Ukrainian confectionery manufacturer Roshen has commenced production at a new Eur59 million factory at Vinnytsia. With a production capacity of 120,000 tonnes, the 62,000 sq m factory has been developed on 16.4 hectares of waste land in less than two years.

Roshen is planning to complete the construction of a second new confectionery factory, with a  capacity of 253,000 tonnes, at Vinnytsia in the second half of 2012. Roshen currently produces about 410,000 tons of confectionery annually.

Zetar, the UK-based confectionery and snack foods group, has reported a 17.5% drop in adjusted profit before tax to £5.5 million for the year ended 30 April 2012. Revenue dropped 5.0% to £128 million due to Zetar’s strategic exit from low margin commodity snack products and reduction in Easter confectionery sales. Net borrowings were reduced from £14.9 million to £10.8 million as the company remains focused on driving down levels of debt.

Ian Blackburn, chief executive of Zetar, comments: “Last year’s financial performance was disappointing primarily due to the late reduction in Easter 2012 sales, as our customers became increasingly cautious as the economic crisis in Europe unfolded. However, we continued to make good progress towards our main strategic objectives to increase the proportion of everyday and branded sales. Our portfolio of brands has been extended by the addition of the iconic brands Guinness and Tango, and we anticipate signing further well-known brands in FY2013.”

He continues: “We are optimistic about the new financial year following recent significant new everyday product wins and although consumer markets remain challenging, we are pleased that the year has begun in line with our expectations with underlying sales growth of 7%, to which may be added one-off sales in respect of Olympic gifting products of approximately £1.5 million in the first eleven weeks of the year. Last year’s cost initiatives are reflected in improved margins in the period. Accordingly the board is confident that the group’s results for the current financial year will be back on plan.”

Zetar has an ambitious business plan for the next three years in terms of revenue and margin growth targets. This will involves bolstering the company’s brand model with additional licensed brands for both divisions and capitalising on opportunities to drive private label sales as UK retailers seek to complement their value-for-money ranges with more premium added-value products. Zetar has also identified opportunities to expand its export sales, particularly into mainland Europe via the newly-formed subsidiary Zetar France.

The board’s confidence in the group’s future prospects and financial strength is reflected in its decision to increase the dividend by 33%.

Scottish bakery and confectionery company Lees Foods is the subject of a £5.6 million management buyout, which will take the business private. Lees Foods is the parent company of Lees of Scotland and the Waverley Bakery, two Scottish companies that have a long tradition in the manufacturing of confectionery products that have been enjoyed by consumers in the UK and overseas for many years. Lees Foods has been listed on AIM since June 2005.

The management, headed by chief executive Clive Miquel and other directors, is conducted the deal through buy-out vehicle Randotte. The management of believes that the proposal to return the company to private ownership is in the best long-term interests of the business.

Lees Foods currently employs 270 people across its factories at Cambuslang and Coatbridge. Despite escalating raw materials costs, Lees Foods has managed to increase pre-tax profits from £379,000 in 2008 to just under £1 million in 2010 with 2011 profits expected to be well ahead of analysts’ forecasts of £900,000.

Following its merger with Leaf coupled with overcapacity in its production operations, Cloetta has decided to close its factories a tGavle, Aura and Alingsas in Sweden, as well as streamline its warehouse network. The closures will result in 345 redundancies. Production will be transferred to other group factories, chiefly to Levice in Slovakia and Ljungsbro in Sweden, as Cloetta continues to further improve efficiency and reduce costs.

Cloetta plans to close the factories in Aura and Alingsas in early 2013 and in Gavle in early 2014. In addition, the warehouses inMalmo in Sweden and Slagelse in Denmark are planned to be outsourced and consolidated into a new warehouse in southern Sweden.

“The merger between Cloetta and Leaf allows an even more cost efficient production and distribution structure. In addition, we have overcapacity in our production which makes it necessary to reduce the number of factories,” explains Bengt Baron, president and chief executive of Cloetta.

The changes will incur a cost of SKr320 million to SKr 370 million and generate annual savings of approximately SKr100 million (Eur11 million). Founded in 1862, Cloetta is a leading confectionary company in the Nordic region, the Netherlands, and Italy. In total, Cloetta products are sold in more than 50 countries worldwide.

Nestle has become the first major confectionery manufacturer in the United Kingdom to remove all artificial ingredients from its entire confectionery range. The company has now replaced artificial colours, flavours and preservatives with alternatives in all 79 confectionery products it sells in the country.

Carrot, hibiscus, radish, and lemon are just some of the natural ingredients Nestle has used to provide colour or flavour in popular products such as Rolo and Smarties.

“Pleasure is, and will always be, our priority for confectionery,” says Marcelo Melchior, head of Nestle’s Confectionery Strategic Business Unit. “A responsible approach towards our product portfolio will help us to be recognised as offering the confectionery brands consumers feel best about purchasing. Our achievement in the UK brings us one step closer to this.”

Nestle made the changes in response to consumer demand in the UK for fewer artificial ingredients in food. According to consumer research, three quarters of British people look for products without artificial additives when buying confectionery. Nestle has already removed artificial ingredients from all its beverages in the UK, including Nesquik.

Nestle’s success is the result of a seven-year research and development programme that has led to more than 80 artificial ingredients being replaced with alternatives. The work is part of the company’s long-term commitment to finding natural substitutes for artificial colours, flavours and preservatives in confectionery. Similar initiatives are already underway in Canada and a number of other European markets.

Across many parts of the world, growth rates within the confectionery market are either very modest or static. This is due to a range of factors, examples of which include health concerns over intake of sugar and saturated fats, weak consumer spending following the economic downturn and strong competition from other snack-oriented foods. Nevertheless, innovation levels within the industry remain high, both amongst the world’s leading multinational suppliers and their smaller rivals.

In recent years, many confectionery manufacturers have been reducing sugar and fat levels, as well as removing artificial ingredients and additives in a bid to improve the perceived health and nutritional qualities of their confectionery products. Suppliers are also experimenting with an ever-wider range of ingredients and flavours, with flavour blends and combinations well to the fore in sectors such as fruit-based sweets and chewing gum.

Other trends have included the development of confectionery products geared towards certain times of year – for example, the amount of confectionery targeted at Halloween in the UK has grown significantly over the last decade. In some markets, manufacturers have also brought back confectionery brands and products from times past, catering towards those nostalgic for their earlier years. More products are also emerging in larger sharing bags and packs, targeted at the growing market for social confectionery.

‘Innovations in the Global Confectionery Market’ is a new publication from Leatherhead Food Research, which updates a report published back in 2002. The report reviews the global confectionery market, as well as profiling the industry’s main suppliers and reviewing their respective market positions. The report also discusses trends in NPD at length, broken down into the following areas:

* Health/Well-being

* Natural/Additive-free

* Ingredients and Flavours

* Seasonal/Retro

* Packaging.

With a length of more than 150 pages, the report will provide the reader with:

* An overview of the global confectionery market

* Global market size data for each of the main product sectors

* Analysis of the industry’s major players and their market positions

* Extensive review of recent new product activity

* Discussion of future strategic directions.

This report is available from the Publications Department at LFR, priced £695 with a discount price of £550 available to members of Leatherhead. For further information, please contact Leatherhead by fax +44 (0) 1372 822374 or by e-mail publications@leatherheadfood.com.

Estimated retail sales of Fairtrade products in the UK reached £1.32 billion in 2011, a 12% increase on sales of £1.17 billion in 2010. Cocoa and sugar have all seen significant growth with increases respectively of 34% and 21% over 2010. Bananas, coffee, tea are all showing steady growth. Critically, this means that Fairtrade Premiums, the extra that producers receive for business or social development, increased by over 10% in 2011 compared with 2010.

The sugar and confectionery industry is leading the way as businesses are stepping up more than ever to meet sustainability challenges, and deliver a better deal for small-scale farmers and workers, and enable them to take their own steps towards a better future.

“Fairtrade is an example of responsible capitalism in action. We believe that responsible businesses are those who don’t just tackle the company bonuses at the top – but take steps to ensure a fairer deal for the workers and farmers at the bottom of the supply chain too,” says Harriet Lamb, executive director of the Fairtrade Foundation. “The commercial reality is that forward-thinking companies are showing leadership in committing to Fairtrade, realising that, as well as it being the right thing to do, they need to invest in smallholders, developing better, longer-term relationships, to ensure the future supply of commodities like cocoa, coffee, sugar, tea, fruit and more.”

For instance,  Fairtrade’s share of the UK retail bagged sugar market is about to increase to 42%. Morrisons supermarket is converting its entire range of sugar to Fairtrade, supplied by Tate & Lyle Sugars. This newest move by Morrisons builds on existing commitments to Fairtrade sugar by Tate & Lyle, which became the first major retail brand to convert to Fairtrade in 2008, as well as retailers The Co-operative, Marks & Spencer, Waitrose, Sainsbury’s, Tesco and their major suppliers. The ambition is to get to 50% of retail market share.

Brand manufacturers have also committed to Fairtrade sugar – like pioneering chocolate company Divine Chocolate and the nation’s favourite chocolate treats, Cadbury Dairy Milk and Kit Kat four-finger, with Maltesers also switching later this year. And ice-cream companies are also using Fairtrade sugar – like Ben & Jerry’s which has been rolling out a plan to convert all its ice-cream to Fairtrade this year. Many cafe and restaurant chains, and catering suppliers again use Fairtrade sugar, with commitments from Sodexo, Aramark and Compass. The Fairtrade campaign will receive another boost in the summer through the Food Vision for the London 2012 Games, which includes a commitment for caterers to use Fairtrade sugar across all venues.

While sugar is one of the most valuable globally traded agricultural commodities, above coffee and cocoa, too many sugar cane producers remain in dire poverty and sugar production in many parts of the world is becoming unsustainable because of lack of investment in farming methods and support for farming communities. With impending EU sugar reforms looming which will jeopardise access to European markets for some of the world’s poorest sugar producing countries, poverty in sugar growing communities is threatening to increase. The phenomenal growth in Fairtrade in recent years has had a significant impact in helping farmers deal with the challenges they face, and is likely to mitigate some of the worst effects of the EU sugar reforms. Research on Belize Sugar Cane Farmers Association (BSCFA), which supplies Tate & Lyle, and Kasinthula Cane Growers Association (KCG) in Malawi, which also supplies the UK Fairtrade sugar market, shows Fairtrade is one of the strongest tools available to farmers, leading to: improved productivity, better environmental management, and social benefits through premiums.

Ferrero Group is to invest $190 million (Eur140 million) in building a new plant in the State of Guanajuato in Mexico. The new production plant will manufacture the new Kinder and Nutella products, for the local market and for export to North America (USA and Canada). The plant is due to commence production from May 2013. When at full rate, it will employ 500 persons besides the 600 already working for Ferrero de Mexico. The Italian confectionery group operates fifteen production plants worldwide.

Fazer Group and Rovio, the entertainment media company and creator of the globally successful Angry Birds franchise,  have signed a strategic co-operation agreement about the development and sales of Angry Birds branded confectionery. The new Angry Birds confectionery will be available in shops in June 2012.

Fazer’s confectionery is already sold in 40 countries all over the world and the company is seeking further international growth. Rovio is also a Finnish brand which has become known worldwide.

“Consumers are increasingly interested in combining new taste sensations with entertainment. This creates new opportunities, and we have identified the joyful and playful field as one of the interesting avenues in our product development,” says Pekka Rantala, managing director of Fazer Bakeries and Confectionery business area.

He adds: “We have been looking for suitable new partners in pursuit of our international growth targets, and the internationally successful Rovio with its super-popular Angry Birds characters fully meets our criteria.”

The co-operation will also include wide-scale utilisation of the social media and surroundings of the Angry Birds game, of which Fazer has previous experience from the Tyrkisk Peber Volcano confectionery launch in autumn 2011.

Thorntons, the UK confectionery manufacturer and retailer, has warned that profits for its full year will fall short of expectations. Citing continued weakness in consumer sentiment and high levels of promotional activity in the market place, the board of Thorntons expects that profit before taxation, exceptionals and impairment and onerous lease charges will be around break even for the 53 weeks ending 30th June 2012.

Thorntons reported a 37.3% plunge in profit before taxation and exceptionals to £4.3 million for the 52 weeks ended 25 June 2011, despite increasing sales by 1.7% to £218.3 million. The company is currently in the process of restructuring its own stores business to achieve an estate of between 180 and 200 outlets, located primarily in the top 150 retail locations. This will involve taking advantage of the 179 lease expiries over the next three years to close around 120 stores and exploring opportunities to close a further 60 stores in weak locations over the same time frame.

Swedish confectionery companies Cloetta  and Leaf are being  merged. The combined company will take the well established name of Cloetta and become a leading Swedish confectionery company with a strong base in the Nordic region as well as in Italy and the Netherlands. The new Cloetta will manage a portfolio of iconic brands and have pro forma net sales of SEK5.7 billion (Eur630 million) and recurring EBITA of SEK666 million.

The new Cloetta will have a strong portfolio of iconic, local, long-established brands including Kexchoklad, Lakerol, Polly, Ahlgrens bilar, Plopp, Malaco and Cloetta in Scandinavia, Jenkki inFinland, Sperlari and Saila in Italy and Red Band and Sportlife in the Netherlands. The two businesses are highly complementary and the merged company will have a full range of confectionery products by combining Cloetta’s strength in the chocolate segment with Leaf’s leading operations within the sugar confectionary segments.

Synergies in excess of SEK65 million annually are expected to be achieved within two years of closing the deal. In addition, Leaf is currently in the process of finalising a supply chain restructuring programme expected to yield another SEK45 million in annual cost savings in 2012.

Bengt Baron, currently chief executive of Leaf, will be chief executive of the new Cloetta.

Leaf has been owned by private equity firms CVC and Nordic Capital since 2005. Since the acquisition by CVC and Nordic Capital, Leaf has focused on developing and building brands and improving efficiency. Non-core businesses have also been divested.

The transaction values Leaf at SEK6.8 billion on a cash and debt-free basis implying an EV/EBITDA multiple of 9.0x for the twelve months ended August 31, 2011. Upon completion of the transaction, Cloetta shareholders will hold 42.4% and Leaf shareholders 57.6% of Cloetta’s enlarged issued share capital.

The merger is conditional upon approval by the shareholders of Cloetta at an extraordinary general meeting and approval by the relevant competition authorities. The EGM is expected to be held on or around February 15, 2012.

R&R Ice Cream, Europe’s largest own label ice cream manufacturer, is joining forces with Kraft Foods to bring confectionery innovation to ice cream markets across mainland Europe. In co-operation with Kraft Foods, R&R will initially develop, manufacture and distribute an indulgent ice cream range of five iconic Kraft brands – Milka, Toblerone, Daim, Oreo and Philadelphia – across ten European markets – Germany, Austria, Switzerland, France, Italy, Spain, Portugal, Netherlands, Belgium and Luxembourg. The first products will hit the shelves in Spring 2012 and are likely to appear in an individual serve ice cream format similar to R&R’s Nestle Potz range, which has proved so successful in the UK.

“We believe this venture could achieve additional sales of some Eur100 million for Kraft branded products within five years,” says James Lambert, chief executive and executive chairman of R&R Ice Cream. “It gives us a world-leading food brand across much of Western Europe and further enhances our reputation as a one-stop shop for both branded and own label ice cream products. I fully expect the Kraft deal to transform the European business in much the same way as the 2001 acquisition of the Nestle Ice Cream business changed our UK operations.”

He continues: “R&R is in great shape for 2012. The surplus cash from last November’s Eur350 million bond will be fully invested by early next year resulting in significantly increased EBITDA and free cash flows. Our cash flow generation will also enable us to further pursue our strategy of consolidating the European ice cream market and investing in our factories to reduce costs and increase innovation for customers and consumers.”

Kraft Foods plans to invest £50 million in its UK confectionery manufacturing operations while cutting the workforce by 200 people. The 200 jobs will be shed at Kraft’s sites at Bournville, Birmingham, Chirk in Wrexham, north Wales, and Marlbrook in Herefordshire. The cuts will be made through redeployment and voluntary redundancies over two years from March 2012.

Kraft will invest £6 million in a new biscuits line at its site in Sheffield, which produces sugar confectionery products such as Trebor, Maynards and Bassetts, to facilitate the manufacture of Oreo and BelVita biscuits in the UK for the first time.

The remaining investment will be made on a range of projects to upgrade infrastructure, speed up production, reduce waste and improve energy efficiency at three chocolate confectionery manufacturing sites. This includes £13.5 million at Bournville, £3.4 million at Chirk and £2.6 million at Marlbrook.

“The ambition is for Bournville, Chirk and Marlbrook to remain at the centre of British food manufacturing and of the Kraft Foods network,” says Neil Chapman, Kraft’s manufacturing director, UK chocolate. “We continue to invest in our people and facilities, so we can increase productivity and transform our business.”

In just a little less than ten weeks, ProSweets Cologne 2012 will once again open its doors. So far, more than 300 exhibiting companies from 32 countries have registered for the trade fair. That means the participation level of the 2010 event – 326 suppliers from 29 countries – has already almost been equalled. From 29th January to 1st February 2012, ProSweets Cologne will take place for the fifth time.

The trade fair will present the entire range of products offered by suppliers for the production, processing and packaging of confectionery. This includes the product areas for Raw Materials and Other Ingredients, Confectionery Packaging and Packaging Technology, Machines and Plants for the confectionery industry, and secondary segments such as Food Safety and Quality Management. And in 2012 products for the production, processing and packaging of snack items will be exhibited at ProSweets Cologne for the first time.

There are not only large numbers of returning exhibitors in all product segments, but also numerous companies that will be exhibiting for the first time. About three quarters of the exhibiting companies took part in the 2010 event, and around one fourth of the exhibitors will present their products and services inColognefor the first time. The new exhibitors include the companies esarom gmbh, Denk Ingredients, Capol and Kahl in the ‘Ingredients’ segment; Sunino, Sirene and Tam Matbaacilik ve Ambalaj San in the ‘Packaging and Packaging Materials’ segment; PFM, CAMA1 and BluePrint Automation in the ‘Packaging Machines’ segment; and Comas and Yamato Scale in the ‘Process Technology’ segment. Over 58% of the exhibiting companies at ProSweets Cologne 2012 will be from abroad, making the event once again even more international (2010: 56%).

And in 2012 there will again be a modest increase in the overall exhibition space occupied by ProSweets Cologne – the registrations and enlarged stand spaces booked so far correspond to growth of 5%. The company NETZSCH-Feinmahltechnik, for example, has expanded its stand space from 15 square metres to 160 square metres and will demonstrate a complete chocolate production line at the stand with partners. The suppliers PAWI Verpackungen, Cavanna and Buhler also intend to significantly increase their stand spaces.

Growth has been recorded in particular in the ‘Raw Materials/Ingredients’ area at ProSweets Cologne 2012, where considerably more companies will exhibit, and on more space, than at the previous event. To make it easier for visitors to find what they are looking for, the product area will be centrally located and feature distinctive signs. In addition to the new exhibitors esarom, Denk Ingredients and Kahl, this area will feature the companies Rum Albrecht, Chr. Hansen, Loders Croklaan, GNT Europa, Mantrose UK, HLR Praline, Curt Georgi, Cesarin and Roha Europe. And the key players Norevo and Palsgaard will once again exhibit at the trade fair.

The ‘Raw Materials/Ingredients’ product area will be rounded out by the ProSweets Cologne Conference on Ingredients, which will be presented in co-operation with Herbertz Dairy Food Service. The conference will focus on the raw materials stevia and milk and dairy products, addressing the potential they offer for innovation in confectionery production.

ProSweets Cologne 2012 will occupy Hall 10.1 at the Cologne exhibition centre. In combination with the International Sweets and Biscuits Fair (ISM), ProSweets Cologne presents the confectionery industry’s entire value chain at one location.

Nestle is continuing to drive its growth in Europe with a €10 million (more than SFr12 million) investment to produce different varieties of chocolate in Spain. The company has installed a new production line for moulding chocolates at its factory in La Penilla de Cayon in the north of the country. It is one of eight major investments Nestle has made in its manufacturing operations in Europe this year, including SFr45 million to extend a factory in Hungaryand SFr38 million to double pet food production in Russia.

The investment in La Penilla is the second Nestle has made in Spain this year, reflecting the company’s continued confidence in the Spanish market. In March, Nestle invested SFr64 million to boost production at its Nescafe Dolce Gusto factory in Girona.

Thanks to sales of Nescafe Dolce Gusto, Nestle Spain increased its exports by more than 40% in the first six months of 2011, despite the country’s tough economic conditions.

The new production line at Nestle’s La Penilla factory is equipped with technology for making new types of chocolate with different shapes and textures. “This investment reflects the importance Nestle places on continuous innovation,” says Bernard Meunier, vice president and chief executive of Nestle Spain.

The investment in the new production line will expand the factory’s annual production of chocolate to 7,000 tonnes. It confirms Nestle’s commitment to accelerating confectionery development, following the company’s expansion of its Product Technology Centre for confectionery in the city of York in the United Kingdom in September.

Nestle’s factory in La Penilla de Cayon produces chocolates and confectionery, cocoa powder, and infant formula. Around 40% of the factory’s annual production is exported to 45 countries worldwide. The new production line takes Nestle’s total investment in the factory to Eur75 million (more than SFr90 million) over the last five years.

Nestle is enlarging its global Product Technology Centre for confectionery, based at York in the UK. Nestle Product Technology Centres have two roles. The first is to develop breakthrough technologies – building blocks that are the basis of new product development. New textures and flavours are created as well as improved nutritional profiles. The second is to deploy these technologies to the company’s operations.

They can be used in Nestle’s factories around the world to ensure its confectionery products are being produced in the safest and most effective way, while meeting the constantly changing needs of consumers. Young talent is recruited and trained at the centre inYork before being assigned to Nestle’s operations or its research and development centres.

At the centre, ideas for new products are developed and tested right through from processing raw ingredients such as cocoa, to manufacturing, to packaging. Teams of technologists, scientists, engineers, food chemists, confectioners, nutritionists and packaging specialists work to develop new chocolate products, as well as fruit and wafer-based confectionery products. They also work on different coatings and chocolate ingredients for ice cream products.

At the heart of the centre is a pilot plant, which will be extended as part of the investment programme. This is where Nestle confectionery specialists and engineers develop and test technologies, manufacturing processes and equipment before they are used in the company’s factories worldwide.

The company’s cutting-edge sensory testing facility for the tasting of prototypes and finished products, will also be extended.

The centre’s extension has been designed to minimise waste of materials such as water, carbon dioxide, and energy while maximising output. This will be done according to the principles of ‘lean construction’, a global standard for designing and constructing more efficient and environmentally sustainable production systems.

Following Nestle’s acquisition of York-based Rowntree Macktinosh in 1988, the city has played an important role in the company’s development and manufacture of confectionery products. Nestle’s York factory produces popular confectionery brands including Kit Kat, Aero, and Milky Bar.

Despite the difficult trading environment, Zetar, the UK confectionery and snack food group, increased revenue by 2% to £135.0m and adjusted operating profit by 3% to £7.5m for the year ended 30th April 2011. Adjusted profit before tax rose 6% to £6.7m and EBITDA increased from £9.6m to £9.8m.

The results reflect a record performance by the confectionery division due to continued increase in everyday sales and an improved mix of higher margin products allied to further cost efficiencies. The natural snacks division was impacted by rising raw materials costs but the operating margin improved during the second half from 2.6% to 4.5% as price increases were implemented and more branded products were sold.

“We have set ambitious plans for the group to enhance revenue and margin over the next three years. Our key focus is to drive sales of premium private label and branded products across both divisions,” says Ian Blackburn, chief executive of Zetar. “The group’s strong financial base provides the resource to realise this strategy.”

Nestle has agreed to acquire a 60% stake in Hsu Fu Chi, a leading manufacturer and distributor of confectionery products in China, for SFr1.4b (Eur1.2b). The remaining 40% will be retained by the Hsu family, which founded the Chinese company. Hsu Fu Chi’s current chief executive and chairman, Hsu Chen, will continue to lead the company in the new partnership.

In 2010, Hsu Fu Chi reported sales of Sfr669m and an EBIT margin of 17.3%. The company operates four large-scale factories in China, has excellent route-to-market capabilities and employs 16,000 people.

Hsu Fu Chi’s portfolio includes sugar confectionery, cereal-based snacks, packaged cakes and the traditional Chinese snack sachima. Hsu Fu Chi’s products are tailored to Chinese consumers’ needs and habits, and complement Nestle’s existing product portfolio in China, which includes culinary products, soluble coffee, bottled water, milk powder and products for the foodservice industry. Hsu Fu Chi’s large portfolio of affordable products, with the potential for enhanced nutritional value, fits perfectly into Nestle’s global portfolio.

“This proposed partnership will greatly reinforce our presence in China. It combines Hsu Fu Chi’s strong brands, its large portfolio of products at affordable price points, its efficient operations and entrepreneurship with our proven innovation and renovation capabilities, supported by our R&D Centres in China,” says Paul Bulcke, chief executive of Nestle. “It also demonstrates our long-term commitment to China and enhances our ability to grow our portfolio of international and local brands in this dynamic market.”

Nestle has been present in China for over twenty years and today operates 23 factories, two R&D Centres and employs 14,000 people. Its China region achieved sales of SFr2.8b in 2010. Main Nestle brands in China include Nescafe, Nan and Maggi as well as local brands such as Totole, Haoji and Dashan. Nestle has established several technical assistance initiatives for milk and coffee farmers in China.

Nestle’s Skinny Cow low-fat frozen snacks brand has launched its first ever confectionery range in the US. The Skinny Cow brand – famous with its majority female fan base for its indulgent but low-calorie ice cream sandwiches, cones, cups and bars – is extending into the confectionery category with two new products offering four different flavours.

Skinny Cow Dreamy Clusters are bite-sized treats which contain 120 calories per pouch, while Skinny Cow Heavenly Crisp bars contain 110 calories per bar. The new products continue the Skinny Cow tradition of offering ‘light’ yet indulgent treats. Indeed, confectionery is a natural extension for Skinny Cow. All four Skinny Cow confectionery products are currently available nationwide in the US, as single candy bars or pouches, or in take-home boxes.

Founded in Jersey under the name Silhouette in 1991, and featuring the Skinny Cow logo, the brand’s low calorie ice cream sandwiches were an instant hit in the small shops and markets of Manhattan, New York. In 2004, it was acquired by Nestle Dreyer’s Ice Cream and re-launched as Skinny Cow. Skinny Cow ice cream has enjoyed steady growth every year since its acquisition by Dreyer’s.

Barry Callebaut, the world’s leading manufacturer of cocoa and chocolate products, and The Hershey Company, the leading manufacturer of chocolate and confectionary products in North America, have agreed to a long-term increase in the volume of products supplied by Barry Callebaut, expanding the supply and innovation agreement signed in 2007. For this increase in volume, as well as other market share growth, Barry Callebaut will invest an incremental $15m in its North American sites by the end of 2011.New deliveries to Hershey will commence by the first quarter of calendar year 2012.

With annual sales of SFr5.2 billion (Eur3.6b/$4.9b) for fiscal year 2009/10, Zurich-based Barry Callebaut is present in 26 countries, operates more than 40 production facilities and employs about 7,500 people. The company serves the entire food industry, from food manufacturers to professional users of chocolate (such as chocolatiers, pastry chefs or bakers), to global retailers.

UK confectionery manufacturer and retailer Thorntons has warned that poor trading over the important Easter period coupled with the ongoing challenging retail environment will result in profit before tax and additional impairment charges for the year to June 25th 2011 being in the £3.0m to £4.5m range, significantly below the £6.1 million achieved last year.

In its third quarter trading update, Thorntons reveals that while overall group sales since January were down slightly by 0.7%, the hot weather conditions over the Easter trading period significantly impacted its own stores, franchise and Thorntons Direct channels. Despite two key trading periods, Christmas and Easter, being affected by unprecedented weather conditions, total sales for the year to date increased by 2.9% compared to the same period last year.

“The past quarter has been extremely challenging particularly in our own stores and for franchisees and we foresee the prospect of this weakness in high street footfall and spending continuing. We have taken a number of actions including adjusting our trading strategy and aggressively managing our overhead costs, as well as ensuring that our production is geared to likely demand,” comments Jonathan Hart, chief executive of Thorntons. The confectionery group, which is currently celebrating its 100 anniversary, is in the process of a strategic review of its business to determine ways of meet these challenges.

Zetar, the UK confectionery and snack foods company, has acquired Derwent Lynton for a maximum consideration of up to £0.8m. Based in Derby, Derwent Lynton is a chocolate confectionery manufacturer specialising in solid milk chocolate and chocolate flavour balls and eggs, hollow milk chocolate shapes, sugar-coated milk chocolate products including eggs & beans and chocolate drops.

Its operations will form part of Zetar’s confectionery division. In the year ended 30th June 2010, Derwent Lynton had sales of £4.2m and an operating profit of £114,000. At 30th June 2010 net assets amounted to £0.6 million.

“The acquisition of Derwent Lynton is complementary to our existing confectionery business, providing access to new customers. Its additional manufacturing capability will also give Zetar the flexibility to offer new product variants to our existing customers,” comments Ian Blackburn, chief executive of Zetar. “This relatively small acquisition is Zetar’s first acquisition since 2007. We are continuing to review other small opportunities.”

Barry Callebaut, the world’s leading manufacturer of high quality cocoa and chocolate products, grew twice as fast as the global chocolate market in the first half of its 2010/11 fiscal year, ended February 28th last: Sales volume at the Swiss confectionery group increased by 7.1% to 706,570 tonnes, while the global chocolate market grew by 3.6%. Emerging markets and cocoa products for strategic partners were the main growth drivers.

However, the strong Swiss franc affected the overall results both in terms of sales revenue and profit level. Sales revenue rose by 3.1% to SFr2.74b (Eur2.1b) but in local currencies grew by 13.2%. Due to good cost control as well as a favorable combined cocoa ratio, Barry Callebaut achieved significant operational improvements. Operating profit (EBIT) was up by 4.0% to SFr217.1m (+11.4% in local currencies) and net profit rose 9.0% to SFr158.8m, and by 17.1% in local currencies.

Juergen Steinemann, chief executive of Barry Callebaut.

“Once again, we managed to significantly outperform the global chocolate market by growing twice as fast. We are pleased that our growth was particularly strong in emerging markets. All strategic product groups showed good momentum, resulting in double-digit profit growth in local currencies,” comments Juergen Steinemann, chief executive of Barry Callebaut.

He adds: “In recent months, we faced a challenging political situation in Cote d’Ivoire, the world’s most important cocoa growing country. In order to avoid supply problems we have put in place a contingency plan and stepped up our sourcing and production activities in other countries. We believe we have taken those steps necessary to enable us to honor our customer contracts and meet our commitments during 2011. However, our primary concern during this difficult time is the safety and welfare of our employees and everyone living in Cote d’Ivoire. We remain committed to the cocoa farming communities and hope for a peaceful resolution of the current situation.”

Barry Callebaut is confident that its good performance in the past six months will continue in the second half of fiscal year 2010/11 despite the challenging situation in Cote d’Ivoire. Barry Callebaut expects to surpass the average market growth rates and is therefore confirming its four year financial guidance.

Falling sales volumes and a decrease in contract manufacturing coupled with rising raw material prices, which weakened margins, have adversely impacted on the financial performance of Swedish confectionery manufacturer Cloetta in the first half to February 2011. Net sales fell 4.1% to SEK557m (Eur62m) and operating profit by 40.5% to SEK22m as the operating margin declined from 6.4% to 3.9%. The Swedish market accounts for about 85% of Cloetta’s sales. Profit before tax dropped from SEK35m to SEK21m.

Founded in 1862, Cloetta is the oldest confectionery company in the Nordic region. The company’s best known brands are Kexchoklad, Center, Plopp, Polly, Tarragona, Guldnougat, Bridge, Juleskum, Sportlunch, Extra Starka and the chocolate bar range Good. Cloetta has two production units in Sweden, one in Ljungsbro and one in Alingsas. For the year ended 31st August 2010, Cloetta posted net sales of SEK1.06b.

Norway-based Orkla Brands has decided to merge its Russian chocolate and confectionery companies – Krupskaya and SladCo – into one entity named Orkla Brands Russia. The integration process has already started. Headquartered in St Petersburg, Orkla Brands Russia will have about 3,350 employees and a turnover of approx. RUB6.8b (Eur170m).

Vadim Ter-Israelyan has been appointed chief executive of Orkla Brands Russia and the chairman is Paul Jordahl, chief executive of Orkla Brands International.

“Combining the best of both organisations, we will improve our competitive position in a demanding Russian market. The establishment of Orkla Brands Russia is an important step in our long-term commitment in the Russian chocolate and confectionery business. We will keep and develop the local brands, thereby maintaining the Russian tradition and proud history,” says Paul Jordahl.

SladCo has been owned by Orkla since 2005. In 2010, the company had net sales of RUB3.8b and 2,100 employees. SladCo is the market leader in Urals and South Volga, with production in Ekaterinburg and Ulyanovsk.

Krupskaya was acquired by Orkla in 2006. The company is located in St Petersburg, and is the market leader in Northwest Russia. The company had net sales of RUB3.0b in 2010, and 1,250 employees. Over the past years, Krupskaya has fortified its position in Northwest Russia by acquiring several companies and trademarks.

Although revenue rose by 4.8% to £127.4m, interim profit before tax for the 28 weeks ended January 8th 2011 declined by 8.5% to £8.3m at Thorntons, the UK confectionery manufacturer and retailer. Adverse weather conditions in its second quarter affected sales and profits, and disruption to the supply chain caused incremental costs of £0.5m.

The fall in profitability was caused by a combination of gross profit margin decline, due to changes in the sales channel mix and some discounting, as well as weather related impacts. Sales of Thorntons branded products increased by 5.5% during the period.

Trading in Thorntons own stores on the high street continues to be difficult but the company’s commercial operations and its Thorntons Direct business are expected to continue to grow.

“We are entering a period when a significant number of our own store leases will be approaching renewal. This will provide the opportunity to change the size and shape of the own store portfolio,” points out John von Spreckelsen, chairman of Thorntons.

Raisio, the Finnish food and functional food ingredients group, increased net sales by 17.9% to Eur443.0m in 2010. EBIDTA fell from Eur37.5m (excluding one off items) in 2009 to Eur35.3m last year. EBIT was Eur19.4m (Eur20.5m excluding one-off items), which accounts for 4.4% (5.5%) of net sales, which is in accordance with Raisio’s all-year guidance.

“Raisio is in the middle of the growth phase which we expect to last two years. During the growth phase, we aim to increase net sales and our international activities,” points out Matti Rihko, chief executive of Raisio.”

Matti Rihko, chief executive of Raisio.

In the first half of 2010, Raisio acquired Glisten to enter the snacks and confectionery market in Great Britain. Since its year end, Raisio has acquired Big Bear Group for Eur95.3m to gain a stronger branded foothold in the snacks and breakfast cereals markets in Great-Britain and Western Europe. The acquisition supports Raisio’s growth strategy to become the leading provider of healthy snacks in Europe.

Matti Rihko continues: “We will continue to be active in the acquisitions front. The group’s strong balance sheet and cash flow provide a good foundation for acquisition activities as far as there are suitable companies available fitting our strategy and meeting our preset criteria. During the growth phase, Raisio aims to maintain the earlier 4-5% level of profitability.”

Great-Britain has now become the largest market area for Raisio’s food business with Eur140-150m of net annual sales.

Zetar, the UK confectionery and natural snack foods group, has built on the recovery in its last financial year by reporting good organic growth in the first six months ended October 31st 2010. Adjusted profit before tax rose 10% to £2.4m on turnover up 6% to £60.3m.

Progress was underpinned by the confectionery division, which is now realising the benefits of its past capital investment and strategic focus on everyday impulse chocolate and also enhancing its market leading position in the novelty licensed character sector. Confectionery sales advanced by 11% to £36.6m and adjusted operating profit increased by £0.9m to £2.3m.

In a market that has experienced unprecedented raw material cost increases in the period, the natural snacks division has implemented a series of customer price increases across its range of products. In the short term this cost inflation has reduced the division’s margins and resulted in an operating profit of £0.6m, down from £1.4m in the corresponding period in 2009, on sales down from £24.0m to £23.7m. A stronger second half performance is expected.

“We are pleased to have continued to grow our business organically and deliver profit before tax ahead of last year by 10%. This is particularly good in view of rising raw material costs impacting our snacks business, and demonstrates the value of the business’s continued focus on innovation and product development,” points out Ian Blackburn, chief executive of Zetar. “Based upon the current indications of trading at Easter, the board expects the group to deliver earnings for the full year in line with market expectations.”

Nestle is reported to have sold its Altai Confectionery business in Russia to local private company Corminus Enterprises for an undisclosed sum. The Altai plant produced about 17,000 tonnes of confectionery products, including brands Altai and Savinov, in 2009.

The disposal will allow Nestle in Russia to focus resources on its well established core confectionery brands such as Kit Kat, Rossiya-Schedraya Dusha and Nestle.

Over the past 15 years, Nestle has built up a strong presence in Russia and currently operates 13 production facilities, ten sales offices and employs around 10,000 people. With double-digit growth rates and sales of around SFr2b in 2009 in Russia, Nestle is market leader in coffee, chocolate, infant cereals and culinary products.

Tokyo-based Lotte Group is reported to be investing in the region of Eur200m to expand and diversify its Wedel confectionery business in Poland. The expansion programme entails the construction of five new factories, including an initial investment of Eur70m.

Lotte Group acquired the Wedel branded chocolate and sugar confectionery operations in Poland last June from Kraft Foods for an undisclosed sum. The deal marked Lotte’s entry into the European food market. The sale followed the European Commission’s decision to approve Kraft Foods’ acquisition of Cadbury conditional on the disposal of the Cadbury Wedel business in Poland and the Cadbury chocolate confectionery and soft-cake business in Romania.

Lotte Group is a multinational conglomerate with annual sales of Yen3,547b ($40b). Founded in 1948 as a chewing gum company, it currently operates in a variety of sectors, including food and confectionery, retail, travel and tourism, industrial chemicals and construction, and finance. As the original business, confectionery is at the core of the Lotte Group’s operations.

Lotte Group’s confectionery portfolio includes many well-known Asian brands, such as Xylitol, Koala March and Ghana. Lotte Group is the largest chewing gum manufacturer in Asia and third largest in the world.

UK confectionery retailer Thorntons has appointed Jonathan Hart as group chief executive with effect from January 4th 2011. Jonathan Hart’s retail and consumer goods experience spans more than 25 years. For the past five years he has been managing director of UK coffee chain Caffe Nero, where, during his tenure, the business has more than doubled in size to over 400 stores with EBITDA of £28.7m and revenue of £153.6m (year to May 2010). In addition to driving top-line growth and physical expansion, he streamlined retail merchandising, built the Caffe Nero brand equity and improved company profitability.

Greggs, the UK’s largest retail baker, has reported that its expansion programme remains firmly on track, with a net 32 new shops opened in the year to date, giving it a total of 1,451 shops at 2nd October 2010. The group now expects total net new shops for the year as a whole to be at the upper end of its previously indicated range of 50-60.

Ken McMeikan, chief executive of Greggs.

Greggs has also completed 84 shop refurbishments, including 17 of the concept shops trialled in 2009. The group is well on course to meet its target of 120 refurbishments this year including 30 concept shops.

Construction of Greggs’ replacement bakery in Newcastle upon Tyne is progressing well, and is scheduled to begin production in mid-2011. Greggs has received planning permission for a new cake and confectionery bakery in Penrith and commences building later this month ready to open in summer 2011.

Greggs has also submitted a planning application for a new bakery in Wiltshire to enable it to unlock the significant growth opportunities already identified in the South and South West of England. Greggs is continuing to self-finance its capital expenditure requirements.

Baking bread in lighter tins, cleaning pipes with ice instead of hot water, and using microwaves to dry fruit gums and jellies: these are just some of the ideas being explored by the Carbon Trust and food industry leaders to cut energy use and carbon emissions at UK manufacturing sites.

Over the last year, the Carbon Trust has worked with companies including Allied Bakeries, Dairy Crest, Cadbury and Nestle to identify more energy efficient manufacturing processes with the potential to cut industry carbon emissions by some 450,000 tonnes a year: equivalent to taking more than 150,000 cars off the road.

Now, in partnerships with the Food & Drink Federation and Dairy UK, the Carbon Trust has challenged food producers and equipment suppliers to help prove the business case for these new processes. It is offering co-funding of up to £250,000 per project and in exceptional instances up to £500,000.

The challenge comes as part of the Carbon Trust’s Industrial Energy Efficiency Accelerator (IEEA) – a £15m programme aimed at catalysing low carbon innovation in industry.

“The way to make truly substantial cuts is to get to the very heart of manufacturing. We want to work with manufacturers to rethink production processes from the ground up. Innovation is the backbone of the low carbon industrial revolution that will not only reduce emissions but will also generate jobs and cut costs,” explains said Benj Sykes, director of innovations at the Carbon Trust.

Dairy

The food industry processes identified by the Carbon Trust as key targets for its IEEA programme include the cleaning of pipework in dairies. This is usually done by heating water to 80 C and flushing it through the pipes before sending it down the drain taking the wasted heat and energy with it.

‘Ice pigging’ – a process that uses solid plugs of ice to clean pipes and is commonly used in the oil industry – is a lower carbon alternative.

Homogenisation, the process that prevents a cream layer separating out from the milk, has also been identified by the Carbon Trust as an opportunity to reduce energy use and carbon emissions. Homogenisation is currently done by pumping milk at high pressure through narrow tubes to break up the fat molecules – a relatively energy intensive process. Lower carbon alternatives could include the use of ultrasound.

Together, these new methods of ice pigging and homogenisation could cut the dairy sector’s carbon emissions by around 5%.

Confectionery and Bakery

Carbon emissions from the production of gums and jellies in the confectionery sector stand at around 60,000 tonnes per annum. Using alternative methods such as microwave technology to dry (or ‘stove’) the sweets could cut these emissions by 10% a year, according to Carbon Trust estimates.

And in commercial bakeries, reducing the weight of baking tins, improving the efficiency of ovens and recycling waste heat could together cut the sector’s emissions by around 9%.

Kraft Foods has opened a European Gum and Candy Research & Development Centre at Eysins in Switzerland. The $14m state-of-the-art facility will focus on innovation and new product development for many of Kraft Foods’ confectionery brands, including the world’s leading gum brand Trident and the world’s leading candy brand Halls, as well as other brands like Bassetts, Carambar, The Natural Confectionery Co, Trebor and V6.

Worth $23 billion annually, the global gum market has grown by almost a quarter since 2005, and is one of the fastest-growing categories within confectionery. Kraft Foods has a number of gum brands with leading positions in markets across Europe, such as Hollywood in France, Trident in Spain, Greece and Portugal, and Stimorol in Denmark and Switzerland.

The new centre will be home to a team of product and package developers and quality experts who are responsible for breakthrough gum and candy innovation, such as the new Fresh & Clean gum product which is currently launching in markets across Europe. As the European Centre for innovation and technology for gum and candy, the team based in Eysins will collaborate closely with the Kraft Foods Global Gum & Candy Centre of Excellence, based in New Jersey in the US, to drive innovation and new technologies that support the company’s European gum and candy business and global category growth platforms.

The Center in Eysins joins 14 other Kraft Foods R&D Centres supporting the company’s global businesses including beverages, biscuits, cheese, chocolate, coffee and gum and candy.

Zetar, the UK confectionery and snack foods group, has completed its refinancing, agreeing new four year bank facilities with HSBC Bank. The refinancing provides Zetar with up to £45m in a combination of asset-based and revolving credit facilities. The new facilities will not give rise to a material change in forecast finance charges for the current financial year.

The HSBC facilities will accommodate the working capital required to meet Zetar’s organic sales growth plans for the next four years. “The group has some exciting plans for innovation-led sales growth over the coming years. I am delighted that a global, market-leading bank like HSBC has recognised the potential of our business and has agreed to support us,” comments Ian Blackburn, chief executive of Zetar.

Roshen, the Ukrainian confectionery manufacturer, plans to invest $250m in building a new production complex near by Cosyrevka town in the Lipetsk region of Russia. It will be Roshen’s third factory in Russia.

Construction of the 230,000 sq m complex, which will incorporate a factory and depot, will start in 2011 and will be finished in 2016. The factory will specialise in the production of high-quality chocolate goods.

The planned 63,000 sq m five-storey factory building will house around 40 production lines. The production capacity will be 253,000 tonnes per year. The new 70,000 sq m depot facility will store raw materials and prepared products for the new factory, and for other Roshen factories in Russia.

SnackTime, one of the UK’s largest national operators of snack and chilled drink vending machines, has acquired Vendia UK for a maximum consideration of £10.98m. Vendia UK’s core operation is a traditional vending business specialising in the sale of hot beverages, which complements SnackTime’s confectionery and chilled drinks operations.

For the year ended December 31st 2009, Vendia UK reported revenues of £19.7m and adjusted EBITDA of £2.1m. The acquisition is in line with SnackTime’s strategic objective to increase its critical mass and substantially improve its hot beverage offering. The enlarged group will have over 30,000 customers being serviced by more than 450 employees, agents and franchisees and will be the UK’s fourth largest vending company by revenue.

Ed Haas, the Austrian confectionery manufacturer, has commenced production in a 6,000 sq m plant at Janossomorja in Hungary. Employing 100 people, the new Eur3.5m facility will produce the group’s PEZ candy brand. Annual production is expected to be 2,000 tonnes.