Investing in the Chocolate Market

Summary

As with any other consumable, the price of chocolate is driven by supply and demand. According to a market business report by Son Nguyen & Nickie Coker, “The masses, enthralled with better-quality treats, have become accustomed to spending an extra $2 or $3 every day on luxury options (Nguyen).” Chocolate is the second dominating specialty product that is wanted and consumed daily, next to coffee.

Background

Chocolate is a loved product worldwide. It is a 500-year-old sixty-billion-dollar industry, as reported by The Oxford Club’s website, Investment U (https://www.investmentu.com/article/detail/30459/investing-in-chocolate). Additionally, the demand for premium dark chocolate has risen since 2008, after the recession. Recent promising studies suggest that dark chocolate may help lower cardiovascular disease risks (Zucchi).  Not only does chocolate have a long history of sales but also has health benefits.

The Chocolate Market

Who buys chocolate? Nearly 50 percent of all chocolate is consumed by Europeans. A blog by CNN’s Freedom project titled “Who Consumes the Most Chocolate” reports that Europe makes up 49.32% of this industry. North America takes up 24.22% (with the United States at 20.19%). The third highest consumer is Asia and Oceania (which includes Australia) at 14.19%. Forbes magazine reports that within Europe’ market, the average Switzerland consumer consumes 19.8 pounds of chocolate yearly (McCarthy). Germany customers consume 17.4 pounds and Irish customers eat 16.3 pounds.

Despite stereotypes, there is no discernible difference between men and women chocolate consumers. A U.K. Study conducted found that although 91% of women admitted to consuming chocolate, 87% of men who were polled also ate chocolate (http://thecnnfreedomproject.blogs.cnn.com/2012/01/17/who-consumes-the-most-chocolate/).  In an article by Slate magazine, there is no scientific basis in gender bias chocolate cravings:

“Research on whether women like chocolate more than men has yielded mixed results, in part because craving—the term researchers tend to use when talking about chocolate proclivities—is an inherently subjective phenomenon (Anderson). “

Chocolate remains a supermarket impulse buy. Roy Morgan Marketing (an Australian firm) conducted a survey on where shoppers purchase their chocolate bars. The survey concluded that “4.9 million Aussies bought at least one chocolate bar from a supermarket in any given four-week period – accounting for more than three-quarters (76%) of the chocolate-bar buying public (Roy Morgan). “

Delish.com reports that 90 million pounds of chocolate candy are sold for Halloween. Easter time 71 million pounds are sold and Valentine’s Day 60 million pounds (Tannenbaum). Referring to a chocolate industry report by Franchise Help, “Seasonal candy is a major driver of the confectionary industry, and in 2014 accounted for over 21% of sales – over $7 billion.”

Conclusion

A focus market for chocolate sales would be based on Europe, specifically Switzerland. The product would ideally be marketed to both men and women. The chocolate product would ideally be sold in grocery stores or convenience stores as an impulse purchase. Lastly, the best opportunity to increase sales of chocolate would be Halloween.

References

Anderson, L.V. “What’s Up with the Stereotype That Women Love Chocolate?” Slate Magazine, Amazon Associates, 13 Feb. 2012, www.slate.com/articles/double_x/doublex/2012/02/valentine_s_day_do_women_crave_chocolate_or_is_that_a_stereotype_.html.

McCarthy, Niall. “The World’s Biggest Chocolate Consumers [Infographic].” Forbes, Forbes Magazine, 22 July 2015, www.forbes.com/sites/niallmccarthy/2015/07/22/the-worlds-biggest-chocolate-consumers-infographic/#538584554484.

Nguyen, Son, and Nickie Coker. “Gourmet Chocolate.” Gourmet Chocolate -, SBDCNet News, 2006, http://www.sbdcnet.org/small-business-research-reports/gourmet-chocolate.

Tannenbaum, Kiri. “8 Facts About Chocolate.” Delish, Hearst Communications, Inc., 28 Aug. 2017, www.delish.com/food/news/a39015/facts-about-chocolate/.

“Chocolate Industry Analysis 2018 – Cost & Trends.” Franchise Help, FranchiseHelp Holdings LLC, 16 May 2016, http://www.franchisehelp.com/industry-reports/chocolate-industry-analysis-2018-cost-trends/.

“Vast Majority of Chocolate-Bar Buyers Get Their Fix from Supermarkets.” Roy Morgan, Roy Morgan, 7 Oct. 2015, www.roymorgan.com/findings/6492-chocolate-bars-at-the-supermarket-june-2015-201510062257.

“Who Consumes the Most Chocolate?” CNN, Cable News Network, 17 Jan. 2012, thecnnfreedomproject.blogs.cnn.com/2012/01/17/who-consumes-the-most-chocolate/.

Zucchi, CFA Kristina. “What Drives The Price Of Chocolate?” Investopedia, Investopedia, LLC., 16 July 2015, http://www.investopedia.com/articles/investing/071615/what-drives-price-chocolate.asp.

Chocolate Demographics by Region

BA-223-0-10288

Market Chosen: Chocolate

Segmentation Model: Demographics by Region

Chocolate is an 83 billion industry worldwide (“Who Consumes the Most Chocolate?” 2012).

Segments

Europe: 49.32% = 40.94 Billion

North America: 24.22% = 20.10 Billion

Asia and Oceania: 14.49% = 12.03 Billion

South America: 8.68% = 7.20 Billion

Africa:  3.28% = 2.72 Billion

Reasoning

Chocolate is the most popular where it is the rarest and the country with the most wealth. In an article by Slate Magazine, the writer reports on why Switzerland consumes and produces the most chocolate products. “Few cocoa-producing countries are big chocolate consumers because chocolate is a luxury,” notes Brian Palmer, “wealthy Western Europe constitutes 6 percent of the world’s population, but eats 45 percent of its chocolate.” Africa, which produces 2/3’s of the world’s chocolate (Maverick), only consumes 3.28% of the product. Many South American countries such as Peru and Mexico are the top exporters of cocoa, which explains why South America is the second least consumer of chocolate.

References

Mattyasovszky, Miklos. “Top 10 Cocoa Producing Countries.” WorldAtlas, WorldAtlas, 22 Apr. 2015, www.worldatlas.com/articles/top-10-cocoa-producing-countries.html.

Maverick, J.B. “The 4 Countries That Produce the Most Chocolate.” Investopedia, Investopedia, LLC., 30 Sept. 2015, www.investopedia.com/articles/investing/093015/4-countries-produce-most-chocolate.asp.

Palmer, Brian. “Switzerland Is the Last Place on Earth Where You’d Grow Cocoa. So Why Do the Swiss Eat So Much Chocolate?” Slate Magazine, The Slate Group, 11 Oct. 2012, www.slate.com/articles/life/explainer/2012/10/nobel_prize_and_chocolate_why_the_swiss_eat_and_produce_so_much_chocolate.html.

“Who Consumes the Most Chocolate?” CNN, Cable News Network, 17 Jan. 2012, thecnnfreedomproject.blogs.cnn.com/2012/01/17/who-consumes-the-most-chocolate/.