Chocolate still leading

Total sales of sweets exceed HUF 150 billion in Hungary. According to Mrs. Kanyó, general secretary, members of the Hungarian Sweets Manufacturers’ Association account for 83-85 per cent of this amount. This organisation was established in 1992 with members like Bonbonetti, Chio-Wolf, Győri Keksz, Ferrero, Kraft Foods, Mars, Nestlé, but SME-s are also represented. Several companies – Kraft, Nestlé, Candy Hill – have relocated their production to countries with more favourable economic environments in recent years. This trend does not seem to continue. Imports accounted for 30 per cent of domestic sales last year. Private labels have achieved a market share of 20 per cent. Sales of candy are on the increase, but per capita consumption of 1,19 kilogram is still low. Per capita consumption of chocolate products without seasonal products is 4,43 kilograms. All manufacturers have been adversely effected by the rise in the prices of materials and energy. Owing to intense competition, increased costs cannot be expressed in prices. Chocolate products remain the largest segment with a market share of 57-60 per cent. The market share of candies shows a slight increase to 10-12 per cent. Wafers, biscuits and tea cakes hold a market share of 30-33 per cent. Sales of chocolate bars have begun to grow after the stagnation of recent years. The two opposite ends of the market, premium products and private labels are both expanding. Black chocolates are becoming increasingly popular as a result of innovation by manufacturers and positive communication. Sales of pralines, gift boxes and refrigerated sweets are also increasing. Manufacturers of pralines and desserts are focusing on the protection of their brands, showing moderate willingness for innovation. Desserts are bought primarily as gifts in Hungary. Up-dating the image of brands is very important in this category, as there are less opportunities for the introduction of new flavours. The new law on commerce has not succeeded in improving the position of manufacturers and guaranteeing a more substantial share of profit for them. Retailers often use their weight to dictate terms to suppliers and the possibilities of SME-s to protect their interests are even more limited than that of large manufacturers. Domestic manufacturers are placed at a competitive disadvantage by more stringent health and environmental regulations applicable to their operations than those in effect in neighbouring countries. They are also a far easier target for supervisory authorities than importers.