Muesli is immune to the economic effects of coronavirus pandemic

Whilst the economic impact of coronavirus pandemic has led to declining sales in several categories of confectionery products, muesli, having consistently shown the fastest growth rate together with biscuits in the last two decades, continues to do well, reported the Association of Hungarian Confectionery Manufacturers at their press event that could be attended both in person and online in accordance with the epidemiological regulations. Guest speakers of the press conference provided an overview of the state of the confectionery industry in the shadow of COVID-19, that has a more encouraging prospect for the Christmas season after the difficult Easter period.

During the pandemic the food industry was primarily hit by the loss of the catering industry, the HoReCa sector including hotels, restaurants and cafés, and the significant decline in exports, which accounted for nearly 40 percent of turnover, said Dr Beáta Olga Felkai, Head of the Department of Food Economics and Quality Policy of the Ministry of Agriculture in her presentation, providing a comprehensive overview of the sector. Most of the more than 4,500 players in the domestic food industry are micro-enterprises, with about seventy large companies and three hundred medium-sized companies operating in the field. Whilst their profitability is constantly improving, the widespread use of advanced digital technologies needed for modernization and automation is not yet typical of the sector, making it more difficult for companies to adapt to the rapidly changing market conditions. Therefore, the Ministry of Agriculture subsidized food processing enterprises with nearly HUF 8 billion from the National Food Crisis Management Program developed as part of the Economic Protection Action Plan, which could be quickly accessed by the applicants with simplified administration.

Consumer demands in the confectionery market are also changing tangibly, and COVID-19 has also accelerated this process, said Sándor Sánta, President of the Association of Hungarian Confectionery Manufacturers. Mass interest is turning to healthy products, which represent a trend rather than a specific category. Functional sweets (e.g. products with high protein or increased vitamin or mineral content and energy bars) can be included here as well as various ‘free-from’ products – lactose, sugar or gluten-free items, which are no longer consumed only by those who has sensitivity to an ingredient – and light, i.e. energy-reduced products.

Judging from the signs, functional food increasingly got in the focus of consumers’ attention, who – stuck in teleworking and home office conditions – are looking for solutions that can ensure the adequate nutrient intake without time-consuming cooking or food ordering. Weight control, aiding digestion, maintaining the immune and vascular systems, or following a clinical (medically prescribed) diet also appear in their ambitions in addition to maintaining supplementary nutrition for doing sports.

The global market for functional products, which amounts to USD 189 billion worldwide, is projected to grow at an average of 8 percent annually over the next five years to reach USD 276 billion by the end of the period. Confectionery industry is mobilizing significant resources for innovation to serve the evolving needs of consumers, as Dr Ernő Gyimes, Associate Professor of the Institute of Food Engineering at the Faculty of Engineering of the University of Szeged analyzed in his presentation.

Cerbona brand name appeared in the domestic market in 1988, the following year our company started the production of muesli and cereal bars, which were new product categories in Hungary at that time – said Tamás Török, Foreign Trade Director of Cerbona Élelmiszergyártó Kft. Our corporate innovation has since responded to consumer needs with ever newer products, making Cerbona a market-leading brand in the categories of muesli, cereal bars, oat-flakes and puffed cereal bars too. Muesli, cereal bars and porridges rich in protein, fibre, vitamins and trace elements and are sugar-free, consumed before, during and after workouts being available in the Cerbona Sport program, as well as the new gluten- and lactose-free porridges are popular among domestic consumers. The company’s latest Raw Bar slices, for example, expand the range of the ‘free-from-all’ category, as they are purely plant-based, their natural taste and sugar content is yielded only by fruits, of which they contain an outstanding amount. Another product innovation of Cerbona is the family of dessert-flavoured cereal bars, with which followers of a healthy diet can also treat themselves.

Although the history of the cultivation of cereals dates back thousands of years, the story of muesli – at least under this name – surprisingly only began in the first half of the 20th century, we learned from the presentation of Dr Róbert Török, Deputy Director and Chief Museologist of the Hungarian Museum of Trade and Tourism. According to the manuals, muesli is a food consisting primarily of cereal flakes and crumbs of dried fruit, which can be consumed mostly with milk. Our word muesli, which is one of the main components of the German word Gemüse (i.e. greens, pottage vegetables), was formed on the basis of the reduced form of the Swiss German word Mus, i.e. pulp, puree, porridge. The word ‘muesli’ originated from its Swiss dialect and spread all over the world.

Chewing gum: the next 5,000 years

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COVID-19 poses serious challenges in the impulse products market, but this cannot end the 5,000-year history of chewing gum. Manufacturers are responding to the changes with innovation and functional products, which were presented by the Association of Hungarian Confectionery Manufacturers at the end of July.

Fifty years ago, in 1970, the Csemege Confectionery Company recorded the first full year of Hungarian chewing gum production, so this significant anniversary provided a special opportunity for the roundtable discussion. The representatives of three companies currently dominating the domestic market participated: the Hungarian-owned Chocco Garden based in Szabadszállás (the successor of the former factory of the Budapest Confectionery Company), MARS, which owns the classic Wrigley brand, and Mondelez, which owns the Halls and Trident brands.

– At least 60 percent of chewing gum consumption is related to activities outside the home, mainly chewing on the go, at work, at school, and buying impulsively at counters around checkouts, so in the first wave of the corona virus epidemic, with many people staying at home and online shopping, adversely affected this product category, said Sándor Sára, the managing director of Chocco Garden and the president of the Association of Hungarian Confectionery Manufacturers, at the event, which was broadcast live on the Internet. – This year is unlikely to be a year of chewing gum.

However, Dr. Róbert Török, chief museologist and deputy director of the Hungarian Museum of Commerce and Hospitality, which hosted the event, provided an overview of the market by reviving more than five thousand years of chewing gum. Archaeologists excavated the oldest relic to date, a piece of tar from birch bark containing tooth marks, in what is now Finland. Tar has antiseptic properties, so it may have played a significant role in oral care at the time, and was sometimes used as a dental filling too. According to later sources, the soldiers of Alexander the Great chewed wild mint, the Eskimos gnawed on whale skin, and the peoples of West Africa chewed the fruit of the kola nut tree. In the Middle Ages, parsley was used to alleviate oral smells, and after the great geographical discoveries, our ancestors also bit into coffee beans and tobacco leaves. Rubber chewing also set out from America on its world-conquering journey. The Mayans made a chewing gum called chicle from a tree botanically known as Archas sapota, which was used, among other things, to reduce the sense of hunger and thirst.

The beginnings of chewing gum production in Hungary

The first commercially available chewing gum in the classical sense of the word was based on the spruce resin used by the North American Indians, and John. B. Curtis began selling it in 1848 in the state of Maine in the United States. In the 1860s, American inventor Thomas Adams, who experimented with chicle, created a kind of rubbery material for industrial production. The habit of chewing gum soon spread across the country and the Adams chewing gum with a tutti-frutti taste, which was later sold in Hungary as well, could already be bought in 1888 from the vending machines of the New York railway network.

Although public belief holds that chewing gum was brought to Europe by American soldiers in the two world wars, it appeared on our continent much earlier. This is also supported by the oldest Hungarian chewing gum advertisement, which Róbert Török discovered in one of the 1902 issues of Budapest Hírlap. The spread of this American passion in Hungary can be dated even earlier, as the popularized Ricy chewing gum, according to the ad, was already available in pharmacies, drugstores, spice and delicatessen shops, in many flavours.

Through economic development and trade relations, it also appeared in Europe and Hungary at the beginning of the history of chewing gum, although it was viewed controversially and was considered both healthy and harmful, and at times considered a rarity, status symbol, or even a shortage item. Between the two wars, for example, the Adams chewing gum was especially prevalent in bourgeois and artistic circles in Hungary, while after World War II it was difficult to obtain, meanwhile intensifying anti-capitalist propaganda in the 1950s also stigmatized the moral-destroying American custom.

However, this did not change the fact that demand and supply and fashion dictated, so by the end of the decade it had become necessary to produce domestic chewing gum, which according to a contemporary article by Magyar Nemzet was first started in 1959 by the plants of the Győri Biscuit and Wafer Factory. However, the real breakthrough ball gum was launched by the Csemege Confectionery Factory ten years later, the chief museologist explained.

At the end of the 1960s, Hungary imported chewing gum worth about $ 50,000, so the Csemege factory bought a French chewing gum production line for almost the same amount. Production began in 1969, initially making 24 quintals of gum balls and pellet-shaped gums a day from rubber. In the pilot plant, which was intended to test a future new factory, the business started to take off so much that by 1973 it had already produced half a million pieces of gum a day, now made of a synthetic material. Production and supply also expanded in the 1980s, with the appearance of the cigarette gum, for example, and the factory also entered the West German market, and then several other countries around the world through the German partner.

Antal Zöld, the retired deputy CEO of the Csemege Confectionery Factory, who participated in the launch of Hungarian chewing gum production, also shared his personal experiences of the beginnings with the audience as a guest of honour at the round table.

Innovation with functional products

Last year, nearly one million tons of chewing gum were consumed worldwide, according to Euromonitor International’s 2019 data, while in Hungary we chew about 2,000 tons a year, i.e. we spend an average of HUF 2,000 per capita on chewing gum. As a comparison in the USA, the world’s largest market, the figure is USD 12, about HUF 3,500 at today’s exchange rate.

Although the data of recent years will hardly be repeated by the domestic market in 2020, the market participants in the current difficult period also look ahead, if you will, to the next five thousand years. Their power of innovation does not falter, the latest product developments are about products enriched with various minerals, trace elements and other food supplements, which not only give the pleasure of chewing, but are also healthy and delicious. From this point of view, sugar-free gums, for example, have always been a particularly healthy product group in the confectionery industry, as chewing improves oral hygiene, strengthens teeth and chewing muscles, and in many cases relaxes, said Sára Sándor.

Debuting in 1964, Trident was the first sugar-free chewing gum to contain three enzymes to help prevent tartar formation. The brand now belongs to the Mondelez International group, which once appeared on the domestic chewing gum market ten years ago, only to return in 2018 with a chewing gum based on cough suppressant candies, also available in the sugar-free version of Halls. The group is planning for the long run under the Halls Gum brand, said Péter Kertész, government and corporate communications consultant at Mondelez Hungária Kft. At the beginning of 2020 the company launched the pellet-shaped dragee version of the gum in several flavours, and by the end of the year they are preparing a study of the changing consumer habits.

Attila Sófalvi, the country director of MARS Magyarország Kft., also known for the Orbit chewing gum, said that after the strong start of the year, a 20-60 percent monthly decrease in turnover was registered in domestic retail chains. However at the same time, sales increased in international discount stores, which covered the complete range of goods for people’s shopping needs. They try to respond to the new situation with, among other things, an online display of impulse buying, which evokes a checkout zone, but added that in the long run they see the solution in expanding their offering with innovative products.

Chocco Garden operates the only classic chewing gum plant in Central and Eastern Europe, said Anna Benke, the company’s business development director. Founded thirty years ago, the original German machines are still in use, in addition to next-generation technology, and 70 percent of their Crazy Gummi products are exported to many countries around the world, from Canada through Brazil and Israel to Japan. They have to meet extremely diverse consumer needs, so consistent quality management is just as important to them as continuous product development, Anna Benke said. Chocco Garden’s innovative products include French fries shaped chewing gum for connoisseurs, for example, but the future lies in functional chewing gum. For example the stimulating Energy Gum, enriched with caffeine, guarana and vitamins, was launched two years ago and is now available in green tea, multivitamins and cocoa -flavonoid superimmune as well as a stress-relieving versions containing zinc and magnesium. In addition to the contents, the looks will also be updated, and with the introduction of a Danish foiling technology, chewing gums with a hidden tattoo pattern in the packaging will hit stores later this year.

Gum arabic: the hope of Africa

United Nations – UNCTAD, Genéve
The United Nations Conference on Trade and Development, Geneva

1. What is gum arabic?
Almost everyone has eaten or has rubbed gum arabic on themselves or on their teeth, which incidentally has no connection with the Arabs. Gum arabic is a resinous material sourced from the acacia tree, it is rich in minerals and bacteria that is useful for humans, and after processing is added to a diverse range of foods from soft drinks to confectionery because it is an excellent texture modifier. It is used as a base material in toothpastes, and in the pharmaceutical and cosmetics industries too. The resinous material is produced by the acacia tree as the plant’s immune response to being wounded or when attacked by pests. The ‘arabic’ name is thanks to the Beja tribe who once inhabited Sudan. In their language the word ‘arabic’ means: transparent and excellent. The acacia tree is almost a magic plant. It binds the sand, hinders desertification and contributes to slowing the rate of global warming. The wood is used as a building material for wooden huts, in furniture production, rope making, as animal feed and as charcoal. Every single part of the plant throughout its entire life cycle can be utilized. Approximately 3% of the acacia tree stocks is used for the production of gum arabic. Only 5% of the extracted gum arabic is processed locally, 95% is shipped to Western European, primarily French factories.

2. The production and sales chain of gum arabic
The major gum arabic producing countries are the poorest countries in the Sahel region, the largest producer is Sudan. These nations could gain more income if they occupied a higher position in the gum arabic supply chain and the crude material processing would take place here rather than in the Western world. Not only are the producing countries poor, but the gum harvesters themselves belong to the poorest and most vulnerable layers of society. The wholesale retail price of the raw gum arabic material is approximately EUR 3, the harvesters receive a mere 5 Cents of this amount. Gum arabic has been extracted using the same technique for the past 5,000 years: using a sharp piece of iron fitted onto a long stick the bark of the tree is wounded in several spots and two weeks later the gum arabic appears, ready for harvest. The other harvesting procedure involves the collection of the resin that spontaneously appears on the tree. With this ‘poking’ method 3-4 harvests are possible in the 2-3 month gum arabic collection season, while the spontaneous collection only allows for one harvest to take place per season.

3. The production and commercial challenges of gum arabic
Because it is based on individual collectors, the production of gum arabic is highly atomized and the amount collected is volatile. When the price of the raw material is down, the resin harvesters opt to stay at home, and do not collect the gum arabic. As a result, prices will start to rise and when it is worthwhile to sell the goods, the harvesters swarm out, which after a while reduces the price once again. At any given moment, purchasing prices can be very diverse according to the geography . The extremely fluctuating price is not good for the harvesters nor the buyers as the costs can not be precisely planned. In addition, many Western buyers would be willing to pay a higher price because usually only very small amounts of the gum arabic end up in various finished products, thus this has little impact on consumer prices. In Mauritania and Senegal state monopolies strive to make production and export more efficient.

4. Social challenges
Production is restricted by poverty too. Many people don’t even have the poking stick at their disposal, in addition to not having the appropriate know-how about the proper harvesting of the trees. Consequently, from a European viewpoint, with a very low investment and good organization, for example with the donation of poking sticks, education, real-time information about market prices via cell phone, many families could significantly benefit. A better functioning gum arabic production system with higher individual incomes would even have a migration deterrent effect. The producing countries have to tackle two kinds of migration triggered by hopelessness. One is the depletion of rural areas and the migration into cities that severely overwhelms the infrastructure of cities and causes serious social tensions. The other is the migration out of the country, which leads to the loss of the working-age population. Officials in the affected countries believe that the damage to the economic and social networks, and the loss of up to 2-3 generations of active-age male citizens, are causing economic deterioration resembling the effects of a war.

5. Positioning
Lobby activities for the better positioning of gum arabic are ongoing. On the one hand as a product containing probiotics as well as natural and important minerals, it would significantly boost gum arabic’s image if it was listed in food guidelines not as an additive but as a probiotic. The producer countries are considering the formation of a production association, equipment supply and information flow development, setting minimum producer grants, and marketing gum arabic as a joint effort. Gum arabic production was considered to be such a vital issue by the United Nations that it is included among the organization’s long-term priorities until 2030.