According to a recently published report by the market research firm, the global industrial chocolate market shipped 6.43m metric tons (MT) in 2014.
Technavio forecasts a compound annual growth rate (CAGR) of 2.43% up to 2019 to reach 7.25m MT – largely in line with growth projected in the $109.6bn global chocolate market.
Chocolate outsourcing ‘gaining traction’
What is industrial chocolate?
In Technavio’s report ‘industrial chocolate’ was classed as chocolate used in-house by vertically integrated manufacturers or sold to third parties to create finished chocolate. Industrial chocolate has undergone conching and is produced from a cocoa liquor/paste and butter combined with ingredients such as sugar, says Technavio. Industrial chocolate can be used in finished goods such as chocolate confectionery, ice cream, beverages and bakery.
Technavio’s figures include vertically-integrated manufacturers that process cocoa for their own finished products as Nestlé does for its Cailler brand. This integrated market accounted for the bulk of industrial chocolate volumes in 2014.
However, Technavio expects the open market for industrial chocolate – from suppliers such as Cargill and Barry Callebaut – will “grow exponentially as the outsourcing of chocolate is gaining traction”.
Easier access from origin countries
Europe is the biggest market for industrial chocolate, but Technavio says the key players such as Cargill and Barry Callebaut are increasingly shifting capacity to cocoa origin countries in Asia, Latin America and Africa for closer proximity.
“This provides easier access to emerging economies from where we are seeing most demand for chocolate,” said the report.
Barry Callebaut Asia and Latin America investments
Barry Callebaut said in its 2013/14 annual report it had a 40% share of the open industrial chocolate market.
Around 33% of the group’s fiscal 2013/14 sales came in emerging markets having grown 14.8% on the prior year. Group volumes in Asia-Pacific and the Americas - which include cocoa ingredients as well as industrial chocolate - increased 9.3% and 5.4% respectively, while the company’s Europe volumes dropped -1.2%.
Barry Callebaut opened its first chocolate plant in Chile last year, which will supply Arcor and other firms, taking the number of factories it has in Latin America to seven. The company also continues to expand chocolate factories in Singapore and Japan.
Cargill gains ADM’s chocolate business
Cargill is the other dominant player in industrial chocolate ahead of rivals such as Blommer, Cémoi and Puratos.
Overall origin cocoa grindings were forecast to account for 44% of total world grindings in 2014/15, according to the International Cocoa Organization (ICCO). This represents a drop of 4% on the prior cocoa year, but ICCO said significant investments were being made to process cocoa at origin. The ICCO also projected a 3% drop in cocoa grindings in importing countries such as the Netherlands and Switzerland.
Cargill last year announced a $440m deal for ADM’s industrial chocolate business, eliminating the third largest player for the industrial market. The deal included six chocolate plants, all based in either Western Europe or the US. However the firm has been ordered by the European Commission to sell a plant in Germany to finalize the deal.
Cargill also recently expanded a chocolate plant in Mouscron, Belgium.
Technavio expects a growing preference for premium dark chocolate to further drive the industrial chocolate market.
Global Industrial Chocolate Market-Market Research 2015-2019