Health trends and new markets drive sugar confectionery amid Western slowdown, flags RaboResearch

The global sugar confectionery market is shifting. As growth slows in mature Western markets, major companies are redirecting investment toward categories like savory snacks and chocolate, according to a new report from RaboResearch. 

Emerging regions such as Asia-Pacific, Latin America, Africa, and the Middle East are driving new demand and offering opportunities for growth.

Food Ingredients First sits down with Julia Buech, senior analyst for consumer foods at RaboResearch, to unpack the report’s implications for industry innovation, strategy, and consumer behavior in the years ahead.

“We’re seeing a clear split in the market,” Buech says. “On one side, emerging regions are driving volume growth, each with distinct drivers: strong economic momentum in parts of Asia, population growth in Africa and the Middle East, and steady gains in Latin America laying the groundwork for future acceleration.”

“In contrast, Western Europe and North America are facing structural stagnation. Here, the focus is shifting firmly toward value creation and innovation, often accelerated by regulation actively driving reformulation and reshaping how products are positioned and promoted.”

Buech notes that brands can win in high-growth regions by responding to local consumer preferences and adapting their strategies to align with consumption habits.

“To benefit from demand-side growth, companies must look to Asia first, followed by Latin America, Africa, and the Middle East.”

“These regions offer scale and momentum. Brands can win by localizing flavors and textures, tailoring pack sizes to affordability, and investing in regional production and distribution. Success depends on understanding cultural preferences and adapting to local consumption occasions. The ability to act locally — while scaling globally — is key.”

Sugar reduction comes with caveats

The sugar confectionery sector also faces rising scrutiny in many developed markets, where regulatory authorities are cracking down on sugary food and beverages. The UK government, for example, levies a sugar tax on fizzy drinks and is now considering expanding it to include milkshakes and other sweetened beverages.

“Expectations are rising — particularly among health-conscious consumers — for products that deliver indulgent taste with fewer calories. At the same time, regulation is tightening in some markets, driving reformulation, as seen with HFSS (high in fat, salt, and sugar) in the UK,” notes Buech.

But health is “a tricky proposition in sugar confectionery.”

“Unlike other snack categories that can credibly lean into protein, fiber, or functional claims, these strategies often feel inauthentic in candy. The most credible and scalable path forward is sugar reduction,” she adds.

According to a 2024 Innova Market Insights global research, consumers surveyed were most conscious of limiting or reducing sugar in their diets, followed by fat and sodium.

But indulgence remains a key consumer ask.

“This isn’t a one-track future. Success will come to brands that can stretch both ways: offering unapologetic indulgence (after all, sugar confectionery is a treat, not a yogurt or breakfast cereal), alongside credible lower-sugar formats. Naturally, indulgence remains the backbone of the category.”

How regional brands could lead

The Rabobank analysis also highlights how social media has changed the impulse-driven nature of sugar confectionery.

“Viral trends often start with users, not marketers, and brands are no longer the sole narrators but participants in a fast-moving, consumer-led culture,” says Buech.

“TikTok has become a launchpad for under-the-radar treats and unexpected cult favorites — like peelable gummies, freeze-dried sweets, or Swedish pick ‘n’ mix — turning them into overnight sensations driven by creators, influencers, and everyday users.”

The report notes that to stay relevant, companies in the space need to create excitement, deliver more with less, and show credible intent on reformulation and health.

“Brands need products that deliver a compelling experience. But virality alone isn’t enough. The real challenge is turning buzz into lasting value — by delivering on taste and using storytelling to build cultural or nostalgic relevance.”

“In a category built for fun and discovery, the brands that engage authentically and stay close to consumer energy — without trying to force the narrative — will be best placed to convert attention into sales.”

Additionally, with global snack giants rethinking sugar-based treats and redirecting funds, the field may now be more open than it has been in years.

“Given the shift in investment away from sugar confectionery, regional and smaller players are looking at a rare window of opportunity,” says Buech.

“As global giants double down on savory snacks and better-for-you options, sugar confectionery is losing strategic spotlight — making it less contested, and more open to bold, focused moves.”

She adds that now is the time for smaller players to think beyond sugar confectionery.

“Diversifying into adjacent categories with stronger momentum — whether through innovation or smart mergers and acquisitions — can help build a portfolio that’s not just reactive, but future-fit.”