Finance Consumer Confectioners chew on changing customer tastes for healthier lollies
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Confectioners chew on changing customer tastes for healthier lollies

Picnic bars getting coated in chocolate at the Mondelez factory in Melbourne
Picnic bars getting coated in chocolate at the Mondelez factory in Melbourne. Photo: ABC
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Consumers’ increased focus on fitness and wellbeing is challenging the Australian confectionery industry to make healthier products

At the industry’s annual conference, chocolate and snack executives said consumers were voting with their wallets for more nutritious products, with companies taking a leadership role in improving their treats.

“We make the product,” said Peter Allsep, the product development manager at Allseps, which produce “gummie” lollies such as jelly babies, false teeth, racing cars, raspberries and frogs.

“But they’re going to eat it.”

Leigh Pezzicara, head of global sustainability and marketing at ingredient supplier Barry Callebaut, said companies had no time to waste in making their products healthier.

“You see a real big push and a big demand from consumer level and that’s really pushing companies to act faster,” she said.

“Because if you want to target these customers you have to listen to their needs.”

“Social factors are critical,” agreed Ferrero Australia institutional affairs director Derek Lath.

“We have commitments in terms of, not only the quality of the product and ensuring it’s the finest quality, but we have responsibilities in terms of portion size.”

Beyond the chocolate consumed by customers, “social factors” mean Ferrero Australia will source all of its cocoa through sustainable means from next year, something it has already achieved with palm oil.

Obesity epidemic putting sugar tax on the agenda

Soaring obesity rates – and the resulting hit on health budgets globally – have seen other countries weigh in with taxes on sugary drinks and foods high in saturated fat.

Iceland considered a 20 per cent sugar tax this year, but ultimately dropped the idea.

In 2011, Denmark introduced a tax on items high in saturated fat. They killed it off a year later (partly because Danes were crossing into Germany to buy cheaper food).

A vat of chocolate churns in Melbourne's Mondelez factory.
Melbourne’s Mondelez factory churns out 35,000 tonnes of chocolate a year. Photo: ABC

In 2014, Mexico introduced a 10 per cent tax on sugary drinks. In just two years consumption fell 8 per cent and the tax raised nearly $4 billion in revenue, much of which was spent on health initiatives such as drinking fountains.

In 2016, the World Health Organisation urged other governments to follow Mexico’s lead on soft drinks and, last year, the UK did.

While those options are not currently under consideration in Australia, the global companies that dominate the confectionery trade are not sitting on the couch and waiting for it to happen either.

“That expectation is growing, that companies take responsibility for their actions,” Ms Pezzicara said.

“And if they want to keep those customers loyal … you have to take responsibility too.”

Confectionery king Nigel Parsons – who runs the Australian arm of global giant Mondelez International, in charge of household names including Cadbury’s, The Natural Confectionery Company and Pascall – said changing consumer desires have sparked innovation.

A version of its flagship Cadbury Dairy Milk family-sized block will soon be available with 25 per cent less sugar, and the company has bought into a start-up focused on gut health.

“It’s very much following what consumers say,” he said.

“Ultimately, we know health and wellness is a growing trend. We know that permissible treating is becoming more and more important and really ensuring that we produce products that deliver to that requirement is important.”

Factory makes 35,000 tonnes of chocolate a year

Visiting one of Mondelez International’s factories, in a Melbourne suburb, you get a sense of the scale of Australia’s sweet tooth.

Snack-sized Picnic bars in their tens of thousands glide along a conveyor belt, assembled with wafers, caramel and peanuts, then entombed in chocolate in a seemingly endless parade.

The factory makes 35,000 tonnes of chocolate a year, mainly bars and eggs.

Chocolate bars roll out on the production line at Mondelez's Melbourne factory.

For Mr Parsons, the health concerns of consumers have an effect beyond just reducing sugar in a few products, to enabling them to understand how eat in them in moderation.

“It’s things like reduced sugar as a product, but also thinking about portionability and thinking around how we transition our portfolio more broadly … to a health and wellness platform,” he said.

Consumers are making the choice. For example, the consumption of Coca-Cola and similar fizzy drinks has fallen away in the past decade.

For the industry, there is a preventative aspect to consider. Although Australia is considered unlikely to impose a sugar tax in the short term, confectioners are keen to avoid the regulation that has affected other legal industries with products that are unhealthy, such as alcohol and tobacco.

“We’re a firm believer in effective self-regulation,” said Mr Lath.

“As an organisation that understands their social responsibility, we strive through those public commitments [about sourcing ingredients and treating farmers well] to ensure we’re doing the right thing.”

He noted that the company, famous for its Nutella spread and Kinder Surprise eggs, runs a program encouraging children to play sport.

Mr Parsons is similarly against any legal changes that would alter the products sold, or the price they are sold at.

“It’s something that we’ve got to be on the front foot about and really educating our consumer base, but also government and industry,” he said.

“You know, there is a lot of research that suggests it’s not the best way to manage sugar.”

But Ms Pezzicara sees legislation as inevitable.

“You see companies adopting sustainability strategies to reduce their risk and to get ahead of that regulatory legislation that’s coming, that we expect,” she said.

“But you also see a real big push and a big demand from the consumer level [for sustainability and healthier products] and that’s really pushing companies to act faster.”

ABC

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