Sugar Rush at Cologne's Sweets Fair

Cologne's huge conference halls were transformed this week into what could easily have passed as Willy Wonka's chocolate factory. A veritable feast of chocolates, sweets and biscuits were on show and crying out to be tasted -- from delicate chocolate nibbles, hand crafted in France to hearty chunky chocolate biscuits made in England.

But even the comforting world of chocolate isn't immune to the ever fluctuating economy or the high prices of raw materials such as sugar and nuts. 2005 wasn't one of the best for the chocolate and sweets industry, but hopes are high that 2006 will see more people enjoying a sweet treat or two

"We're hoping that 2006 and several events coming up that make people eat more sweets -- the World Cup, for instance -- will increase consumption again by 1 or 2 percent," said Karsten Keunecke, the Managing Director of the German Association for Confectionary Industry, and one of the organizers of the Cologne trade fair.

Confectionary turnover fell by 1 percent last year, and the amount imported and exported also fell sharply -- especially of chocolate. On the other hand, trade with countries outside of the EU increased -- especially with the USA, Switzerland and Russia. Germany also boasts a healthy 55,000 people employed in the confectionary industry. And figures show that every German bought 31.65 kilos (69.78 pounds) of confectionaries last year -- 8.15 kilos of which was chocolate.

Hazelnut revolution

So the main problem isn't that people have lost their appetite for the sweet stuff. The real challenges lie with the costs of raw materials, which the industry has no control over.

"We are supporters of market economy and know our raw materials are affected by fluctuations of the world market," Keunecke said. "But if you see the price of your produce increasing fivefold, then you have a real problem."

"We've seen hazelnut prices peak at $11-12 a kilo (9-10 euros), from $2-3 a kilo. That's not an evolution, that's a revolution, and for companies producing products with high hazelnut content, that's a real disaster," Keunecke said.

The controversial EU sugar reforms aimed at enhancing the competitiveness and market-orientation of the European Union sugar sector have also been closely watched by the confectionary industry.

"Sugar using industry has been fighting a very long-term battle in this field, and I'm happy to see that finally the EU has moved and reform is now on the horizon," Keunecke said.

Slow reforms

And while the EU sugar reforms are welcome, many fear that both the industry and the consumers won't feel any real benefits for a while.

"We're not happy with the political compromise that has watered down the deal and so we won't see price decreases before autumn 2008," Keunecke said.

So what's the good news then? The year 2006 luckily has a few aces up its sleeve. Not only will Germany be welcoming thousands of soccer fans flocking to the FIFA World Cup, but the whole world will be celebrating the 250th anniversary of Mozart's birthday. Both events offer big marketing opportunities.

Chocolate Mozartmania

The Reber chocolate stand at the Cologne Sweets Fair evokes images of imperialist Russia. Visitors are surrounded by luxurious red velvety drapes, gold furniture, glittering chandeliers, and of course, a life sized figure of Mozart leaning nonchalantly against a grand piano, in the company of thousands of Mozartkugeln -- the small chocolate truffles whose packaging bears the image of the famous Austrian composer.

Reber chocolates hold 95% of the Mozartkugeln market share. And although Managing Director Peter Reber admits the economy and skyrocketing raw material prices have taken their toll on the 141 year old family-run business, he is optimistic about the profits they'll be making out of the Mozart year.

"We prepared our whole marketing activities about 4 years ago, to do a good job in the Mozart year, and we started in September last year to put all our new Mozart products onto the market," Reber said.

"We had a growth of about 10 percent for Mozartkugeln last year. And this year, the Mozart year, we hope we will do more. It seems it will be a good year, because the press and the TV show the life of Mozart, which is of course good for the Mozartkugeln," he said.

Kicking it like Beckham, not Amadeus

Soccer doesn't fit with Reber's luxurious image, he says, so they won't be selling any football inspired chocolates this summer. But most other manufacturers can hardly wait for the world cup fever to start. There are chocolate footballs of all sizes on display in Cologne as far as the eye can see.

Confiserie Heilemann, located in southern Bavaria, is one of the many German chocolate makers cashing in on the huge marketing opportunity. The company has designed a football inspired range of chocolates, but won't be using the FIFA symbol, so that they can go on selling throughout the year.

"Once you have the FIFA symbol on it, it costs you a lot of money," said Andrea Pisch-Dingwall, head of export at Confiserie Heilemann.

"I'm quite confident we will have a peak season before and as long as the German team stays in. And afterwards we will keep on selling the products. You have to be optimistic," she said

Sweet optimism

Optimism does seem to be the word on the street in Germany -- as much in the confectionary industry, as elsewhere. Business confidence is stronger than it's been for a long time.

"We do believe that it's a question of how the overall economy is faring. The atmosphere is improving, everyone's looking forward to a positive development of the economy and we do believe that the confectionary industry will benefit from this," said Karsten Keunecke of the German Association for Confectionary Industry.

The new German government is popular with the majority of the nation. And with Mozart's birthday and the football world cup to look forward to, it looks like 2006 could be a sweet tasting year.