Category dynamics vary
Overall, the confectionery market is relatively fragmented. Even after the merger of Mars and Wrigley, the top five players account for only 42% of the market.
Chocolate represents the biggest segment in the category with a 55% share in value and has been growing at a rate of 6% in the last four years. Chocolate is mainly a regional business where consumers seek a particular taste in each market. This brings about fragmentation in the market as well as complexities in production. The top five producers account for 50% of the global market, and there is scope for rationalisation.
Gum, with a 14% share in confectionery sales, is the fastest growing segment at 7%, led by innovation and marketing. This is the most consolidated segment with the top two players, Wrigley and Cadbury, accounting for over 60% of the market. Gum ‘travels well’ and well-run global businesses can generate good economies of scale. Innovation and formulation are also important barriers to entry to new competition.
Candy is the most fragmented confectionery segment with a proliferation of local brands and growth around 4%. The top five players represent only a quarter of global confectionery sales. Functional candy such as cough drops, indulgent candy such as premium toffees and natural products without artificial colours or sweeteners, have been drivers of market growth.