The chocolate of tomorrow
What today’s market can tell us about the future June 2012 kpmg.com
evenues from the chocolate industry continue to prove rewarding, with 2011 figures from IBISWorld predicting annualized growth of around 2% over the next five years, after dampened expectations during the dark days of 2007-09. But behind the encouraging headlines, many companies are battling to stay on top of a rapidly shifting marketplace. Taste is diverging, as fast-growing economies and empowered consumers demand more from their products. For industry stalwarts, the requirement to offer local, highly tailored and increasingly diverse products represents a serious threat to market share. Spotting the markets that are likely to grow quickly will make the difference between the winners and losers of tomorrow’s chocolate landscape. According to official government figures, current hot spots include India (annual growth rate 15%), China (9%), Russia (6%) and Mexico (3.8%). They all exhibit a number of key factors that help them stand out from the pack, including a youthful population, rapid capital inflows and retail consolidation. In this report, we’ll take a tour of the factors shaping the chocolate market of tomorrow – from geography and demographics, to consumer needs and preferences, and other market drivers. And we’ll attempt to offer a glimpse into the future by defining what might be the chocolate bar of 2030.
John A Morris
European Head of Consumer Markets KPMG LLP
© 2012 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
The chocolate of tomorrow State of the market
4 The global picture
What they’re eating and why: a world tour of consumer taste in the chocolate market The three types of consumer shaping the way people buy chocolate across the world Four factors that are increasingly deﬁning the chocolate market A glimpse of the future – and what it might mean for the industry
6 Shoppers’ preferences
8 Trends to consider
Where next for chocolate?
The industry has weathered a global recession and is still seeking growth. But with some markets saturated, where does its future lie? The global chocolate industry is many things, but as a bellwether for the wider economy its use is limited. Revenues have remained resilient despite a recessive global picture, falling disposable incomes, volatile commodity prices and increasing competition. Chocolate is often described as recession-proof. Some economists call it the ‘lipstick effect’: when facing an economic crisis, consumers are more willing to buy less costly luxury goods, such as cosmetics and chocolate, even as they cut back on other luxuries. Revenues over the past few years would seem to back this hypothesis, although year-on-year growth remains relatively sluggish and the spectre of volatile input prices continues to cast a shadow over future projections. Although the global market is still dominated by Western Europe and North America, emerging markets clearly represent the future. The BRIC countries (Brazil, Russia, India and China) accounted for 55% of global confectionery retail growth in 2011. Other emerging economies with youthful populations and an acquisitive middle class are likely to develop a taste for chocolate and, as their disposable incomes grow, they will represent important target markets. With the traditional markets of Western Europe and North America seemingly saturated, manufacturers are being forced to pull even more innovative tricks out of the bag to attract consumers, from enigmatic ﬂavor combinations to bolder health claims, portion control and personalized bars. Like a large sharing tablet, the market is breaking up. Taste is diverging as the BRICs and empowered Western consumers demand more from their...