Both the confectionery and beverages markets in which we operate are growing. The main drivers are population growth and increased consumer wealth (particularly in developing markets), and product innovation, affecting both developed and developing markets.
According to Euromonitor the global confectionery market grew in value by 3.9% in 2004. It forecasts a similar rate of growth continuing for the foreseeable future. Within the overall confectionery market, chocolate grew at 4.1% in 2004, sugar by 2.4% and gum by 6.5%. In gum, consumers are switching from sugared to sugar-free products. 70% of our gum is sugar-free.
Overall, developing markets are growing faster than developed. Around 30% of our confectionery sales are generated in developing markets around the world. Our key developing markets are Mexico and Brazil in the Americas Confectionery region; Russia, Poland, Turkey, Egypt and South Africa in the EMEA region; and India and Thailand in the Asia Pacific region.
Value
| |
% total market |
2004 Vs 2003 (%) |
| Chocolate |
53.8% |
4.1% |
| Sugar (sweets/candied) |
32.8% |
2.4% |
| – Medicated |
3.1% |
2.1% |
| Gum |
13.4% |
6.5% |
| – Sugar |
4.7% |
1.9% |
| – Sugar free |
8.7% |
9.1% |
| Total confectionery |
$121.6bn |
3.9% |
Source: Euromonitor 2004
Our main beverages market is the US. According to AC Nielsen, the US refreshment beverages market, which includes nonalcoholic carbonated and non-carbonated soft drinks, grew by 2% in volume and 6% in value in 2005. Carbonated soft drinks (CSDs) volumes have been flat or declining in recent years and fell by 3% in 2005. The decline has been attributed to a combination of above inflation pricing and consumers switching to non-carbonated products, primarily sports drinks and bottled water. Within the carbonated market, products sweetened with sugar (regular) declined 5% in 2005 while those sweetened with low calorie sweeteners (diet) grew slightly by 1%. We have six out of the top 10 non-cola diet CSDs in the US, including Diet Dr Pepper, Diet A&W, Diet Sunkist and Diet Rite. In 2005 diet CSDs accounted for 24% of our US CSD sales and grew by 4%. We do not participate in the sports drinks market in the US and have only a small presence in the bottled water market. The non-CSD categories in which we participate grew by 2% in volume in 2005.
Volumes
| |
% total market |
2005 Vs 2004 (%) |
| Carbonated soft drinks |
53% |
(3)% |
| – Regular |
35% |
(5)% |
| – Diet |
18% |
+1% |
| Non carbonated |
45% |
+9% |
| – Water |
21% |
+17% |
| – Isotonics/Energy |
5% |
+25% |
| – 100% Juice |
9% |
(2)% |
| – Juice Drinks |
10% |
(1)% |
| Other |
2% |
0% |
| Total |
100% |
+2% |
Source: AC Nielsen (December 2005)
Many of our businesses are seasonal. Their seasonality is primarily influenced either by the weather, or by religious festivals and holidays. Within the Group, our businesses have different seasonal cycles throughout the year depending on their geographical location and the timing of festivals and holidays, which also may vary from year to year. For the Group as a whole, the second half of the year is typically the larger half.
