INC Magazine

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17 November, 2017 A Chat with the Industry

'Nuts and Dried Fruit Will Play an Increasing Role in the Confectionery Products of the Future'

'Nuts and Dried Fruit Will Play an Increasing Role in the Confectionery Products of the Future'

Sandra Martinez de Arévalo is Senior Vice President – Confectionery at Nestle.

Sandra Martinez de Arévalo is Senior Vice President – Confectionery at Nestle. She has previously played other significant roles in the management of the company, such as President of the Confectionery Division of Nestle Canada, CEO of Nestle Venezuela and Global Head of the Confectionery Strategic Business Unit.

How have confectionery consumer trends changed lately?
There are two significant trends sweeping across the confectionery world. The first is “premiumization”, as consumers in both developed and developing countries are willing to pay higher prices for unique tastes and experiences. The second is towards healthier eating, where the consumer is looking for all the great taste but in a product format that is “better for them” than existing products on the market.
So, is the increasing awareness about the importance of healthy eating forcing a change in the type of confectionery products available?
Certainly. Products are evolving. We see products simplifying ingredients lists, removing artificial flavors and colors and a few have even reduced fat and sugar. Perhaps the biggest evolution, however, is that we are making it easier for consumers to eat our products responsibly by making portions which are both appropriate in size and intuitively easy to understand. We have also seen the rise in many new “healthier” products which emphasize wholesome ingredients such as fruit and nuts either inside the product or (even better) prominent on the packaging so that they can be seen by the consumer.

Do you expect that this awareness will continue to increase? Is the industry prepared for that?
We only see this trend continuing. The whole industry is reshaping its portfolio. Manufacturers are acting and they have a good understanding of what the consumer is looking for. The challenge is to fit it into their existing manufacturing footprints or brand portfolios.

What other challenges is the sector facing?
Ingredients such as dried fruit and nuts will be increasingly used in the category and will play a prominent role in the products of the future. Ensuring consistent supply, quality and traceability will be key. The modern consumer wants to eat better but will not compromise on taste and is asking tough questions about where these ingredients are coming from and how the farming communities are being treated.

Nestle has announced that there is room to grow in the confectionery market, but at the same time is considering reducing its number of brands. Is this because consumer trends have changed, and nowadays certain types of confectionery represent a thriving business opportunity while others have become no longer profitable?
Nestle is constantly reviewing its portfolio. Few brands have lost relevance to the consumer but there are many others which have met modern consumer needs and are thriving. The company is not afraid to let this natural attrition take place.

What is the role of nuts and dried fruits in confectionery?
As I explained previously, the consumer appreciates seeing whole ingredients in their products and they associate that with a more natural and, in many cases, healthier perception. A good example of how we have captured this trend is our product Nestle Les Recettes de l’Atelier (see picture).
Are there any nuts or dried fruits that, in your opinion, have margin for growth in the confectionery market? 
Across the world different fruits and nuts are enjoyed in different regions. It is likely that manufacturers will increasingly try to cross-fertilize some of these ingredients into different regions to see how consumers react. We should also expect the growth of “superfruits”, which are more exotic and enable differentiation and “premiumization”.

What is the role of marketing in the process? What percentage of success depends on the product itself, and what depends on marketing?
NESTLE has been built on brands. Engaging with the consumer in a meaningful way and reassuring them of the quality is just as important as giving them a great product. There are some great products in the market that the consumer doesn’t know about, doesn’t trust or cannot relate to – that’s the part a brand plays. Of course, the brand can promise many things, but if it does not “delight in the mouth” then… we know how that ends up!

Is Big Data essential to understanding consumers and reacting accordingly?
Understanding the consumer has always been at the heart of selling successful products. Previously, brands gathered this information from many sources, including their own research. These days there is more data becoming available from digital sources, which is more granular and timely. There is no doubt that this can improve our offering to the consumer, especially as those consumers are expecting greater levels of service and personalization.

Although initially it may seem as though they are not related, have new technologies and online trends affected or in any way modified the confectionery market? How?
It varies by country and category. Ecomm penetration levels are very high in countries such as the UK and China and very low in others like Russia. Where penetration is high (for example 25% of the chocolate market in China is in Ecomm), consumer understanding of brands is definitely shaped by their digital interaction; they are influenced by other consumers’ comments and recommendations. The speed and ease of delivery means that they are more prepared to try new brands even if they can be quite expensive.

What changes can we expect in the near future?
The world is going to continue to speed up! Expect more influence from Asia. Premium and healthier products will grow, the consequence of which is that there will be many opportunities for the fruit and nuts industry.
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