SUBSCRIBE

Breaking News on Confectionery & Biscuit Processing

News > Markets

Read more breaking news

 

 
Editor's Blog

The chocolate prophecies: Industry fortune-telling for 2014

2 comments

By Oliver Nieburg+

03-Jan-2014
Last updated on 03-Jan-2014 at 15:48 GMT

ConfectioneryNews predicts where the tarot cards will lay for the chocolate industry in 2014. Photo Credit: Steve Snodgrass
ConfectioneryNews predicts where the tarot cards will lay for the chocolate industry in 2014. Photo Credit: Steve Snodgrass

Not quite the choc-pocalypse, but retail prices for chocolate are expected to rise in the face of cocoa price hikes, which could see the taste, shape and size of chocolate change significantly in the year ahead.

Rabobank predicts a third consecutive cocoa deficit for the 2014/15 crop year that will see prices soar 23% from Q3 2013 levels to $3,000 per (MT) by Q3 2014.

Expect the big players to tweak formulations to mitigate the cost. Simply bulking out bars with more sugar is an option, but Rabobank predicts that sugar prices will also edge upwards of 8% in 2014.

Sugar alternatives such as steviol glycosides are options, but are rife with limitations including added cost and negative taste affects, so don’t anticipate that manufacturers will turn to healthier sweeteners on mass in 2014.

Rethinking portion sizes and shape

Mars UK has already cut the weight of a Mars bar by 12% to meet its calorie reduction pledge, while the price remained the same.

So how about a smaller bar with the same retail price? The press will have field day, but it’ll soon become yesterday’s news. That’s a strategy Mars in the UK has already employed for its Mars and Snickers bars.

The company claimed that reformulation had gone as far as it could to reduce calories for now – a claim scientists who contacted ConfectioneryNews in the aftermath firmly refuted.

Manufacturers may also rethink the shape of well-known brands to disguise downsizing. Mondelez for example in late 2012 changed Cadbury Dairy Milk to rounded shape chunks , reducing the size from 49g to 45g, but keeping the price the same.

Increased cost of manufacture

Mintec recently said that the negative cocoa outlook had already caused cocoa butter prices, which account for a quarter of the ingredients cost of chocolate, to rise 80%, meaning UK chocolate producers who were once paying £0.16 ($0.26) for cocoa butter to produce a 100g milk chocolate bar in January 2012, were paying £0.21 ($0.35) in July 2013 – a 31% hike.

Palm-oil reading

Industry experts widely expect chocolate to develop into a two-tier market. Brands will position themselves as either premium or affordable.

Jean-Marc Laurens, quality and R&D Manager at French chocolatier Cémoi , believes premium chocolate will develop like the wine sector with cocoa origin blends tailored to meet aromatic profiles.

Meanwhile, economical chocolate could explore more cocoa butter equivalents (CBEs) and alternatives to allay the rising cost of cocoa butter. The Global Shea Alliance , an advocate for CBEs derived from a mix of shea stearin and palm mid fraction, told us last year that while global chocolate sales grew at about 3-4% per annum, annual growth in demand for CBEs was about 10%.

There are however limitations to CBEs, which are restricted to 5% in chocolate in the EU and any product using CBEs in the US  must be labelled a ‘chocolate flavored’ product.

The race is on in China

Which firms will win big in China? Answers in a fortune cookie.

The $12bn Chinese chocolate market will be where the race for global supremacy is won and lost. Hershey has made a late shopping-spree to shorten its odds when it acquired the Shanghai Golden Monkey Food Company  last month for $584m.

But the Chinese chocolate sector is already highly consolidated with the top 3 players Mars, Nestlé and Ferrero, commanding almost 70% of the market.

Don’t discount local Asia player Lotte , which has earmarked China as its international growth priority as it aims to grow sales outside the Korean market over 40% by 2018 to $3.5bn. However, the company’s chocolate category only accounts for 5% of sales with its China sales coming mainly from gum and chocolate pie.

Premium products developed to Chinese tastes could be the key to increasing China’s low (1.2 kg per capita) chocolate consumption among the country’s increasingly affluent population, according to market analyst at Canadean. 

Healthy chocolate

In September last year, Barry Callebaut’s cocoa flavanol heart health claim was finally approved by the European Food Safety Authority (EFSA).

The first chocolate made by Callebaut’s flavanol-preserving Acticoa method is likely to hit the EU market this year and will test how far the health claim can be taken.

We already know that the origin of the cocoa affects the percentage of cocoa flavanols in the final product, with Central and South America origins containing more flavanols than cocoa from the big producing nations in West Africa.

R&D priorities

A likely R&D priority for manufacturers will be to observe how cocoa flavanols and added functional ingredients in chocolate such as phytosterols are impacted by manufacturing processes, particularly those using heat.

R&D departments at cocoa processing firms will also make the most of what little cocoa they have to exploit the potential of cocoa waste as an ingredient in foods , stationery and food packaging.

The big acquisition

Analysts have long prophesized that the only thing missing from Nestlé's confectionery portfolio is a leading premium brand.

The company allegedly approached Ferrero during 2013, but could this be the year it considers another recognized name, perhaps one closer to home?

The third largest cocoa processor ADM Cocoa is also likely to change hands in 2014, which could lead to a very consolidated market if the likeliest contender and number two player, Cargill, is the buyer.

2 comments (Comments are now closed)

Top three player of Chinese chocolate sector: Mars, Nestle and Ferrero

I would say, Nestle should not be included in Chocolate sector in China, as the only Nestle products in China maybe related to chocolate is Wafer confection, it is snack but chocolate, its name is "Shark wafer", and the center and coating of the wafer products are all compound but chocolate.
I guess, Maybe, just maybe, in 2015 you can find some of Nestle chocolate in China market.

Report abuse

Posted by Qian Cheng
17 January 2014 | 11h18

flavanols

Interesting. I didn't realize that South and Central American cocoa/chocolate has more flavanols that others. I quite love South Am chocolate and this gives me more reasons to eat it. Do you know about Madagascar? I'm wondering if that cocoa, too, has more flavanols, as it truly has a superior flavour to many others.

Report abuse

Posted by Doreen Pendgracs
05 January 2014 | 19h43

Key Industry Events

 

Access all events listing

Our events, Events from partners...

On demand Supplier Webinars

Your future starts at Cargill's T for Trends
Cargill Cocoa & Chocolate
All supplier webinars