Facing Challenges in the Chocolate and Confectionery Industry

Chocolate Bars are Shrinking

From downsized Chocolate Orange’s to shrivelling milk buttons, our favourite chocolate snacks are shrinking before our very eyes. But why is this occurring and becoming more common? And, where does pigging technology fit in?

Click Here to Download our FREE guide to Hygienic Pigging for Chocolate and Confectionery Companies >>

Chocolate Manufacturers Face Multiple Challenges

Chocolate confectionery manufacturers and retailers continue to face multiple challenges. Along with the increases in the price of raw materials, they’re also encountering widespread government regulation and competitive pressure. These continue to cause headaches and place burdens on their earnings.Chocolate Manufacturers Challenges

2016 saw the increasing prominence of inflation. The prices for imported raw materials such as cocoa butter, sugar, almonds and vanilla climbed to record levels. Cocoa butter particularly fared poorly. This can be attributed to the unfavourable weather conditions in producer countries, combined with a surge in global demand for a chocolate fix. As a result, prices have increased by almost 40 per cent in 2016, combined with a progressive increase over the past four years.

Cocoa beans also increased in price, although this has been rising sharply for the last decade as a result of raw materials rising considerably on the world market. In the UK, the weakening of the pound also created obstacles for many chocolate manufacturers.

How do Manufacturers Overcome this?

Chocolate and confectionery manufacturers may decide to absorb some of the raw material cost challenges. Equally, another route would be to pass on the price increase to their customers. However, consumers may not be willing to pay the higher prices, and may turn to cheaper alternatives instead.

Chocolate manufactures and supermarket chains are being cautious. They know from bitter experience that they risk being punished by penny-pinching shoppers if the price of chocolate increases too fast and by too much. So, some manufacturers are resorting to ‘shrinkflation’ to offset the rising costs. In other words, the price of the product remains the same, but the portion size decreases!

Price Increases Create Challenging Markets

Unfortunately, it looks like the downsizing trend is one that is here to stay.

Shrinkflation gained international headlines and further prominence recently, when an iconic milk chocolate bar was redesigned. The chocolate bar is now a 360g bar (from 400g), and instead of 15 peaks it boasts only 11. The shape of the bar has also been reconfigured, and now comprises of narrower triangles and a significant gap between the peaks. For some cvanillahocolate lovers, this is a step too far. More than ever, manufacturers are embracing shrinkflation as a cost-cutting measure. It’s occurring more frequently, and barring a customer backlash which is only going to exacerbate.

The cost of milk chocolate production has risen by a staggering 40%, because of the steep increases in the price of sugar and whole milk powder. While some manufacturers pass on these rising costs to the consumer through shrinkflation, this is not always the case. Many are looking at the alternative technologies they can implement to reduce their costs.

Vanilla Shortage Another Problem

The vanilla market has also been volatile lately. Vanilla is one of the most popular, and expensive spices. And Madagascar is renowned for being the world’s primary vanilla producer. However, this has been hampered by ongoing droughts and questionable working practices. As a result, the price of vanilla confectionery soared by nearly 150% last year. This has been largely driven by poor quality harvests and lower quality beans.

The vanilla pod shortage is a challenge for food producers, who have inflated prices to content with. Subsequently, many companies have developed a host of strategies to avoid sourcing the more expensive vanilla.

How Can Pigging Help Manufacturers

More than ever, chocolate and confectionery manufacturers are realising that the benefits of pigging for chocolate production are substantial.

So, output is declining and cocoa, vanilla and other raw materials are becoming more expensive. That’s why recovering as much as possible during the manufacturing process becomes ever more valuable, and one of the key reasons why chocolate and confectionery companies use pigging.

Less product wastage during the production process is essential. It means chocolate manufacturers could offset the increase in production costs. What’s more, pigging recovers a significant proportion of the product within the pipelines (99.5 per cent). Plus, the product that is recovered is perfectly good and usable, while maintaining product quality.

It’s almost impossible to think about chocolate and confectionery production without pigging technology. As well as increasing yields, pigging systems streamline processing, and generally makes various operations a lot quicker and more efficient.

Efficient Cleaning Processchocolate production

With chocolate and confectionery products, it’s fairly common to use butter, oil or both to remove product residue via flushing. This is used as an alternative to water. While the oil may be reusable, the butter is not, therefore this can be costly.

Likewise, with the cost of butter rising due to consumer demand increasing, it’s becoming less of a viable option for chocolate manufacturers. That’s why pigging is effective, as it can significantly reduce or even eliminate the butter flush altogether. Additionally, as pigging technology reduces wastage, the positive environmental and sustainability benefits of pigging are considerable.

Find Out More

HPS is the world’s leading specialist in Liquid Product Recovery, Product Transfer and Pipeline Pigging for manufacturers, producers and processors of confectionery, chocolate and other food and beverages. Our clients include multi-national, blue-chip companies such as Nestle, Ghirardelli, Mondelez and many others.

For more information about improving your yield, lowering your costs and speeding up processing through pigging technology, please contact HPS or your local representative.