Modern economic POTENTIAL OF UKRAINE

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Confectionery industry

The confectionery industry of Ukraine is one of the most important sectors of its food industry. Volume of confectionery industry production constitutes 3% of GDP. The share of Ukraine on the world market totals 1% (USD 93 bn).

The productive capacity of the industry amounts to 1 mn tons. Ukrainian confectionery enterprises consume approximately 400 ths. tons of sugar per year. The national confectionery industry is represented by the companies of the State Foodstuff Department system: CJSC Ukrconditer (Ukrainian Confectioner), Ukrprodsoyuz (Ukrainian Foodstuffs Union), Ukrkhlib (Ukrainian Bread), and non-associated companies from the private sector. The Ukrconditer system embraces 28 factories, plants of foodstuffs, workshops, and public catering companies. The aggregate productive capacity of the 28 factories of the CJSC Ukrconditer system is roughly three-quarters of the confectionery output volume in Ukraine. The total number of confectionery industry companies is steadily growing and constituted approximately 800 enterprises as of the beginning of 2005. Up to 90% of the companies deal with the production of flour confectionery and only 10% produce sugar confectionery (chocolate, boiled sweets, candies, panned sweets, etc.). The seven largest confectionery enterprises in Ukraine possess 4-26% of the market and produce up to 72% of the total production volume. Ukrainian export of confectionery articles in 2002 increased by 53% compared with 1999 and totaled 206 ths. tons (USD 169.1 mn). The CIS states, and first of all Russia, are the main export markets of this output. Boiled sweets account for 40-50% of export volumes.

The share of imported confectionery articles on the local Ukrainian market is a mere 3% of the total and constituted 14.6 ths. tons in 2002 (USD 33.1 mn).

Per capita consumption of confectioneries expanded from 8.3 kg in 1999 to 13 kg in 2005. Meanwhile, it is still lower than in 1990 (21 kg) and in Russia (13.6 kg).

The market for confectionery articles is generally divided into three main segments: sugar confectionery, flour confectionery, and chocolates. Sugar confectionery (boiled sweets, panned sweets, and candies) is the most important segment. The flour confectionery segment (cookies, waffles, cakes, and biscuits) takes up to 38.6% of the total output, while chocolates have a 5.7% share. Practically all commodity groups in the confectionery industry are being developed thanks to the development of new recipes by producers and manufacturing improvements.

The greatest expansion in product range over the years has been in bar chocolate, due to the introduction of aerated and high quality thin bars; chocolates, because of developments in praline fillings; chocolate bars, especially waffles; rolls; biscuits including sponge-type cookies; glazed cookies; and filled cookies.

Seasonal production trends and changes in assortment in each of the commodity groups is generally seen as starting in August-September has been traced over a number of years.

Growth in confectionery articles production of 5-6%, approximately up to 1-1.06 mn tons, is expected in 2006. Insignificant production growth is anticipated because of expected increases in energy costs and the introduction of special duties by the Russian Federation last year for certain Ukrainian-made confectionery articles. Last year trend to curtail boiled sweets production will be kept in 2006, because it is the most power-intensive segment of the confectionery industry. Moreover, it was exported to Russia in large lots. Production of confectionery articles in Ukraine in 2005 amounted to 998.7 ths. tons, which is 6.3% more than in 2004. Roshen, AVK, Svitoch, Kraft Foods Ukraine, and Kiev-Konti are the largest producers of confectionery articles in Ukraine. Analysts estimate that the local retail market has a capacity of about 1 mn tons per year.

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