Euromonitor, 2017.
Forecasted gum sales in China by sub-sector – retail value in US$ millions
Sub-sector 2017 2018 2019 2020 2021 *CAGR (%)
2017-2021
Gum 2,320.9 2,376.0 2,502.5 2,679.0 2,898.3 5.7
Chewing gum 2,076.0 2,128.6 2,247.9 2,415.0 2,623.9 6.0
Bubble gum 244.9 247.3 254.6 264.0 274.4 2.9
Source: Euromonitor, 2017.

Key categories

Sugar confectionery

Chocolate confectionery

With a combined 49% market share in 2016, most chocolate confectionery retail sales were in supermarkets and hypermarkets. However, internet retailing has become increasingly popular due to its convenience, reaching 22% market share for chocolate confectionery sales in 2016.

Gum

Top companies

For confectionery products as a whole, Mars Inc. was the top company, representing 15.1% market share in 2016. Of the top ten companies, Mondelez International Inc. saw the most growth, increasing by 142.9% from 2012 to 2016, followed by Hershey Co. (124.1%), and Fujiya Co. (114.5%).

Most confectionery sales in 2016 took place in supermarkets and small independent grocers, with a combined volume market share of 58.4%. Retail sales for confectionery products in supermarkets represented US$5.6 billion in 2016 and those in independent small grocers represented US$3.7 billion. Internet retailing, however, has experienced the most growth, increasing in value by an impressive 427.4% from 2012 to 2016, while sales in supermarkets decreased by 0.8% and those in independent small grocers decreased by 4.3%.

Top ten confectionery companies in China, 2016
# Company Market Share (%)
1 Mars Inc. 15.1
2 Nestlé 6.2
3 Guangdong Strong Group 4.2
4 Perfetti Van Melle Group 4.1
5 Mondelez International Inc. 2.9
6 Want Want Holdings Ltd. 2.6
7 Ferrero Group 2.5
8 Hershey Co. 2.2
9 Fujian Yake Food Co. 2.2
10 Orion Group 1.2
Source: Euromonitor, 2017
Distribution of confectionery products in China by store type: % total volume
Format 2012 2013 2014 2015 2016
Supermarkets 39.5 39.0 38.6 37.5 35.3
Independent small grocers 26.9 25.6 24.4 23.3 23.1
Hypermarkets 14.0 14.1 14.7 14.3 14.2
Internet retailing 2.1 3.7 4.6 7.5 10.1
Convenience stores 3.1 3.2 3.5 3.7 4.1
Food/drink/tobacco specialists 2.9 2.8 2.8 2.8 2.9
Other grocery retailers 2.6 2.4 2.2 2.1 2.1
Forecourt retailers 1.3 1.3 1.3 1.4 1.5
Discounters 0.2 0.2 0.3 0.3 0.3
Source: Euromonitor, 2017

New product launch analysis

New confectionery product launches in China, January 2012 to December 2016, by feature
Feature 2012 2013 2014 2015 2016
Yearly product launches 608 588 802 838 701
Source: Mintel Global New Product Database, 2017.
Top five claims - Yearly launch counts
Feature 2012 2013 2014 2015 2016
Low/no/reduced sugar 77 52 87 73 70
For children 54 55 74 98 59
Social media 0 10 13 55 71
Halal 11 24 24 39 48
Functional 37 28 30 13 37
Source: Mintel Global New Product Database, 2017.
Top five flavour components - Yearly launch counts
Feature 2012 2013 2014 2015 2016
Milk 44 56 91 104 111
Unflavoured/plain 46 58 65 116 80
Strawberry 49 41 70 62 57
Mint 44 37 54 37 41
Fruit 39 33 40 42 30
Source: Mintel Global New Product Database, 2017.
Top five packaging types - Yearly launch counts
Feature 2012 2013 2014 2015 2016
Flexible 263 310 423 486 426
Rigid box 44 41 79 80 45
Flexible sachet 90 75 50 32 3
Tub 38 37 52 58 46
Flexible stand-up pouch 29 24 52 53 29
Source: Mintel Global New Product Database, 2017.

New product examples

Milk chocolate with hazelnut filling
Company Hershey Co., China
Brand Hershey’s Kisses Deluxe
Category Chocolate confectionery
Sub-Category Seasonal chocolate
Launch Type New packaging
Price in US Dollars $6.96
Product description: Hershey's Kisses Deluxe Milk Chocolate with Hazelnut Filling was repackaged for Valentines 2017 in a newly designed 90g pack containing 11 units and featuring two WeChat codes.
Matcha-flavoured wafer chocolate
Company Tongxi Food, China
Brand Yiqiao
Category Chocolate confectionery
Sub-Category Chocolate countlines
Launch Type New variety
Price in US Dollars $1.60
Product description Matcha-Flavoured Wafer Chocolate is said to offer a multi-level crispy texture. It retails in a 300g pack containing 30 units.
Melt milk chocolate with mellow milk filling
Company Mondelez, China
Brand Milka
Category Chocolate confectionery
Sub-Category Individually wrapped chocolate pieces
Launch Type New product
Price in US Dollars 2.38
Product description This product retails in an 81g pack featuring a QR code and contains six 13.5g individually wrapped units.
Mango madness mango-flavoured candy
Company Fillidutt, China
Brand Fillidutt
Category Sugar and gum confectionery
Sub-Category Pastilles, gums, jellies and chews
Launch Type New Product
Price in US Dollars $1.43
Product description This product is made using ingredients that are GMO-free and free from high fructose corn syrup and artificial colours. It retails in a 65g resealable pack featuring WeChat and Weibo QR codes.
Almond-flavoured nougat
Company Wal-Mart, China
Brand Member’s Mark
Category Sugar and gum confectionery
Sub-Category Toffees, caramels and nougat
Launch Type New Product
Price in US Dollars $9.18
Product description This product is made with imported almonds, milk powder and processed according to a traditional handcraft. It is said to be non-sticky, and retails in a 480g resealable pack containing individual units.
Marshmallows with tiramisu-flavoured filling
Company Seven and I Holdings, China
Brand Seven premium
Category Sugar and gum confectionery
Sub-Category Marshmallows
Launch Type New Product
Price in US Dollars $0.90
Product description This product retails in a 70g pack.
Refreshing pear-flavoured sugar-free chewing gum with xylitol
Company Orion food, China
Brand Orion chang kuai lin li
Category Sugar and gum confectionery
Sub-Category Gum
Launch Type New variety
Price in US Dollars $0.88
Product description This product contains added pear and loquat ingredients. This product is said to clear the throat, and retails in a 26g pack.
Flower-flavoured sugar-free chewing gum
Company Orion food, China
Brand Orion xylitol 3+
Category Sugar and gum confectionery
Sub-Category Gum
Launch Type New packaging
Price in US Dollars $2.35
Product description This product is made with imported almonds, milk powder and processed according to a traditional handcraft. It is said to be non-sticky, and retails in a 480g resealable pack containing individual units.
Magic blueberry-flavoured sugar-free chewing gum
Company Wrigley, China
Brand Wrigley’s 5
Category Sugar and gum confectionery
Sub-Category Gum
Launch Type New packaging
Price in US Dollars $0.84
Product description This product retails in a newly designed 32g pack.

Conclusion

Companies that are interested in exporting confectionery products to China should be aware of the trends toward premium and health and wellness products. Sugar-free claims in the gum category are particularly popular, as well as functional ingredients across the entire confectionery category. Canadian companies should also be aware of the positive image that imported products have in terms of being high quality and safe, and use it to their advantage.

Although online purchases are increasing, confectionery products are still most often purchased in stores. If choosing to sell products online, it is important to choose a platform that offers a strategy for highlighting products. There is such a large quantity of products being sold in China, in stores and online, that product could be overlooked if a strong marketing campaign is not in place to attract consumer attention.

Market Access

China has strict import requirements for many products and Canadian exporters are responsible for determining these import conditions by working with their Chinese importer. However, the Market Access Secretariat (MAS) of Agriculture and Agri-Food Canada is also available to assist in providing export-related information and support. This service offers a single point of contact with the goal of helping the Canadian food industry and businesses reach international markets.

If you have questions about exporting your agricultural or food products, or are looking for support, please contact the Market Access Secretariat at aafc.mas-sam.aac@canada.ca

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional information on Food & Hospitality China (FHC) 2017 please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@canada.ca

Resources

Sector Trend Analysis
Confectionery Trends in China

Prepared by: Julie Acheson, Market Analyst

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