Global Chair, Chemicals & Performance Technologies, Pharmaceuticals
KPMG LLP (UK)
The chocolate sector
A global review
In this report we analyze the fastest-growing markets in the chocolate sector, how consumers’ tastes are changing, and suggest some solutions for companies on how to get ahead of the competition.
Transformation in chocolate
Trends that could change the industry
Global chocolate industry revenues will reach record US$117bn in 2014. Rising demand driven by emerging markets – and recovery in US, where chocolate market grew in 2013, for the first time in five years.
Eight markets drive 70% of the world’s confectionery growth, according to Mondelez: Brazil, China, Colombia, India, Russia, South Africa, Turkey and Vietnam.
Seasonal sales still strong, growing across the globe in 2013.
Most dramatic change in consumer taste is surge in popularity of dark chocolate. Perceived health benefits have fueled a 93% growth in launches and dark chocolate now accounts for 20% of US market.
Premiumization (demand for “moments of happiness”), convenience (portion control), value, variety of flavors (new combinations, nostalgia, artisanal ingredients).
Innovation in product and branding often driven by smaller makers. Larger rivals poised to embrace customization.
Urgent action needed – and being taken – to improve cocoa supply. Mars fears demand could exceed supply by 1m metric tons by 2020 if industry doesn’t act. Sequencing the cocoa genome could help resolve this issue.
Confectionery companies, governments and NGOs invest heavily in cocoa farmer development programs. Over US$800m is set to be invested in the coming years to improve farmer productivity. This could have a significant impact on the farming community and on company sourcing costs.
Companies need independently verified information when they share the potentially huge social and economic impacts of their investments in cocoa productivity with shareholders and stakeholders.
Sustainability remains a key challenge. Companies are recognizing the need to go beyond single initiatives with a strategic approach to improve yields and consumer trust.
With obesity a global epidemic, the industry needs to assuage concern with healthier products that could transform the market for chocolate and deter draconian regulation.
Digital technology could revolutionize the supply chain as 3D printing is a disruptive innovation that could change the behavior of companies and consumers.