Australian Confectionery Market: Hitting The Sweet Spot

As the favorite confectioneries of health-conscious Australians are sugar-free and/or vegan, manufacturers are rushing to meet these requests.

By Nandini Roy Choudhury, senior research consultant, Future Market Insights

In the present day and age, evolving consumer preferences have kept food & beverage operators on their toes. The confectionery sector is gradually adapting to the strong consumer inclination towards healthier products that contain low sugar and fat content. Growing concerns pertaining to obesity have encouraged consumers in Australia to sway towards a healthier lifestyle. Modern-day consumers are religiously monitoring and keeping a track of their calorie intake more than ever before, and its repercussions can be seen across Australia, where consumer demand for sugar-free and fat-free confectionery is steadily on the rise.

Confectionery operators are wasting little time to fulfill these demands by expanding their product portfolios and introducing new products that appeal to health-conscious consumers. Apart from the sugar-free fad that is making the headlines, the confectionery space is gradually embracing the vegan trend, as more and more vegan confectionery products continue to hit the shelves of supermarkets and retail stores.

Healthier Confectionery Alternatives

Industry trends suggest that, despite a decline in the overall number of confectionery enterprises across Australia, the number of small-scale industry operators and boutique confectionery and candy producers has gradually gone up. Due to this, polarization in the confectionery industry between established brands such as Nestlé and Mondelez and small-scale brands has increased. Revenues from the confectionery sector continue to grow each year, as brands are jumping onto the bandwagon of manufacturing alternative products with healthier ingredients. Current and future innovations are likely to revolve around the adoption of improved ingredients, including natural colors and flavors. Also, confectionery products that contain fresh and dried fruits along with a hint of fruit essence are expected to gain popularity in the coming years.

Several experts in the industry are of the opinion that consumers are willing to shell out more money for premium nutritious products. Sensing the growing demand, companies are leaving no stone unturned in their efforts to improve the quality and health quotient of their treats. Nestlé recently announced that the company is set to reduce sugar content and include dietary fiber to its line of lollies, owing to growing health concerns among Australian consumers.

Trends also suggest that, despite the growing demand for natural and healthier alternatives, consumers are unwilling to compromise on taste – a pressing challenge that confectionery operators in the country are seeking solutions for. This decision has got a lot to do with what the consumers want, and Nestlé is actively exploring the possibilities of following a similar route for other products. The company further revealed that new products do not contain artificial sweeteners, and overall sugar content was cut-down and replaced with soluble dietary fiber. It is safe to say that, Nestlé Australia is at the forefront in terms of innovation and sugar reduction activities – a trend that is likely to continue and catch up with other brands operating in the confectionery sector across Australia.

Organic Chocolate, from Niche to Mainstream

Consumer preferences have left confectionery operators with little choice but to bring about additions to their existing product offerings. At present, it is impossible to miss out on the ascending demand for organic food products. Furthermore, the organic trend has gradually transcended into the confectionery space, and Australian consumers are embracing it with their arms wide open. Numerous confectionery brands are focusing on providing an indulgent organic experience to their consumers. At the back of the growing organic trend, organic chocolate has gained significant popularity in the past few years, as more and more brands are introducing different variants of organic chocolate to the market. It is essential to note that iconic and well-established brands, as well as smaller names in the industry, are venturing into the production of organic chocolate – a trend that is expected to continue in the coming years.

Despite the ‘organic’ claim, there are other factors that brands need to take into consideration. Consumers associate the term ‘organic’ to support other aspects of a product, such as Fairtrade, Better-for-you, and Free-from. Consumers are increasingly making ethical purchase decisions, wherein they expect the ingredient to be sourced from regions that are free from unethical labor practices. A consumer often considers organic products to be healthier, and companies are expected to be more transparent about the nutrition quotient of their products.

The ‘free-from’ food trend is playing an important role in complementing the demand for organic chocolate, as it fulfills consumer demand for consuming a healthier product made from ingredients that are sourced ethically. Australian consumers are voting with their wallets, and have no qualms in spending a premium amount on organic chocolate made from organically-sourced ingredients, including nuts, cocoa, and more.

What Next?

The confectionery sector in Australia is primarily driven by a growing consumer affinity towards healthier products that contain less amount of sugar and fat. However, apart from catering to these demands, companies operating in the Australian confectionery sphere are expected to switch to eco-friendly packaging solutions in the coming years. In their bid to reduce their footprint on the environment, confectionery operators in Australia are highly in favor of using biodegradable plastic and recycled materials to package their products. Mounting health awareness and significant rise in disposable income over the past few years have opened up new avenues for confectionery operators, as vegan products and exotic flavors continue to gain acceptance from the Australian audience. Further, although not much has changed on the technological front in the last five years, the adoption of automation and 3D printing is steadily ascending.

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