Demand for cocoa is on the up, registering compound growth of 2.7 per cent over the next three years, and most of it will come from Africa, according to a new report.
Global Industry Analysts predicts that the market will exceed four million tonnes by 2010, while cocoa production is becoming more concentrated in one continent. The trend means that manufacturers are becoming more dependent on countries such as Ghana for supplies.
Such an increase in concentration could cause supply problems for processors, especially as the region is known for its political problems, which in the past have caused disruptions.
The analysts examined the purchase of cocoa powder, cocoa butter and cocoa liquor world-wide, and concluded that global consumption has increased rapidly over recent years.
"This is due to rising income levels and growth in chocolate consuming population," they said.
According to the report, Europe leads the global cocoa market , accounting for a share of approximately 42 per cent.
This region is then followed by the Americas, taking up 35 per cent of the market, the Asia, 13 per cent, with Africa accounting for only two per cent of global chocolate consumption.
According to the International Cocoa Organisation (ICCO), the leading consumers of cocoa are the US, Germany, France, the UK, Russia, Japan, Italy and Brazil.
One of the strongest areas for growth in 2007 will be the Asia-Pacific region, where chocolate and chocolate products have only recently become popular, and the demand for cocoa there is expected to grow over four per cent, said Global Industry Analysts.
While chocolate consumption is rising, manufacturers of chocolate products are becoming increasingly dependent on Africa for supplies, the analysts said.
African countries now provide about 70 per cent of the world's cocoa, up from 61 per cent in the mid-1990s, with Cote D'Ivoire and Ghana cultivating the lion's share. Together the two countries account for 65 per cent of global net exports.
By contrast, the Asia and Oceania region's share of global production has declined to 16 per cent from 17 per cent, while the Americas' contribution has fallen to 13 per cent from 19 per cent, the ICCO said.
Most of the cocoa cultivated in Africa is exported to the major centres of cocoa consumption in Europe and North America, with the Netherlands and the US maintaining their positions as the world's two leading cocoa processing countries, the ICCO added.
Certain manufacturers have however increased manufacturing capabilities in Africa itself.
Last week Barry Callebaut said it will boost its cocoa processing capacity in Ivory Coast by 50 per cent over the next two years, and will double the amount of beans it buys, while Cargill has recently built a new plant in Ghana.
Although international chocolate companies provide employment in Africa, there is some controversy over the money funding civil unrest and terrorist groups.
Last month, Global Witness warned that the cocoa industry profits are providing massive revenues for the warring government and the rebel group Forces Nouvelles (FN) in the Cote d'Ivoire.
The UK-based pressure group named companies such as Archer Daniels Midland (ADM), Cargill and Barry Callebaut in its report, and accused chocolate companies of slowing down peace agreements between the FN and the government.