Confectionery prices are set to rise further as producers – who are already battling spiralling sugar costs – struggle to contend with hikes in other key ingredients.
The cost of gelatine has risen 20% since the start of the year, while EU foodgrade maize starch is up 34% year-on-year [Mintec]. The hikes in both commodities – key ingredients in many gums and jellies – come at a time when sugar has risen by as much as 50% year-on-year.
Suppliers are renegotiating prices with retailers and have warned there are more increases to come. One leading British confectioner said it was expecting “high double-digit” growth in the cost of gelatine going into 2012 as the price was pushed up by growing demand from China.
Confectioners have tried to mitigate retail price rises through changes to pack sizes and by encouraging the growth of sharing bags, a format particularly popular with shoppers at a round-pound price.
“Sharing bags offer better economy for consumers and suppliers and are less ‘fiddly’ to produce – they require less packaging than the equivalent small packs, for example,” said one producer, who added that promotional activity was also being used regularly to offset unavoidable retail price hikes.
The commodity pressure comes at a time when gums and jellies are enjoying strong growth – sales of sugar confectionery have soared 9.1% by value and 4.2% by volume, according to The Grocer’s 2011 Focus on Confectionery [1 October 2011].
Last year, volume sales were virtually static.