Market overview

Pick & mix as a way of consuming confectionery is a segment within the confectionery market where the confectionery is picked, mixed and bagged by the consumer directly at the point of sale.

The business model is built on a professional “shop-in-shop” model based on the idea of consumers’ preference for freedom of choice.

The confectionery market is divided into sugar confectionery (excluding chewing gums) and chocolate confectionery, and includes both pre-packed and pick & mix.

Sugar confectionery includes jellies, boiled sweets, mints, liquorice, lollipops and toffees from brands like Bassett’s, Haribo and TicTac.

Chocolate confectionery includes bagged selflines (e.g., bagged small chocolate bars), bagged softlines (bagged chocolates of the same sort, e.g., m&m’s), boxed chocolate assortments, countlines (chocolate bars), chocolates with toys and chocolate tablets from brands like Cadbury, Ferrero, Marabou, Cloetta and Anthon Berg.

Crisps, natural snacks and ice cream are not included in the definition of the confectionery market.

The graph below presents the estimated aggregate value of the confectionery markets in the countries indicated. The aggregate value of the Nordic confectionery markets was estimated at approximately SEK 36 billion in 2012.

Confectionery market value (2012)

Confectionery market value

Consumer preferences and consumption patterns differ across geographies. For example, while consumers in Sweden and Finland have historically favored sugar confectionery, Norwegian consumers have preferred chocolate confectionery. Confectionery consumption per capita and year in the Nordics was estimated at approximately 11-13 kilo in 2012, which represents a relatively high level compared to other European countries.

Confectionery consumption per capita and year (2012)

Confectionery consumption per capita and year

The Nordic confectionery markets taken as a whole has shown an average growth rate of 1.2% (CAGR) per annum during the period 2002-2012 in terms of volume. With the exception of Denmark, the confectionery markets in the Nordics have proved to be resilient to GDP swings, which the Company believes is primarily a result of confectionery being an impulse-driven and relatively cheap product category.

Confectionery market volume and Nordic GDP growth (2002-2012)

Confectionery market volume and Nordic GDP growth

*) Nordic GDP growth calculated as the weighted average of GDP growth in Sweden, Denmark, Finland and Norway.

The confectionery pick & mix market

Confectionery pick & mix accounts for 18-23% of total confectionery consumption in the Nordics (in terms of volume). Since a professional pick & mix concept was first introduced (by Candyking) thirty years ago, the pick & mix segment has grown to account for almost one third of total confectionery consumption in Sweden (in terms of volume). According to Nielsen and Euromonitor International, the Swedish confectionery market has the highest pick & mix penetration rate in Europe.

Due to the limited or non-existent presence of professional pick & mix providers, the confectionery pick & mix concept is currently much less established in European countries outside of the Nordics, Based on its operating experience from the Nordic markets, Candyking believes that the time during which a professional pick & mix provider (such as Candyking) has operated in a particular market relates positively to the penetration rate of pick & mix in such market

Pick & mix penetration and number of years which a professional pick & mix provider has operated in each market (2012)

Pick & mix penetration and number of years

*) Candyking entered the Danish market in 2011 through the acquisition of Tastymix. Prior to Candyking’s entrance, pick & mix was provided primarily through private label solutions with less sophisticated in-store service execution.