Marcia Mogelonsky, Director of Insight, Mintel Food and Drink, speaks to Food Marketing and Technology Editor-at-Large Alankar Srivastava, about the chocolate market, organic farming methods, and much more. Excerpts…
Q. Thanks for being with us. Give us a sense of the global chocolate market.
A. In developed markets such as the US, France and the UK, chocolate confectionery is a mature market and much of the excitement in the category is driven by activity in developing markets such as India. Indeed, sales volume in developed markets is flattening. The picture is different in emerging markets where sales have generally fared better.
In general, the chocolate confectionery market continued to see some growth, though at a very slow rate, and in some established markets, sales volume declined between 2015 and 2016. In the US, UK, Germany and France, sales were flat over the two-year period, while sales fell in Russia (-2%), Brazil (-6%), and China (-6%). The only markets in the top 10 to see any growth were Poland (+2%) and India, which saw significant growth of 13 percent in the category between 2015 and 2016.
Q. India has emerged as one of the world’s fastest growing chocolate confectionery markets; what are the challenges and opportunities that exist in Asia’s third largest country?
A. A rapidly urbanising population with more access to traditions and trends from other markets has definitely contributed, as has a rapidly developing infrastructure that will support such a perishable product as chocolate confectionery.
Multinationals are looking to India as the market is growing, and although there have been some challenges along the way with gaining a secure foothold in the country, some multinationals are well established in the Indian market – like Mondelez, which acquired Cadbury, for example.
Q. Enlighten us on consumer demographics for confectionery and snacks in Asia, particularly India.
A. According to Mintel research, 42 percent of Indian consumers aged 18-64 eat sugary snacks other than biscuits, which includes chocolate confectionery.
Typically, these sorts of treats are eaten once a week (72% of consumers have indicated in our survey), and such treats fill some major occasions and needs. Forty three percent of consumers eat chocolate and similar sweets for a between-lunch-and-dinner treat while 29 percent eat them between lunch and dinner. As with other occasions for eating chocolate and similar sweets, while 22 percent eat them for breakfast, 18 percent eat them for lunch, 6 percent eat them for dinner and 6 percent eat them after dinner.
For the reasons behind eating chocolate and similar sweets, convenience (49%), health (44%) and the perception that they are good ways to treat one’s self (41%) are the top three justifications used to enjoy chocolate. Additionally, 35 percent of Indian consumers surveyed believe these snacks provide them with energy.
Q. In your opinion, which are the factors that are fuelling the growth of India’s chocolate confectionery market both in value and volume?
A. To reiterate, a growing infrastructure and the upward popularity of chocolate confectionery among the rising cohort of urbanised Indians are factors that have contributed to the product’s growth in the country. Indeed, the popularity of chocolate as a treat, and as a gift – for holidays such as Diwali – has helped push sales in both value and volume. The fact that there are more outlets in which climate control is helping to extend the shelf life of chocolate is also noteworthy.
Q. Globally, it seems seasonal chocolate leads the pack when it comes to demand. Do you think companies will continue to focus more on new product development in this segment?
A. Yes, seasonal chocolate is especially important to the market. In Brazil, for example, chocolate Easter eggs are among the top-selling confectionery products and manufacturers continuously strive to introduce more imaginative versions. However, there are some challenging headwinds as more consumers, governments and consumer watch groups are pushing for declines in sugar consumption for kids and for adults. Nonetheless, launches of seasonal confectionery continue to grow increasing globally by 26 percent between 2015 and 2016. In India, seasonal launches more than doubled over the same time period.
Q. Tell us about the commercial viability for cocoa growers when it comes to switching to organic farming methods.
A. Although still a small part of the category, accounting for less than 6 percent of new product introductions in 2016, launches of chocolate confectionery with an organic claim increased by 6 percent between 2014 and 2016. However, the interest in providing organic cocoa is proving to be a challenge for the industry. In order to satisfy the growing demand, it will become necessary for more cocoa growers to switch to organic farming methods. According to the Switzerland-based Research Council of Organic Agriculture (RCOA), only about 2.5 percent of global cocoa harvest was grown organically in 2014 (most recent year available). If the global demand for organic products continues to rise, the strain on the industry will make sourcing organic products a major issue. While the centre of the cocoa industry is Côte d’Ivoire, the country lags significantly behind in organic cocoa. Latin America and the Caribbean account for over 85 percent of the world’s organic cocoa, with Dominican Republic, Peru and Mexico leading in organic production. According to RCOA, the growth of the organic cocoa industry is notable, having increased at least five-fold since 2004, faster than most other crops. That being said, the organic cocoa industry faces headwinds even as consumer demand for the product grows. Organic cocoa crops have smaller yields as organic growing methods do not allow the use of chemical pesticides and fertilisers, which would encourage more growth, and easily prevent disease and pests from damaging or destroying plants. It is not just a wholesale change in growing methods – including ensuring the land set aside for organic crops is itself devoid of chemical residues from previous plantings. Regulatory constraints are even more significant, from obtaining certification that the land and crops have successfully been converted to organic status, to garnering the proper import and export permits for the organic beans.