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Chocolate Industry in Victoria

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further information
Department of State and Regional Development Regional Industries Level 11, 55 Collins Street MELBOURNE VIC 3000 Tel + 61 3 9651 9486 Fax + 61 3 9651 9304 Small Business Victoria Level 5, 55 Collins Street MELBOURNE VIC 3000 Tel + 61 3 132 215 Confectionery Manufacturers of Australasia Level 2 PO Box 1307 689 Burke Rd CAMBERWELL VIC 3124 Tel + 61 3 9813 1600 Fax + 61 3 9882 5473 Food Science Australia Sneydes Road (Private Bag 16) WERRIBEE VIC 3030 Tel + 61 3 9731 3220 Fax + 61 3 9731 3201 William Angliss Institute of TAFE 555 Latrobe Street MELBOURNE VIC 3000 Tel + 61 3 9606 2111 Fax + 61 3 9670 1330 AUSTRADE HWT Tower Level 21, 40 City Road SOUTHBANK VIC 3006 Export Hotline 13 28 78 Victorian Food Industry Training Board Suite 10 Skipping Girl Place 651-653 Victoria St ABBOTSFORD VIC 3067 Tel + 61 3 9428 7744 Fax + 61 3 9428 9931

Issued May 2001

The Industry in Victoria

The Australian Confectionery Industry

Food Science Australia

Sales patterns
The chocolate confectionery business is strongest in the colder months of the year and around special gift occasions such as Easter, Christmas, Mother’s Day and Valentine’s Day. In Australia today, 65% of all confectionery is sold through the grocery sector. The Australian grocery sector is highly concentrated with three supermarket chains accounting for approximately 75% of national grocery confectionery sales. Convenience stores and service station outlets account for a further 12% of Australian confectionery sales. Extended trading hours have increased the confectionery market share of large supermarket chains, convenience stores and service station outlets, at the expense of small family-owned businesses.

confectionery industry

With annual sales (ex factory) exceeding $1,469 million, the confectionery market accounts for almost 3% of the value of the overall Australian food and beverage market (ex factory). Chocolate accounts for about two-thirds of the total confectionery market, the most popular items being chocolate bars (42%), chocolate blocks (26%) and boxed chocolates (10%). In recent years the industry has enjoyed average annual growth of 3 - 5% from expanding product ranges and from continuing high levels of advertising and promotional activity. In 2000 more than $120 million was spent on consumer advertising and promotion across Australia. Over the next three-year period, the value of confectionery sales is expected to rise by 3-5% annually.

Product quality and variety
More than 5,000 different confectionery products are made in Australia. Australian made confectionery enjoys a very favourable international reputation, especially for high-quality chocolates. Australian manufacturers have consistently won various international awards. Cadbury won the prestigious (SIAL) Salon International de I’Alimentation award for the Yowie two years ago.

In AUstralia today,
High-volume production
Adoption of technologies such as e_commerce is enabling confectionery manufacturers to work more efficiently, gain competitive advantage and reduce the costs of doing business. Because technology and equipment for modern chocolate-making, chocolatecoating and packaging require a relatively high level of capital investment, the industry relies on high-volume production and economies of scale for production efficiency.

65% of all confectionery
Victorian Confectionery Exports over the 1990's
200 $ millions

is sold through the grocery sector.




0 page 2

91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 Years

confectionery industry

page 3

The companies
The manufacturers

Confectionery Manufacturers of Australasia

Market Drivers
The CMA believes that product innovation, brand development, strong marketing, changes to supermarket displays, a revitalised distribution network and value for money are the key drivers for confectionery growth over the next few years.

success factors

There is a substantial number of smaller (often family-run) Australian-owned confectionery manufacturers, the better know include Darrell Lea and Dollar Sweets Holdings Limited.

Breakdown of market share for the Australian Confectionery Industry.
Mars Confectionery Australia 15%

Its membership covers manufacturers, suppliers and distributors - and businesses of every size from multinational organisations to family businesses. Membership covers 95% of confectionery manufacturing companies, including the three largest. It is one of Australia and New Zealand’s most successful trade organisations.
For further information visit

Product and packaging innovation
Product innovation, line extensions and new packaging stimulate consumer interest and keep perceptions of brand names fresh. However, Australian consumers look for something that is genuinely new and different, not just a ‘me too’ version of an existing product.

Rising community consciousness of health issues suggests that product innovations are likely to include low-fat products, low in sugar sweets, and sugar confectionery with features such as vitamin fortification. The increasing proportion of older people in the population may encourage an expansion of the low in sugar products, which there is likely to be a general move towards functional foods in the next decade. New packaging styles, such as multi bags, are essential to stimulating sales in supermarket.

The importers
Cadbury Schweppes Australia Ltd 35%

Other Manufacturers


For further information on the Australian Customs Service visit



13% Sugar Confectionery

47% Chocolate Confectionery containing Cocoa 39% Food Preparations containing Cocoa

VUT - TradeData (from ABS data)

successful new products are often linked to established brands. page 4 page 5




A wide range of confectionery is imported into Australia at low tariff rates (5%). In 1999-2000 confectionery imports were $213m.

Victorian Confectionery Export Products


The Australian confectionery market is dominated by three major international companies, which together have 75% of the market: Cadbury Schweppes Australia Limited (35%), Nestle (25%) and Mars Confectionery of Australia including its subsidiary Kenman Kandy (15%).

The Confectionery Manufacturers of Australasia is the peak body for the confectionery industry of Australia and New Zealand. Established in 1969 it is based in Melbourne, Victoria. Its policy and activities are guided by a board of directors drawn from participating companies.

Successful new products are often linked to established brands. Often they are product brands that already sell successfully in Europe or the United States. New product lines in competitive food categories such as biscuits, processed fruit, chips, dairy and cereals, influence new confectionery products.

Strong brand recognition

Sales and distribution network
Confectionery products need the widest distribution of any consumer product to take advantage of impulse buying. Most of confectionery is bought on impulse, manufacturers ensure that their product is efficiently distributed and readily available to consumers. Confectioners are expected to further widen their distribution networks to include hotels and bottle shops, hardware shops and other high-traffic venues, where impulse buying opportunities are present.


Low cost production
The main raw materials required for chocolate production are cocoa beans, milk and sugar, while for sugar confectionery they are sugar and glucose. Raw material prices influence a confectionery manufacturer’s profitability. Prices of these raw materials can be volatile, given the direct influence of weather patterns, crop yields and stockpiles on these commodities, especially cocoa and sugar. Australian manufacturers have access to a constant high-quality supply of natural sugar, a commodity whose price can fluctuate significantly elsewhere. Australia’s largest sugar logistics company has its head office in Melbourne. Victoria is a low cost producer of milk. Victoria has over 65% of Australian milk production and exports of $2.1 billion of dairy products each year.

Advertising and promotional campaigns

Because confectionery is a ‘mature’ market, consumer interest has to be constantly stimulated through strong merchandising. Advertising and promotional campaigns are vital to the long-term success of brand images as well as to sales growth.

Victoria’s multicultural society has influenced the development of Australia’s confectionery tastes and flavours, which have expanded from traditional offerings to the latest sophisticated products that include Australian bush ingredients.

Value for money
Demand for confectionery is price ­ sensitive because buyers are keen to obtain value for money and because confectionery prices and product lines face strong competition from alternative snack foods such as potato chips, nuts and biscuits. Market growth for confectionery companies depends on population growth, spending power and competitive pricing.
26% 23% 8% 7% Japan New Zealand Taiwan Hong Kong 7% 4% 3% 22% Republic of Korea

Exports of Victorian Confectionery by Country

Saudi Arabia Others

VUT - TradeData (from ABS data)

Home to the major companies
A large proportion of Australian confectionery suppliers have manufacturing operations in Victoria. Major facilities are operated by Mars’ at Ballarat, Cadbury in Melbourne, and Nestle’s in Melbourne, Broadford and Marybrough. page 6

Food Science Australia

Food Science Australia



page 7

High-profile brands with strong consumer loyalty are fundamental to maintaining market share and to generating sales growth in the confectionery industry. A highly successful brand also tends to give a product a longer life cycle. Generic brands only hold a small part of the Australian market

Victoria is the Australian leader
Victorian confectionery manufacturers contribute $761.4 million (ex factory) (30%) of Australia’s domestic output and export around $170 million per annum or about 70% of Australian exports.

In the year 2000 some 130 firms were involved in confectionery production across Australia, employing just under 6000 people. In Victoria over 3000 people are employed in the confectionery manufacturing industry

Packaging Resources
Victoria dominates the Australian packaging industry with the majority of the industry’s employment and production capacity. The three top suppliers all have corporate headquarters in Victoria. These include:
• Amcor group, • ACI Packaging • Visy Industries

Centre of innovation
Cooperative Research Centre

Strongest skills base
With just under 60% of the national confectionery workforce, Victoria has Australia’s strongest confectionery labour force and skill base. Australia’s three largest confectionery manufacturers all have major operations in Victoria. The course structure is continually reviewed and training material previewed by the industry each year. Students are able to take some sections of the course through distance education.
For further information on William Angliss visit

Local training programs
William Angliss Institute of TAFE has a high-quality and comprehensive training program to meet the needs of the confectionery industry. The Diploma of Confectionery Manufacturing at William Angliss Institute of TAFE was developed in conjunction with the Confectionery Manufacturers of Australasia, who undertook analysis of their industry in order to determine their training needs. The course, designed to appeal to both industry entrants and industry practitioners, has four key elements:
Typical Confectionery Manufacturing Process

The above companies represent approximately 70% of the Australian market. Victoria is also home to the International Food Science and Packaging CRC & the Centre for Packaging, Transportation & Storage at Victoria University.



Food Science Australia


Food Science Australia, located at Werribee in Victoria, has expertise and technical resources to assist companies develop new markets and products. It has major capabilities in chocolate and confectionery research and development, covering stages from raw ingredients to final product. Special projects are directed to the development of functional ingredients such as vitamin fortification and scientific support for projects to improve product quality, shelf life and microbiological integrity.
For further information on Food Science Australia, visit




Technical covering panning, enrobing, chewing gum and chocolate manufacturing

Management covering critical management issues in the confectionery industry, occupational health and safety, and managing people



Food Science Australia

Foundation Sciences such as chemistry, laboratory techniques and physics

Quality including principles of food spoilage and control, HACCP (Hazardous Analysis Critical Control Points) and food analysis


page 8

training programs

page 9


The Cooperative Research Centre for international food manufacturing and packaging science includes Australia’s most highly regarded tertiary institutions: The University of Melbourne, and La Trobe, Monash, Swinburne, Ballarat, Victoria and RMIT universities. The Cooperative Research Centre plays a key role in ensuring that Victoria’s food manufacturers have access to world-class research so that they remain innovative and maintain competitive advantage.

Victorian F ood Industry Training Board (VF ITB)

investing in victoria

Labour relations
Enterprise agreements and site agreements have been a feature of the confectionery industry. In the face of globalisation and the continuing search for operational cost efficiencies, productivity has steadily risen over the past decade. This has also been fuelled by the development of export markets.

For further information on the Department’s services visit

Telephone (03) 9651 9444 Facsimile (03) 9657 9304 Email Website

Regulatory regime
The production and sale of processed foods are regulated at both Federal and State Government levels. Federal involvement in food regulation principally arises through its responsibility for developing the Australian Food Standards Code, the setting of export standards for some product groups, and the inspection of exports and imports. State governments are responsible for ensuring compliance with the national standards. In the latter half of 1996 the National Food Authority Australia’s food regulating body joined forces with the New Zealand regulating body and formed the Australia New Zealand Food Authority (ANZFA). The mission of the Authority includes to harmonise food standards between both countries.

• determine sources of government funding for training • identify appropriate training providers.

National Confectionery Employment Levels

57% 43%

Victoria Rest of Australia

Data ABS

page 10

Food Science Australia

• obtain advice on implementing training at a work site

investing in victoria

page 11

Victorian Food Industry Training Board Victoria is the industry peak body on training matters, and is a key source of industry training advice for the Victorian Government. It has representatives from the food-processing industry who tap their state wide industry network. The Board is responsible for aligning training provision with industry needs. Confectionery industry manufacturers use the Board to:

Investing in Victoria’s confectionery industry

Investment assistance
The Victorian Government, via the Department of State and Regional Development, can provide some assistance to new investors and existing businesses through a wide range of Enterprise Improvement Programs.

Level 11 55 Collins Street Melbourne VIC 3000 GPO Box 4509RR Melbourne VIC 3001

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