Slash fairtrade chocolate prices in developed markets, says Euromonitor

By Oliver Nieburg contact

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Fairtrade chocolate such as Kit Kat has been excelling in the UK due to wide availability and low prices, a strategy that can be replicated in other developed markets, says Euromonitor. Photo Credit: Nestlé
Fairtrade chocolate such as Kit Kat has been excelling in the UK due to wide availability and low prices, a strategy that can be replicated in other developed markets, says Euromonitor. Photo Credit: Nestlé

Related tags: Fair trade, Chocolate, Fairtrade international

Branded chocolate makers could get a sales boost by cutting prices for fairtrade products in developed markets and making items more readily available, according to an analyst from Euromonitor.

Francisco Redruello, senior analyst for food at Euromonitor told ConfectioneryNews that fairtrade chocolate was excelling in the UK because prices were lower than most other markets as branded manufacturers competed with private label discounters.

Replicate UK strategy

The latest estimates for global fairtrade chocolate valued the market at $600m in 2009.

“I would expect it to grow because of the price positioning in the UK. It is more accessible to consumers than in other countries,” ​said Redruello.

“If you can replicate that strategy in other markets it will be a key driver for sales.”

The UK accounted for 36% of all fairtrade chocolate sales in 2009, followed by the US (19%).

Could work in France, Germany and Spain

Redruello said there was scope to lower prices in other developed markets such as Germany, France and Spain and to increase the visibility of fairtrade goods in mainstream retail.

Certified cocoa typically commands a premium of between $150-200 per ton, but the analyst said that lowering retail prices would not necessarily harm margins.

“If they ​[branded manufacturers] sell much more they will benefit from economies of scale – if you sell more your unit costs go down.”

Differentiating from private label

To distinguish branded fairtrade chocolate from cheaper supermarket versions, manufacturers can offer a wider range of fillings, cocoa origins and innovative packaging to bring out the premium image of the products, said the analyst.

However, a 2012 study​ by Torres et al.​ in the journal Appetite​ found that higher cocoa percentages and single origin cocoa claims on dark chocolate labels failed to improve consumer expectations, 

Redruello said that branded producers should also make their fairtrade offerings available in multiple channels to increase exposure, giving them an advantage over private label brands which only sell in a retailer’s own-store.

Which certifier?

Chocolate makers can source fairtrade cocoa from a variety of certifiers including Fairtrade International, Fair Trade USA, Rainforest Alliance and UTZ Certified.

Each certificate commands different premiums and supports farmers in different ways. Rainforest Alliance for example is more focused upon community projects than the price for the farmer.

Redruello said that consumers are unlikely to be picky about which certification label appears on products.

“The people who know about these technicalities are happy to pay a premium for the product. I don’t think the mainstream consumer has this specialist knowledge.”

Euromonitor recently gave its growth predications for the chocolate market in a recent blog​ post and also produced a datagraphic​ on the fastest growing regions, which are mainly the BRIC countries.

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