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28 Aug 2009


Confectionery Market 2009: Surrounded by Challenges (Business Brief No.2614)

The effect of slowing economy has forced consumers to reduce their spending and become more cautious in what they buy. The health and body care trend has also influenced consumer behavior, making us more selective about our diets. Therefore, confectioneries such as candy, chewing gum and chocolate that people only consume for pleasure to ease cravings are to be avoided under the present economic conditions. Moreover, confectionery products generally have high amounts of sugar. In fact, the Thai consumption rate of confectionery products is still low at only 700 grams/person/annum compared to the USA, UK and Vietnam where people consume 14, 10 and 2 kilograms/person/annum, respectively. That is why it is viewed that the market for confectionery products in Thailand has an ample room for growth. It is expected that in 2009, the market for candy, chewing gum and chocolate will grow 7-8, 15 and 20 percent, respectively, with an aggregate domestic market value of THB10 billion divided into 50 percent for candy, and 25 percent each for chewing gum and chocolate.
Consumers now have lower purchasing power and competition is intensifying in the market, so, with decelerating purchasing power and international trade liberalization, cheap imported confectionery products are pouring into Thailand. Moreover, the health care trend and the possibility of rising sugar costs are factors that producers will have to take into consideration toward quality and production processes to maintain their market shares with children especially, who love colorful, tasty snacks. Products must have greater variety to support changing consumer behavior.
Producers should expand their marketing channels toward health-conscious consumers, where growth is expected to be similar to the confectionery market in the USA; there, mixtures of herbs, fruit and spices such as mango, orange peel, ginger, chili, cinnamon, pineapple, etc., have been added to chocolate and other sweets to create new flavors that also benefit health. Thailand's plentiful fruit, herbs and spices are raw materials that are ready to support this trend.

Moreover, entrepreneurs should focus on proactive marketing to educate consumers about the quality and benefits of new products. Modern packaging in easy-to-eat styles that preserve product quality are also important to consumers during unfavorable economic conditions, as well as expanding to neighboring markets such as Burma, Laos and Cambodia that are lucrative export markets for Thailand. With the quality of Thai sweets, flavor, product standards, modern packaging and moderate pricing, Thailand's confectionery products will be popular in neighboring markets and have a chance to grow well. Looking into new markets such as India that has high economic growth will also be vital, as the chocolate consumption rate in India is still very low at only 100 grams /person / annum.

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