The Israeli confectionery market
Confectionery sales continue to increase throughout much of the Middle Eastern region, in spite of the global economic downturn and its effect on consumer spending. Many confectionery markets across the Middle East have been characterised by increasing levels of disposable income, as well as the continued popularity of many types of sweets in both Jewish and Arabian cultures. The region also benefits from having a high percentage of teenagers and young people (in contrast to many parts of the developed world), as a result of which demand for confectionery remains high.
One of the region’s more developed markets is Israel. The country has one of the largest economies in the Middle East, and benefits from a fairly well developed retailing industry. Food and drinks account for over 85% of the Israeli market for consumer goods, with many consumers showing an increasing appetite for more premium and expensive products. The Israeli confectionery market is fairly unique in that kosher products feature strongly – for example, much of the chocolate eaten in Israel is made with specially-supervised milk. It is thought that almost two thirds of the country’s population observes kosher dietary laws to some extent, at least.
Value sales of confectionery in Israel were worth an estimated $440m in 2010. Market value has risen by 27.5% since 2006, with annual growth rates having increased within the last couple of years. With sales worth an estimated USD205m, the chocolate sector accounted for a leading 47% of overall market value in 2010, ahead of sugar confectionery (35%) and chewing gum (8%). Growth has been particularly apparent within the chocolate sector, which rose in value terms by nearly 37% between 2006 and 2010.
Volume sales of confectionery in Israel amounted to 58,000 tonnes in 2010. This figure has increased by almost 21% compared with 2006, driven in part by the fact that more specialist confectionery stores have appeared throughout Israel over the last few years. That said, mainstream retail channels such as the Shufersal and Mega chains still account for a sizeable percentage of confectionery sales. In 2010, the sugar confectionery sector accounted for a leading 45% of total market volume, slightly ahead of chocolate (41%). However, growth levels have been higher within the chocolate sector over the past few years.
At more than 3.1kg, per capita consumption of chocolate in Israel ranks higher than the regional average, although it remains low compared with parts of Western Europe in particular. Per capita consumption of sugar confectionery is slightly higher, at around 3.4kg. Israel is thought to have a fairly large confectionery production industry, on the grounds that many leading suppliers manufacture domestically. However, the country also imports considerable quantities of confectionery, from Turkey and the US in particular.
Chocolate countlines, bars and moulded blocks account for almost two thirds (65%) of market volume within the Israeli chocolate sector. They remain popular as a result of high penetration levels achieved by branded products from leading manufacturers such as Strauss-Elite and Kraft Foods. However, the market also features seasonal chocolate items, which are traditionally eaten during religious festivals. Sales of chocolate remain highly seasonal in Israel, with the winter months accounting for more than 60% of consumption.
Although market data remains scant for the sugar confectionery sector, bagged sweets and lollipops are believed to account for a sizeable percentage of sales. There is also evidence of a trend towards sugar-free products, given the ranges supplied by leading manufacturers. Sugar-free products also hold sway within the chewing gum segment, accounting for an estimated 90% of sales. This reflects growing health concerns amongst the Israeli population over sugar intake.
Strauss-Elite leads the Israeli confectionery market, with an overall share in the region of just under half. This rises to almost 60% within the chocolate sector, where annual sales of its Pesek Zman chocolate countline bars amount to more than 20 million. The company’s range also includes the Cow chocolate brand, which encompasses products such as countlines, moulded bars and gift assortments. The company also competes in the sugar confectionery category, where its range includes bagged sweets and lollipops, many of which are marketed on a sugar free platform. Elsewhere, its Must brand is the second largest within the Israeli market for chewing gum.
Another leading domestic confectionery manufacturer is Carmit Candy, which represents a major supplier to the own-label sector. Its product range includes chocolate bars and coins, lollipops, marshmallows and toffees, as well as gluten-free and dairy free confectionery. Outside Israel, it also has major export markets in the US, Canada, Australia and parts of Europe.
Mars leads the chewing gum market via its Wrigley subsidiary, which accounts for 70% of sales. Its main brand is Orbit, sales of which have benefited from the rising interest in sugar-free products. The parent company’s presence in the chocolate and sugar confectionery markets, however, is thought to be less extensive. Another multinational present in the Israeli confectionery market is Nestlé, which supplies chocolate brands such as KitKat and Aero. At the start of 2012, Nestlé paid €75m to increase its stakeholding in the Israeli company Osem, a manufacturer of bakery and kosher foods.
During 2009, Cadbury entered the Israeli chewing gum market via its Trident brand, following an unsuccessful attempt earlier in the decade. However, most signs indicate Trident’s share of the market remains extremely modest. Cadbury’s new parent company, Kraft Foods, is present in the Israeli chocolate market, supplying brands such as Milka, Toblerone and Cote d’Or. Another leading supplier of chocolate confectionery is Ferrero, which competes in sectors such as countlines and boxed assortments.
