The premium chocolate market has grown significantly in recent years and a new report from just-food forecasts that this growth will continue, in spite of the economic downturn. Ben Cooper reports.
When announcing the launch of a new luxury chocolate range last week, Nestlé said it was undeterred by the current economic downturn. This may smack of a company putting a brave face on what might appear to be an ill-timed product launch, but there is evidence that indulgence products do not fare that badly during a recession.
While now can hardly be said to be the most felicitous moment to bring any new product to market there is a school of thought among marketers that consumers seek out affordable luxuries during bad times, having foregone larger indulgences. So it may be bad news for companies selling expensive holidays and HD televisions, but consumers may still be prepared to splash out on a good bottle of Scotch or, Nestlé hopes, some high-quality chocolate.
Marcia Mogelonsky, senior analyst at market research firm Mintel, recently described the chocolate, cigarettes and alcohol categories as “relatively recession-proof”, while a new report from just-food paints a particularly upbeat picture for the premium chocolate market.
The just-food Global Market Review of Premium Chocolate – Forecasts to 2011 predicts the global premium chocolate market will grow to around US$12.9bn by 2011, from $6.95bn in 2007, on the back of growing awareness of premium chocolate, a widening consumer base, increasing consumer willingness to trade up, and continued emphasis on new product development by many of the world’s leading suppliers.
Nestlé itself suggests the global market for premium and luxury chocolate may reach US$14bn within the next decade.
The premium chocolate sector has grown by 18% over the past year, the report states, and since 2002 the category has expanded by over 65%. But in spite of recent growth, premium products still represent less than 10% of the global chocolate market. In Europe, the premium category accounts for 12% of the market, while in the US it represents 18% of total chocolate sales.
“It is in Western Europe and North America where the trend towards premium chocolate has been most apparent,” the report states. “This is to be expected, given that these represent some of the most affluent parts of the world. Over one in three consumers in these two regions are believed to have changed their chocolate consumption patterns in favour of premium varieties within the last few years. Increasingly, purchasers of premium chocolate are no longer confined to the higher income groups, as a result of which the sector is encroaching on the mainstream chocolate market.”
In specific reference to the US market, the report forecasts that current economic conditions will not interrupt the growth trend for premium chocolate. “In the past, US sales of premium foods have often continued to rise despite adverse economic circumstances, such as those which followed the terrorist attacks in 2001, mainly because consumers are more inclined to seek out indulgences and therefore improve their state of well-being,” the report states.
Within the premium chocolate sector, the report identifies a number of key product trends, with the single-origin, ethically-traded and dark chocolate sub-segments all driving category growth.
“Consumer behaviour is expected to develop over the next few years as the market grows. It has been suggested that the rising popularity of single-origin chocolate is mirroring trends observed in other sectors such as wine and coffee – for example, consumers are becoming more knowledgeable about cocoa varieties in the same way people seek out wines made from specific grapes.”
A 2007 survey commissioned by Swiss chocolate company Barry Callebaut suggests consumers in the US and Switzerland are the most receptive towards single-origin chocolate.
The same study confirms that consumer awareness of both Fairtrade and organic chocolate is rising both in Europe and the US. The research showed that around 33% of consumers in Western Europe and the US had tried Fairtrade chocolate, while 24% had tried organic chocolate. The UK has one of the highest penetration levels for Fairtrade chocolate, at nearly 45%. Another important market for Fairtrade chocolate identified in the report is Switzerland, where around 46% of consumers stated that they had bought Fairtrade chocolate.
The recent move by Nestlé is also in line with recent trends in the premium chocolate market, the report points out. Nestlé is collaborating with Belgian chocolatier Pierre Marcolini in launching two luxury ranges, Les Grands Crus Nespresso and Les Variations Nespresso, to complement its Nespresso premium coffee business.
“It is perhaps significant to note that many of the larger companies are making serious attempts to establish links with suppliers at what might be termed the super-premium end of the chocolate market,” the report says. “It seems likely that more of this kind of collaboration will occur over the coming years, especially since consumers are becoming ever more demanding.”
For more information or to download this report, go to www.just-food.com/store