Boost chocolate profits in Asia, says report

By staff reporter

- Last updated on GMT

Related tags Chocolate Ferrero spa Ferrero rocher Charlie and the chocolate factory India

There is great potential for Western chocolate manufacturers in
China, India and Japan, despite the relatively small size of the
markets in these countries, according to a new report.

The new report appears to validate several chocolate manufacturers in Europe and the US, who have moved into the Asian markets because of the cheaper labour and operating costs in the region. A burgeoning taste for chocolate in this region, is also driving domestic demand, creating new markets for chocolate makers. Compared to the highly developed confectionery markets in Western countries, Asian countries are at earlier stages of development, according to the report "Chocolate Challenges", published yesterday by market researchers Report Buyer. For example, the US market is valued at between $14bn (€9.9bn) and $17bn (€12bn), while India's chocolate operations are valued at only $188.6m (€132.8m). Furthermore, Asian consumers account for only 17 per cent of global cocoa consumption, despite a boom in individual wealth and the new popularity of western style snack foods. But China, India and Japan have huge potential for chocolate companies, the report states, and chocolate consumption in the region is currently increasing at a rate of 25 per cent a year in the Asia-Pacific region. Report Buyer suggests that the growth is possibly due to "a growing desire for Western goods",​ as well as massive populations in this area. "The sheer population size and growing economic prosperity in the area has convinced many manufacturers to keep their faith with the market."​ The most successful type of chocolate in Asia in terms of sales is often luxury brands, bought by consumers determined to make the most of their growing or brand new spending power, the report says, Brands such as Ferraro Rocher and Tresor Dore are among the most popular. According to Report Buyer, several chocolate companies have also conducted very marketing campaigns in these regions to boost sales. Successful ventures have included Valentine's Day chocolate promotions in Japan, or free chocolate bars distributed in India when the film Willy Wonka and The Chocolate Factory was released in the country. Companies that have been particularly successful in India include Cadbury and Nestle, who between them hold over 90 per cent of the market, while China is dominated by foreign firms. "Dove if the most popular brand, holding nearly 38.9 per cent of the market, followed by Cadbury, Le Conte, Nestle, Hershey's, Golden Monkey, Ferrero Rocher, M&M's, Tresor Dore and Shenfeng,"​ the report said. Earlier this year, an AC Neilson survey suggested that all types of confectionery, not only chocolate, are increasingly popular across Asia. Sales of non-chocolate confectionery grew 24 per cent in 2006, while cookie-type products also experienced growth with a 19 per cent increase. "More so than any time in our world's history, we are able to identify and understand the shifts in the environment, the global economy and in the rapidly developing markets,"​ said AC Neilsen. "Today's developing markets will be tomorrow's core for marketers - India will overtake China in terms of population before 2050, becoming the number-one and two populations in the world." ​Many global confectionery companies are slowly turning eastwards, often moving production to Asia from Europe or the US. In July, Barry Callebaut announced it was moving into India as part of plans to increase the share of sales generated outside Western Europe and North America from 11 per cent to 20 per cent by 2010. Cadbury is another company keen on the Asia region, and this year increased its hold with the acquisition of Japan-based candy company Sansei Foods.

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