Market Analysis
Chocolate makers to go premium as North Americans cutback consumption
Euromonitor International anticipates annual per capita chocolate consumption in North America will drop 200 g from 2016 to 2021 – the equivalent of four 50 g bars.
North America represents 22% of the $20.5bn global chocolate market and is home to the single largest market for chocolate, the US.
Snack bar competition
Euromonitor has called the figures “pretty worrying for the industry”.
“There’s going to be a loss in sales for some manufacturers,” Jack Skelly, research analyst for Euromonitor told ConfectioneryNews. “So they are going to have to find a new strategy.”
“There’s much more competition from snacks and that’s a huge challenge for chocolate manufacturers,” he continued.
“The other snacks are positioned as healthy and chocolate has this unhealthy association.”
He highlighted rapid growth for KIND and Clif Bars, and said major players like Hershey and Mondelēz had already begun to explore categories beyond confectionery.
Confectioners diversify
Hershey snapped up Krave Jerky in January 2015 and snack maker Brookside Foods in December 2011. Mondelēz already has a strong presence in breakfast biscuits with belVita and also added free-from snacking company Enjoy Life Foods in February 2015.
Chocolate consumption around the globe
Chocolate consumption in Western Europe and Asia is set to rise 100 g per person annual by 2021, but Middle East & Africa and Latin American volumes are expected to remain flat, predicts Euromonitor. Western Europe is the largest region for chocolate confectionery globally with $35bn in value sales last year.
“It’s part of their strategy to reposition as general snack manufacturers,” said Skelly.
The analyst said he expected chocolate makers to premiumize in developed markets, but was skeptical on chocolate’s positioning as a health food, regardless of any EU-approved health claims on cocoa flavanols.
“It will be a very niche audience. There’s just too many other snacks that do that better than chocolate,” said Skelly.
Dark chocolate and quality cocoa
Instead, he feels chocolate will become more sophisticated in the developed North America and Western European markets with a focus on premiumization.
Dark chocolate sales in the US were pegged at $583m in 2015, having recorded a CAGR of +5% in the previous five years, according to Euromonitor.
Milk chocolate in the US enjoyed slower growth of +3% over the period to $972m in 2015.
Premium in emerging markets
Euromonitor’s Jack Skelly expects strong premium chocolate growth in Western Europe and North America, but says premium chocolate in emerging markets such as Asia Pacific will take around 20-30 years to develop rather than optimistic estimates of 5-10 years. He says chocolate remains fairly unaffordable in these regions and refrigeration remains a challenge in hot climates.
“That’s an indicator people are seeking higher cocoa content in their chocolate,“ said Skelly.
“Generally the Latin American beans are regarded as higher quality,” he added.
Latin America and the Caribbean nations account for 18 of the 23 of fine flavor cocoa-producing nations as recognized by the International Cocoa Organization (ICCO).
Ecuador is the world leader in fine flavor cocoa and the national government has rallied around the crop as the country hopes to mechanize cocoa production.
In April this year, Mars acquired 485-hectare Ecuadorian cocoa plantation Hacienda La Chola to bolster its crop research program.
Premium chocolatier Lindt reported 7.1% organic growth in group sales in 2015, while the overall global chocolate market declined 2-3% over the year, according to Bank Vontobel estimates.
