AVK Lowers Prices for Sugar Candy by 4-5%

The AVK Company has approved the decision to lower the prices for sugar candy starting from September 20. “The prices for this sort of confectionery will go down by 4-5 percent”, said acting General Director of the AVK Company Andriy Dykunov. He said that by this move the company intends to sustain the sales at the levels prior to the crisis on the sugar markets and to preserve the loyalty of the consumer group of this confectionery.

The stabilized pricing situation on the sugar market and the available raw sugar products at the rates affordable for the competitive production of the sugar candy resulted in the review of the pricing policies. Currently, the Company has the opportunity to acquire sugar at UAH 3-3.5 per kilogram.

As the prices for sugar as a core raw component of the sugar candy climbed this summer, AVK was forced to review its pricing policies and to raise the prices for the sugar candy by 3-6 percent, and eventually suspended the candy production.

The price increase resulted in the substantial decrease of the product consumption. In June-August alone, the AVK sales decreased by 40% compared to the previous period of the last year.

Simultaneously, AVK offered its consumers a new form of the sugar products – chewing candy “ChewyLand” and “ClubJelly”. This advanced hard to manufacture products demonstrated the high sales trend. As a result, the AVK successfully improved its products spectrum and substituted the low priced sugar candy with the products that bring more profits to the Company and more value added to end consumers. These steps are in line with the business development strategies that target the increase in the share of the products of the premium and medium price segments.

As the demand for the low priced sweets decreased, AVK has increased the sales of other more complicated and profitable types of confectionery, including the chocolate products and biscuits: 23% and 12% up of the sales during June-August, accordingly.

The sales fluctuations had virtually no affect on the advanced trading channels represented by supermarkets, hypermarkets, and malls as these trading formats target more payable category of consumers for whom the price is not the sole reason for making a purchase. The analytical research confirmed that the consumer’s behavior in big cities where such sales channels prevail look more optimistically than in low the density areas where open markets and small sale points are common.

“Over the summer period -- from June through August – the overall sales of AVK increased by 10% compared to the same period of the last year – up to UAH 205.9 million, “said Andriy Dykunov. According to him, this situation reflects the continued consumption trend in the premium and middle price consumption segments.