Despite economic headwinds battering consumer confidence, the global chocolate market remains robustly defiant and is predicted to grow by an average of 2 per cent a year for the next five years. Yet it is not all plain sailing for manufacturers, who face a rising proliferation of consumer tastes, coupled with volatility in the cocoa markets, warns KPMG in a new report entitled The chocolate of tomorrow.
The report’s findings show that the chocolate industry’s growth is being driven by demand from the consumer markets of Latin America, Eastern Europe and Asia Pacific. However, whilst these new markets have some similarities, including a youthful population, a growing middle class and rapid capital inflows, the buying behaviour of consumers varies greatly from country to country, creating a headache for manufacturers trying to scale their operations globally.
The report recommends that manufacturers adapt their product lines to suit the marketplace they are targeting. In Mexico 52 per cent of the population is under 20 and 80 to 90 per cent of chocolate and candy products are targeted at children. In Russia and China premium products are in demand.
Stéphane Gard, Sector Head of Consumer Goods at KPMG said: “Behind the encouraging headlines, many companies are battling to stay on top of what is a rapidly shifting marketplace. Taste is diverging as fast growing economies and empowered consumers demand more from their products. Spotting and targeting the markets that are likely to grow quickly will make the difference between the winners and losers of tomorrow’s chocolate landscape.”
The report identifies seasonal gift giving and personalisation as two major opportunities available to manufacturers targeting growth opportunities in both new markets and saturated Western markets. “It is vital that manufacturers tap into underrepresented seasonal and gift markets as a matter of urgency,” explained Gard. “In China confectionery is booming as a gift item, with over half of all chocolate bought as a gift. Festivals such as the Chinese Luna New Year present the opportunity to run seasonal launches of chocolate products to meet the demand from the Chinese consumer. In the West – with the exception of Easter – other occasions like Valentine’s day, New Year’s Day or Halloween and personal occasions like birthdays and wedding days and even new trends coming from the East like the lunar festival have not yet been exploited by the chocolate industry.”
Demand for increased personalisation of products could be the next consumer-driven revolution in the industry. Manufacturers have begun to dip their toe into the water and offer consumers a range of options to personalise the products they buy, from choosing the contents of a selection box, personalising the packaging to creating their own bar of chocolate, with the toppings of their choice. The personalised market could be the next frontier for chocolate, but only if manufacturers can balance costs and opportunities.
KPMG’s report also identifies the main trends expected to happen in the next 20 years. The findings predict that by 2030 chocolate bars will be sweeter and smaller, as volatility in cocoa prices forces manufacturers to use less cocoa content in their products.
Concerns around health and increasing regulation will mean the bar is healthier in composition, with additive free chocolate will become the norm in developed economies. Combinations of sweet and savoury (like bacon and chocolate) will increase and olive oil and herbs and flowers will be increasingly used as flavourings in the developed markets as palates grow more sophisticated and brands seek a marketing boost. Manufacturers are also more likely to source chocolate from ethical sources to meet aspirational buyers’ needs.
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