Problems and prospects of development of confectionery industry enterprises in Ukraine

The article is devoted to the analysis of the modern confectionery market of Ukraine. This article examines the state of the confectionery industry and highlights the main trends and problems in the development of the confectionery market in Ukraine. It identifies the main factors influencing the increase of competitiveness of confectionery enterprises and the development of the confectionery industry in Ukraine and highlights the problems related to sourcing domestic and imported raw materials for production. It contains a listof the largest exporting countries of cocoa, cocoa beans and cocoa products to Ukraine. The articlesconsiders opportunities and problems of export of Ukrainian confectionery products and contains a list of thelargest importing countries of Ukrainian confectionery products. The analysis was made of the dynamics ofthe volume of exported production and the total volume of sales of confectionery products over severalyears. The main reasons for the decline in confectionery exports have been identified. The ways to improvethe efficiency of domestic confectionery sales have been indicated. The article determines that to strengthentheir market positions, the enterprises need to monitor the quality of their products and equipment, ensurethe relevance of marketing activities to increase sales, improve the existing product range and develop new,exclusive products that could take a free market niche, and also look for ways to export, diversify or find newways to market products sale in Ukraine.


Statement of the problem and its connection with important scientific and practical tasks.
Confectionery products are an important component of modern human nutrition.Of course, the reason for the high demand for these products is not only their variety and richness of taste.The high sugar content of certain confectionery products gives them a high energy value, and products containing cocoa have tonic properties.In addition, a healthy food market is beginning to take shape in Ukraine, with a certain share of healthier confectionery products made with the addition of natural fruit and vegetable juices and purees, soy products, wheat germ, natural food additives, etc [1].
The confectionery industry also plays a big role in shaping Ukrainian economy.Confectionery products are in demand among Ukrainians, production requires the use of domestic raw materials and sales in retail chains.This helps to support the development of other areas of Ukrainian economic activity, and, in addition, enterprise taxes are an important source of revenue for the state budget.However, the constant development of the industry and the emergence of an increasing number of enterprises have led to fierce competition in the confectionery market.
Forming of the aims of the research.The purpose of the study is to analyse the current state of the confectionery market in Ukraine and to identify current problems and further prospects of its development.
Giving an account of the main results and their substantiation.The current state of the market of confectionery in Ukraine is characterized by the instability of the external environment of the enterprises, rapid changes in consumer demand, fierce competition between a large number of companies of different categories and forms of ownership, increasing consumer demands for products.Although confectionery is not a basic necessity, the demand for it remains relatively constant: according to the State Statistics Service of Ukraine, spending on confectionery will account for 6.8% of Ukrainian households' total food expenses in 2019, 6.2% in 2020, and 6.3% in the first quarter of 2021 [3].This is one of the reasons why more and more confectioneries with a similar or analogous assortment of products appear every year, which makes potential customers pay particular attention to the price difference, the breadth of the range and the quality of the competitors' products.Looking at trends in the Ukrainian confectionery market, it can be said that today it is at the stage of completion of its formation and, without a doubt, in a state of fierce competitive confrontation.The research shows that among domestic consumers' preferences, more than 95% of the market is occupied by products from domestic companies, whose number is steadily increasing every year: for example, 284 new companies focused on confectionery products were registered during 2019, including 280 small and 3 medium-sized ones [4].To hold their position in the industry reliably, enterprises need to monitor closely all trends in their competitive environment and respond to them in a certain way.Every enterprise needs to be able to properly assess the market situation and choose effective means of competition that, on the one hand, would be adequate to the market situation in Ukraine and its development trends, and, on the other hand, would correspond to the specifics of this enterprise.It should not be forgotten that competition is an important and effective tool for the development of a country's economic system because it is the reason why companies, when competing for leadership, resort to analysing and improving their activities.As a result, this brings them greater market success and the ability to hold onto their position more firmly in the battle for potential consumers.
Among all the factors affecting the competitiveness of enterprises and driving the development of the confectionery industry in Ukraine, it is possible to identify five very closely related key factors.
The first among these, of course, are the raw materials and resources used to make the products.The confectionery industry provides significant demand for domestic agricultural raw materials, as products such as milk, eggs, sugar, flour, honey, nuts, berries and fruits, etc. are often used in the production of sweets.Rising prices for domestic raw materials could have a strong impact on the value of the confectionery industry's finished products.This, in turn, against the background of slow income growth, may lead to a decrease in Ukranians' consumption of some relatively expensive confectionery products, such as cakes and pastries.In addition, seasonal fluctuations in raw material prices and higher production costs could cause Ukrainian producers to lose significant profits and competitive advantages on foreign markets [5, c.18-19].
The availability of domestic raw materials was a prerequisite for the formation and further development of a strong confectionery industry in Ukraine, but nowadays the vast majority of products also use cocoa, cocoa beans and cocoa products -in 2020 imports of cocoa, cocoa beans and cocoa products cost Ukrainian producers almost $376 million -table 1. Cocoa, cocoa beans and cocoa products are imported raw materials and this makes domestic confectioners quite sensitive to currency risks, which can also significantly affect the final cost of production and cause a significant fall in demand.
The second, no less important factor, is the possibility for domestic producers to export their products.Strong domestic competition in the industry forces producers to actively compete for the local market and lower prices for goods.As a result, this causes deterioration of the quality of the products due to the use of cheaper raw materials.Despite generally positive trends in the development of the Ukrainian confectionery market, the share of exports in total sales volume of confectionery products has been gradually decreasing in recent years (Figure 1).This is due both to significant changes in the global market and deteriorating quality of Ukrainian products to maintain positions in the domestic market, inefficient marketing and sales programmes, exchange rate volatility and high competition from foreign confectioneries.Nevertheless, among Ukrainian enterprises some are actively taking advantage of opportunities and bringing new confectionery products to foreign markets, encouraging the absence of duties on sweets in the European Union and gradually increase their share of exports.Ukraine's confectionery market is getting stronger, and this can be seen in the positions taken by Ukrainian confectioners in the world's largest confectionery companies ranking -Global Top 100 Candy Companies.In 2020, domestic industry leaders such as "Roshen", "AVK", "Millenium" and "Konti Group" were included in the list of the world's largest producers of sweets -table 2.
According to the statistics on exports of Ukrainian confectionery products in 2020 [9], the most exports were to countries such as Poland, Belarus, Romania, Kazakhstan, Turkey, Germany, Azerbaijan, the UK and Indonesia -together they import more than half of Ukraine's confectionery products.It is worth noting that this list has changed significantly in recent years, and in order to increase sales of confectionery products, there are plans to consider exporting Ukrainian confectionery products to countries such as China, India, Ghana and Nigeria [10, с. 125].
The third factor influencing the competitiveness of enterprises and the development of the confectionery industry is the consumer of products.High competition between enterprises, the increase in the number of private ISSN 2312-847X ЕКОНОМІКА ХАРЧОВОЇ ПРОМИСЛОВОСТІ Том 13, Випуск 3/2021 enterprises with a small assortment and high prices, but higher quality, fresher and more attractive products, the general oversaturation of the confectionery market, the decline in purchasing power of the population as a result of the difficult economic situation in the country caused by the pandemic is forcing consumers to pay more attention to the choice and purchase of confectionery products.[8] Despite the popularity of confectionery products, the demand for them is spontaneous most often confectionery products become one of the main items of cost saving for Ukrainians.In order to stimulate sales, manufacturers should pay a lot of attention to packaging design, trying to make it as modern and original as possible, corresponding to attractive bright designs of imported goods; marketing activities, primarily advertising via the Internet and creating advertising blogs on popular social networks and, if possible, distributing products not only through retail chains, but also by placing their own outlets in crowded places.As an illustrative example, we can see the ranking of chocolate bar brands in 2020 based on consumer ratings in Figure 2.

Figure 2. Ranking of chocolate bar brands in 2020 in Ukraine based on customer surveys*
*compiled by the authors based on [7] This brings us to the next, fourth factor -product sales.One of the pressing problems of confectionery sales in Ukraine is the strained relationship that often arises between confectionery businesses and retail chains.Since the amount of retail space is limited and there are not many large retail chains in Ukraine that are able to sell large quantities of confectionery products, retail chains can set their terms for confectioners -including offering producers to sell products on demand and under their own brand, which often results in lower sales revenues than planned.In addition, the payment discipline of retailers is often low, leaving confectioners with no choice but to cooperate with retailers on uncomfortable and dangerous terms of permanent interest-free long-term loans.This is the reason why products from large market-leading confectionery companies and imported goods are often seen on shop shelves [10, с.78].

ISSN 2312-847X
ЕКОНОМІКА ХАРЧОВОЇ ПРОМИСЛОВОСТІ Том 13, Випуск 3/2021 The way out may be to open your chain of shops, to cooperate with small local retailers, or to start exporting of products.
The fifth and final, but very important factor is the marketing policy of companies.Nowadays, proper advertising of a product is one of the most important steps towards its sale.It is the source of information through which the potential consumer learns about the product; it exerts a certain psychological influence on the consumer, convincing him to purchase the product.Unfortunately, many producers of confectionery products neglect marketing activities and don't take care of quality promotion of their products, and this is the reason why they are overshadowed by more successful competitors.It shouldn't be forgotten that a large number of confectionery products are bought as gifts, and the target audience of this kind of products consists mainly of children and young people, who pay special attention to interesting advertising and modern product appearance.This is why manufacturers should not forget about promoting their products on the market -developing a website with information about their products, blogging on social networks, advertising on the Internet and at product outlets, preparing an original stylish product wrapper design that could change during themed holidays, as well as holding promotions and events will help increase the interest of potential customers, attract new audiences and increase revenue from sales of their products.
Conclusions and prospects of the further investigations.Looking at trends in the Ukrainian confectionery market, it can be said that today it is at the stage of completion of its formation and, without a doubt, in a state of fierce competitive confrontation.To hold their position in the industry reliably, enterprises need to monitor closely all trends in their competitive environment and respond to them in a certain way.Enterprises in this industry have a lot of positive features that allow them to develop and expand: the availability of domestic sources of primary raw materials for production, a wide target audience and a large number of potential consumers, the possibility of occupying a new market niche through exporting products to several different countries around the world and ample opportunities to expand production and obtain investment in new projects.At the same time, many challenges prevent the confectionery industry from increasing its growth rate.These include the possible increase in the cost of imported raw materials due to currency appreciation and seasonal increases in the value of domestic raw materials, the deterioration in the country's economic situation and loss of purchasing power of the population due to the pandemic, the need to keep prices down to ensure the competitiveness of products on the market, the limited commercial space and the lack of large retail chains to distribute their products.Manufacturers should monitor the quality of their products and equipment, ensure relevant marketing activities to increase sales, improve their existing product range and develop new, exclusive products that could occupy a free niche in the market, look for ways to export, diversify or find new ways to market their products in Ukraine.

Figure 1 .
Figure 1.Ratio of export volumes to total sales of confectionery products in Ukraine for 2016-2019* *developed by the authors based on [7]