Who has never yielded to a chocolate bar or a chocolate candy ? The chocolate manufacturing industry has grown for the last decades and it is not going to stop. Chocolate confectioneries remain very popular in developed markets and are gaining momentum in the emerging ones. The new middle class with rising wages in emerging countries such as China, India or Brazil entails a growing demand. The way of consuming chocolate changed too ; producers have to adapt to the diverse demands. Let’s focus on some of the key aspects of this heavy market.
What a gourmand world !
Chocolate consumption has increased since the boom of the cocoa production in the 90’s. This growth of the production is linked with the exponential demand and the reduction of taxation. In almost twenty years, chocolate confectionery retail consumption has more than doubled in terms of revenues.
By 2025, the chocolate confectionery market is planned to be worth $154.5 billion!
Developed countries lead the consumption. Today, Europe accounts for half of the global consumption (in volume and value) and North America for around 1/3 for the value and 25% for the volume of the market. If we talk about countries, the USA is the biggest consumer by far with sales accounting for $21 billion in 2017. Behind the US, we find Russia, Germany, UK, Brazil and France. However, the evolution is a more relevant indicator to analyse the current market. While there is a kind of saturation in Europe and North America for several years, the volume of chocolate confectionery consumed in Middle East, Asia and Africa skyrocketed. In ten years, the consumption has doubled in these areas. In India, the volume of consumption and the value of it were respectively six times and four times higher between 2000 and 2015.
Interesting fact : some countries have not been mentioned but perform very well in terms of individual consumption : a Swiss man is twice as gourmand as an American. French people are only the tenth biggest consumers.
A competitive market
As marketing students, we will mainly talk about the manufacturers and distributors of chocolate confectionery. However, it is important to highlight that most of the big producers purchase their raw materials. Archer Daniels Midland, Cargill and Barry Callebaut are some examples of the companies that supplied producers with cocoa.
Big manufacturers are usually agrifood giants. Artisanal chocolatiers are an insignificant part of the chocolate industry in terms of volume (even though there is a trend to value high quality chocolate). The market is very concentrated : seven multinational firms share around 70% of the total production. They have developed branded products to meet the needs of various targets. They also do lot of acquisitions to maintain this concentration. Here are the main competitors with their subsidiaries: Mondelēz International (Cadbury, Côte d’Or, Toblerone, Milka…), Ferrero (Nutella, Kinder, Ferrero Rocher…), Mars (Mars, Twix, Snickers, M&M’s, Dove…), Nestlé (Smarties, KitKat…) and Lindt (Ghirardelli, Caffarel, Hofbauer…).
Marketing challenges
Everybody eats chocolate bars and chocolate confectionaries. Companies thus have to brand their products focusing on the audience they want to target. Around 20% of the cost of production is due to the marketing. As the patterns of consumption are drastically changing (organic chocolate, high quality cocoa, …) companies must adapt to it and be ever more creative.
The Chocolate’s market is wide and really depends on the habits of consumptions in each geographical market. The French are more likely to buy dark premium chocolate than the American. The other posts of these blogs will thus allow you to understand the different approaches of the brands. They establish their strategy considering the cultural aspects of a specific market, its main target, its consumption patterns…
Dark chocolate, milk chocolate or white chocolate ? Premium high quality or affordable price but lower quality ? Chocolate bar, sophisticated confectionaries or sweet chocolate candies ? And how to brand your products ? Emotive or informative advertising ? What about the packaging ? And the customers’ retention in an industry where loyalty does not really exist ?
A lot of questions that need to be answered ; we will try our best to answer them in the following posts.
Cited sources :
- Statistics and Facts on Chocolate Consumption and Industry, Statista, 2018
- The Economics of Chocolate, Oxford University Press, 2016
- The World's biggest chocolate consumers, Forbes, July, 2016