Little substitution from sugar confectionery to chocolate

One particularly striking factor of Mexican confectionery, which sets it apart from other increasingly lucrative emerging countries such as Brazil and China, is that even though consumer spending power is increasing, few consumers are switching from sugar confectionery to chocolate.

For many Mexicans, it’s a matter of personal taste, with traditional flavors and/or formats of sugar confectionery, including marzipan and spicy chilli/citrus flavours, proving persistently popular. Indeed, few Mexicans feel they need to “trade up” to anything, instead preferring to stick to what they historically know and like.

In turn, this means that real retail values for chocolate are not forecast to increase by as much as for sugar confectionery or gum, with sales growing by just $200 million from 2012 to just under $1.3 billion in 2017. In contrast, both gum and sugar confectionery are each slated to increase by more than $350 million over the same period.

However, growth opportunities do exist for chocolate in Mexico. For example, while most Mexicans continue to prefer fairly sweet milk chocolate, tastes are slowly but surely becoming more sophisticated. Lindt & Sprüngli de México SA de CV is making notable efforts to promote dark chocolate, offering 99%, 90% and 85% cocoa variants. However, such offerings remain relatively expensive, targeting a minority of affluent and health-conscious consumers.

Don’t forget about gum

Finally, confectionery companies should not forget about opportunities for gum in what is, after all, the product’s country of origin. At just under $1.4 billion in 2012, sales remain slightly below pre-crisis levels, athough they have steadily recovered since 2010. The pace of recovery should accelerate through 2017, with sales surpassing $1.7 billion.

On a per capita basis, Mexican consumers are not expected to chew much more gum between 2012 and 2017. They are, however, expected to spend more over this period, with retail values increasing some $2.50 to nearly $15 per capita.

This growth stems almost exclusively from a continued consumer shift towards more expensive sugar-free formats. As consumers show greater concern about their dental health and become more aware of the dangers of excessive sugar consumption, especially given Mexico’s growing number of diabetics, this transition should accelerate. In turn, this will create further opportunities in what would otherwise be a fairly mature product area.