Premium chocolate offers hope as food inflation soars in eurozone
Fresh data from the Organisation for Economic Cooperation and Development (OECD) suggests food costs in Britain are rising faster than in France, Germany, Spain and the Netherlands.
According to the OECD figures released last week, Britain's food inflation rate stood at 9.5 per cent for June, ahead of France with 5.77 per cent; Germany at 7.12 per cent, Spain at 7.2 per cent and the Netherlands with 6.1 per cent.
Overall, food prices rose 6.5 per cent in the 12 months to June, following on from a 6.0 per cent rise in the 12 months to May.
As food prices rise, consumers in the shopping aisles are want to amend their habits, with a keen desire for in-house treats as they spend less eating and drinking outside the home.
And a batch of recent evidence suggests that chocolate makers with their eyes firmly set on premium chocolate brands, and products with a health and wellness twist, could very well tap into the change in spending patterns.
Research from market analysts Mintel published last month reveals that key to growth in the dark chocolate segment is the mushrooming consumer desire for a slice of luxury, that sees chocolate aficionados actually buying less, but splashing out on more premium varieties when they do make a purchase.
"Even though people are still cutting back on the amount of chocolate they eat, sales in the two years to 2007 saw no less than a 10 per cent increase in value," states the Mintel report.
A figure that amply shades a mere 1 per cent growth between 2003 and 2005.
And Mintel predicts this healthy growth rate will continue its steep curve this year, with a further five per cent growth expected in 2008 alone, pushing the British chocolate market to £2.23 billion in value by the end of the year.
"And these trends will continue to help stem the chocolate market meltdown, with sales of all chocolate set for a further 17 per cent growth in the five years to 2013," adds the 'Chocolate confectionery' report.
Indeed, half year results released by UK confectionery firm Cadbury last week, and the first set of figures released since the company spun of its drinks arm, support the Mintel report.
The firm reported a 7.3 per cent rise in first half sales and profits of £223m during the first half of the year.
"No matter how bleak economies look, people always go for treats and that's why we have seen no real slowdown," said Todd Stitzer, the company's chief executive.
But against the backdrop of rising commodity costs, notably for cocoa that has risen by 30 to 40 per cent from a year ago, sugar, and milk, the firm, like all current players in the food industry, stated that it will review its costs in a bid weather the global economic downturn.
Cocoa prices
And in terms of cocoa costs, chocolate makers such as Cadbury will have welcomed a slight softening in cocoa prices last week. Pulling back from the $3000 a tonne barrier broken last month, September cocoa futures prices ended on Thursday at US$2,858 a tonne.
