Innovative children's products were central to ISM this year, with sugar-free and organic trends likely to be the next big thing. The event offered visitors the opportunity to sample the latest innovations and chocolate and sugar confectionery and biscuits, although some key companies chose not to exhibit this year…

Innovative children's products were central to ISM this year, with sugar-free and organic trends likely to be the next big thing, with some companies choosing not to exhibit this year.

The companies and products on display at ISM (Internationale Süßwaren-Messe - International Confectionery & Biscuits Fair) clearly illustrate the key confectionery trends analysed in the latest global confectionery report about to be published by Euromonitor.

A dichotomy between fun sugar confectionery aimed at children, versus premium luxury chocolates aimed at more adult consumption, is immediately clear. Sugar confectionery products on display were characterised by a wealth of product innovation including new concepts, formats and packaging.

Sugar confectionery shows innovative product development
Novel products from Asia Pacific include fun-size jelly tubs containing yoghurt and/or fruit-based confectionery, while Southern Europe and Latin America continue to build on developments in pouches, sachets, rollers and squeezy tubes of liquid, paste and jelly sugar sweets.

Interactivity and flavour innovation is especially prevalent in more developed markets where children have higher disposable incomes and a host of alternative demands on their spending money, with which sugar confectionery increasingly competes. Not only does this include chocolates and gums, but also baked goods, snack bars and non-edible expenses such as mobile phones costs, computer games and the like.

Sugar-free set to take off
Sugar-free looks set to be an explosive trend in 2003, particularly for more adult-orientated sugar-confectionery, but also for children's products and chocolates. Sugar-free is of course already a dynamic and established trend in gum. Technological advancements could spell an end to laxative-effect bulking agents which have so far prevented progress in children's products.

Equally, sugar-free chocolate is now indistinguishable from the 'real thing', although major manufacturers are still struggling to develop sugar-free variants which retain the unique taste and texture of their brands. Nonetheless, moving out of pharmacies and health-food stores into more mainstream distribution channels, sugar-free is definitely a trend to watch.

Organic held back by raw material supply
Another significant development was the wealth and variety of organic ranges and dedicated organic producers. Still largely driven by private labels, even discounters like Lidl have started carrying organic products. Moreover the launch of cocoa producer Barry Callebaut's organic range demonstrates that interest is growing among larger manufacturers too.

A key issue in organic production remains the supply of all the ingredients involved in the manufacture of chocolate and sugar confectionery; that is sugar, milk, cocoa and gelatine, among others. All the ingredients have to be certified organic, and it takes several years for the ground they are produced on to become suitable. In addition, distribution and production facilities all have to be certified to prevent cross-contamination. Thus, even if in 2003 manufacturers choose to invest in organic product development, the raw material supply will remain finite in the near future.

Key names absent from ISM
A surprise at ISM this year was the absence of some big names. Confectionery market leader Mars never has a presence at ISM, while Nestlé's country-specific stand was typical (only Nestlé Italy was represented). However, companies like Kraft, Ferrero, Bahlsen and Chupa Chups, as well as key domestic German companies such as August Storck and Ritter Sport were all conspicuous by their unusual absence.

Growing price pressure from retailers, and private label competition, especially in Europe, in addition to a somewhat uncertain economic climate mean that many companies have initiated cost-cutting strategies including portfolio rationalisation and searching for greater supply synergies. For many this must also involve a reassessment of the effectiveness of trade fair presence vis-à-vis other forms of brand support, whereas in happier climes such an either-or decision was never an issue. The level of manufacturer presence at ISM 2004 will undoubtedly give a clearer picture of whether such cost-cutting is going to become a permanent company strategy in an increasingly consolidated and competitive industry.

Market leadership up for grabs in 2003
In addition to healthy 2% value growth predicted by Euromonitor for 2003, the whole structure of the market is set to change as a consequence of Cadbury Schweppes' ambitious acquisition programme. The company acquired Dandy and Kent in 2002, and the purchase of Pfizer's confectionery unit Adams is due to complete later this year.

Meanwhile Nestlé has been restructuring its approach to confectionery, divesting sugar brands and boosting support for smaller brands such as Smarties, which has seen a host of NPD in recent months. Mars has also been renewing its brand support, building brand equity by increasing the number of confectionery brands extended into other food sectors such as bakery or ice cream.

With innovation and sugar free being key trends over the year, and developing markets, particularly China, offering exceptional opportunities for growth, leadership of the global confectionery market is set to be hotly contested over 2003 between Cadbury Schweppes, Mars and Nestlé.