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Per capita chocolate consumption in Iran is 2 kilograms per year, which is much less than the European average of 10 to 11 kilograms.
Per capita chocolate consumption in Iran is 2 kilograms per year, which is much less than the European average of 10 to 11 kilograms.

A Sweet Return for Confectionery Industry

Close to 1.6 million tons of confectionery are produced in the country every year, while production capacity is over 2.4 million tons

A Sweet Return for Confectionery Industry

The 15th edition of Iran’s International Confectionery Fair concludes in Tehran today after it opened on Tuesday.
The event attracted more than 360 Iranian and 85 foreign companies from Austria, Germany, Spain, the UK, USA, Ukraine, Italy, Belgium, Turkey, China, Sweden, Denmark, Poland, Lebanon, Malaysia, Canada, France, Switzerland, Colombia, South Korea and India.
“Iran’s confectionery exports during the first five months of the current Iranian year (started March 20) amounted to $210 million,” said deputy minister of industries, mining and trade, Mohsen Salehinia, at the opening of the fair.
According to Secretary of Iran’s Confectionery, Chocolate and Biscuit Association Jamshid Maghazei, exports are estimated to reach $500 million by the yearend.
“Close to 1.6 million tons of confectionery are produced in the country every year, while production capacity is over 2.4 million tons. Iran has the capacity to dominate the regional markets for confectionery, worth $1.5 billion,” he said.  
According to Maghazei, per capita chocolate consumption in Iran is 2 kilograms per year, which is much less than the European average of 10 to 11 kilograms.
East Azarbaijan Province is Iran’s main chocolate production hub, as it is home to 40% of all the production units across the country. Other prominent provinces in the chocolate business are Isfahan, Khorasan Razavi, Gilan and Mazandaran.

> Business Owners Speak of Challenges

“Right now production and sales conditions are satisfactory, but there’s one big problem. We cannot compete in the international markets though we have the potential, because our industrial machinery are old and dilapidated. The industry needs a major overhaul. During the sanction years, we had difficulties in purchasing new machinery, but we hope that now, after the lifting of sanctions, we can get back on track,” Asouya Qasem-Ebrahimzadeh, CEO of Rezvan Chocolate Company that produces under the Baraka brand, told Financial Tribune.
He complained that there are no bank facilities for renovating the industry, which is something business owners cannot carry out single-handedly since it is highly capital-intensive.
“Our machinery is mostly imported from three countries, namely Germany, Denmark and Italy. We are currently in talks to purchase part of the machinery we need for renovating the business from these countries and hope they will finance the purchases for us.”
Ebrahimzadeh said Iraq, Afghanistan and Bahrain are his company’s export destinations and the company has also entered new markets in Canada and China, to which their first shipments have been recently sent.
“We want the government to subsidize exports and help producers in the business by doing away with obstacles it has caused in the way of exports.”
Apart from sugar, he said, the raw material for chocolate production, including chocolate powder, cocoa mass and different kinds of oils are all imported from European countries.
He believes most Iranian confectionery products cannot compete in the international markets in terms of packaging and sometimes quality, but says producers have been working hard in recent years and the business prospects are bright.
Hamid Majdi, general Manager of Nadi Food Industry that produces cookies, biscuits, cupcakes and snacks, said they procure most of their required raw material, including sugar, flour and bran, domestically, while different kinds of essence and additives are imported.
“We are expanding the business and look forward to the future. We have both foreign and Iranian machinery. After the removal of sanctions, we have easier access to machinery parts that need to be replaced.”
Majdi said his company has had a lot of exports to Iraq, Azerbaijan, Canada, Germany and Australia, and is eyeing the Russian market as a new destination. However, he lamented that every once in a while the government places new impediments in the way of exports.
“The government has imposed new sets of standards for all exporters. These standards are no different than the ones most eminent firms already follow and we are forced to go through time-consuming procedures to obtain certain licenses, which is quite off-putting.”
Another challenge, according to Majdi, is procurement of raw material.
“There are also price and quality fluctuations while supervision over the market seems to be quite lax,” he said.

> Foreigners Seek Partners

Nina Levenghuk, director of Grona Company, a confectionery producer from Ukraine, said in an interview with Financial Tribune that the company has been to many exhibitions around the world, but now it is making inroads into the Iranian market with prospects of growth.
“We have exports to Iraq and we thought it is a good idea to look into Iran’s market as well and right now we are looking for a distributor here. From the example of another Ukrainian company that produces chocolate and is active here we know that the Iranian market is a big one. We also know that there are a lot of formalities and regulations we need to go through to be able to actually get into the market, because the Iranian government as we know supports local producers, so we need to have suitable quality to be successful,” she said.
Head of export and marketing of German mechanical engineering industry association VDMA, Beatrix Fraese who was present at the exhibition, announced that 17 major German manufacturers of confectionery machinery will be visiting Tehran on September 27-28 to take part in a conference with Iranian producers for reentering the Iranian market, IRNA reported.
“In 2015, Iran imported $280 million worth of machinery in the field, 25% of which were German machinery,” she said.

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