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Export


Confectionery in China


By Francisco Redruello, senior foods analyst, Euromonitor International.


Confectionery retail volume sales in China are projected to rise by 4% in 2012, with retail value sales totalling $12.6billion. Rapid economic growth and strong demand for indulgence products among mid-income Chinese consumers will drive growth in added value categories such as chocolate confectionery and sugar-free gum.


Economic environment


The Chinese economy will see slower growth in 2012. Income distribution is worsening, particularly between rural and urban households. Consumer spending will play a more important role in driving the economy in the medium term. A growth rate of 8% is needed to create enough jobs to keep up with a growing urban population. However, the labour pool is no longer growing as rapidly as in the past. In 2012, it is expected to grow by less than 5.2million, compared with more than 9million new jobs per year over 1990-2000.


The pace of growth will slow in 2012, when real GDP is expected to rise by 8%. Weaker exports are part of the reason why many economists think growth will be lower. According to the government’s statistics office, the economy grew by 8% in the first quarter of 2012 on an annualised basis.


Trading environment Exports (in dollar terms) fell during the Great Recession but rebounded strongly since this time. In 2011, exports grew by 20% and gains of 11% are expected in 2012. The share of exports in overall GDP dipped sharply during the global recession but began to rise again as major importing countries’ economies recover. In 2011, exports amounted to 27% of GDP. Chinese exporters are being squeezed by the renminbi’s steady appreciation. The renminbi rose by about 9% against the dollar over the past 18 months and in April 2012 Beijing allowed the currency’s trading band to double. The timing of the move may be intended to mute criticism of China’s currency policies. Low end manufacturers have thus begun to move to other countries in Asia where workers are paid less. The current account surplus amounted to 5% of GDP in 2011 and it is expected to remain at that level in 2012.


Chocolate confectionery


Chocolate confectionery is predicted to see strong growth in 2012, at 13% in retail value terms and 7% in retail volume terms. Overwhelming sugar confectionery and gum, chocolate confectionery is the most dynamic category in overall confectionery. A better economic situation led to many consumers switching to chocolate instead of sugar confectionery, particularly during festivals. Furthermore, in this gradually more mature category increasing consumer education ensured rising awareness of the benefits of chocolate. In addition, with increasingly stressful


26 Kennedy’s Confection September 2012


work lives, many people, especially women, seek a variety of ways to relax and treat themselves. Chocolate is viewed as a good form of indulgence. Thanks to growing demand, the review period saw chocolate gradually becoming a snack for everyday consumption rather than simply a gift item.


Countlines is predicted to record the highest growth in chocolate confectionery in 2012 in both value and volume terms, with increases of 18% and 13% respectively. Thanks to the efforts of key players, there was no shortage of new product launches for chocolate countlines in 2011 and 2012.


In association with


Sugar confectionery


Sugar confectionery is predicted to see strong growth in 2012, at 9% in retail value and 4% in retail volume terms. Overall, the increasing cost of raw materials and packaging pushed Chinese manufacturers to increase retail prices in order to keep their businesses profitable.


kennedysconfection.com


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