Challenging the Current Landscape

AFJ: Tell us about confectionery in the region.

Ageloussis: Asia has enormous potential. I believe—especially in the case for China—that the cake has not been completely taken. At the moment, there is a fight between the MNCs (multi-national companies) who are penetrating the market by dumping prices. They’re trying to find out who can hold their breath the longest, in terms of financial power. The winner ends up as a monopolist, wielding control over prices long term.

While China is still booming, we have seen a slowdown in demand for South-East Asia. In the past few years, the regional customers have gotten bigger and bigger. So it takes much longer time for new product developments to be approved by marketing teams and than launched in the market. Many trends are repeating themselves. Nobody has been able to develop an outstanding new product which is truly different in shape, texture and/or taste.

This lack of leadership has made confectionery in Asia a bit boring. Unlike in Japan—where lifecycles are very short and very innovative—nobody has taken up the challenge. It's time for South-East Asians manufacturers to be the trendsetter rather than the follower reinventing the wheel again and again. There are many who have the potential.


AFJ: Who would you consider a leader?

Ageloussis: Perfetti van Melle. The Chupa Chups buyout was confectionery’s biggest story of the year. They are transforming into the most aggressive player in the industry. There is no other company with so many new launches worldwide which are topsellers in the market. Even here in Asia, Perfetti is playing an important role in nearly all segments. It is still a family driven company; and by the way they act and grow, it is definitely my favorite confectionery company!


AFJ: Tell us about your company.
Ageloussis: Alex Sweets is a privately-owned foreign joint-venture company in Panyu (Guangzhou) that produces a range of high-quality chewing and bubble gums. The company was established in July 2006 through Annie Sun Ning (who has 17 years experience working for MNC food ingredient suppliers like Danisco and IFF), and myself (I am a master confectioner, and have worked for companies like Symrise and Danisco, and acted as a consultant to global confectionery manufacturers).

From the beginning of my career, which started in Germany fifteen years ago, I dreamt about owning a lollipop factory. Unfortunately conditions for entrepreneurs in Europe have been far from ideal due to the high cost of labor, factory space, and electricity, etc. So the dream of opening my own factory was put on hold until recently, when I started traveling in Asia. The past three years have taught me that the region has enormous potential. It impressed me so much that in May 2007, Annie and I decided to make the big step and start manufacturing in China.

During my working career, my experience has focused on gum products. So this was paramount in the founding of Alex Sweets. Our company has manufacturing facilities covering 4000 square meters, employing a staff of 70, with the capacity to produce 3500 tons of gum per month. We produce a wide range of bubble gums (Pop Pop brand) and chewing gums (Xylodent brand).


AFJ: What are your success strategies?

Ageloussis: In China, our goal is to differentiate ourselves from the average Chinese manufacturer and to understand the needs of each client. For us, that means our target is the export market. We use high-quality gums with ingredients from Western companies—flavors from Firmenich, sweeteners from Danisco. The artwork for our products was developed by an American marketing company. Right now, all of the Chinese gum manufacturers are focusing on the local market. Realistically, it's difficult to serve both areas (China and Western markets) because the cost structure is totally different. So we have deliberately focused on one area—the Western market—so we could understand the different legislations of each market, develop the right flavor and recipe concept, and create relevant marketing strategies and tailor-made packaging design. This is very important to our clients, and helps to develop their trust and confidence in us.

We saw a gap in the market for a high-quality gum that consumers could enjoy at very competitive prices. Just take a look at the shelves of any supermarket in Asia and the rest of the world! My feeling is that with the exception of gum and chocolates, there is no product that is really profitable these days—unless bigger investments are made and massive volumes can be achieved. There are too many candy manufacturers in the region and the price for a complete candy machine is not more than $10,000. Also, it doesn't take a lot of technology or knowledge to produce a candy. So competition today is very fierce and prices are low. If you look at the acquisitions of the past years, you can see that even MNC candy or lollipop manufacturers were divested.