Study of Risks in Confectionary Industry of Ukraine

Abstract

Enforced transformational processes caused by crisis situations, such as battle against consequences of the spread of COVID-19 pandemic and the formation of a socio-economic and security mechanism for counter fighting Russian war in Ukraine, are significantly reflected in the specifics of Ukraine’s confectionery market operations today. It is determined that danger, instability, uncertainty, complexity and ambiguity accompany the development of various socio-economic systems, including confectionery market. The purpose of the article is to reveal the potential of the Ukrainian confectionery market in view of the intensification of competition in crisis situations, to identify the dominant influencing factors in the developmental environment of confectionery enterprises in order to design alternative competitive strategies to support their sales. The main goal is to present the results of the analysis of determinants of confectionery market development in Ukraine in the period of the spread of crisis situations in terms of identifying risks in the sector. Research methods are the method of economic analysis and comparison for researching the specifics of the confectionery market; abstract-logical method for theoretical generalisation and conclusions; calculation of confectionery market capacity and market shares of Ukrainian confectionery enterprises; index method for assessing the concentration levels in the confectionery market. Conclusions and added value of work: the specifics of Ukrainian confectionery market development are revealed. Analysis of the dynamics of the confectionery production volume in Ukraine has been carried out; the number of business entities in the segments characterised by types of economic activity and in terms of large, medium, small and micro enterprises has been identified. Analysis of export-import operations volumes has been carried out based on the commodity structure of foreign trade in confectionery products. The list of risks of the developmental environment of confectionery enterprises and intra-industry risks has been identified using the probabilistic method of risk assessment; analysis of factors affecting the dynamics of confectionery market development has been established in accordance with M. Porter's method of five forces of competition, an assessment of market concentration has been carried out using the index method (in particular, the Herfindahl-Hirschman index and the Lind index). According to the results of the evaluation of concentration levels of confectionery market in Ukraine and the factors affecting the conjuncture of this market, it has been identified that three enterprises are involved in the core of the confectionery market, namely SE "KK ROSHEN", PrJSC "HBF" and PrJSC "AVK". Forms of their interaction are secret conspiracies, the policy of dictating prices in order to maintain the market power of influence on industry counterparties and other stakeholders of the confectionery market, and other forms of interaction characteristic of an oligopolistic market structure.