Chocolate: Its Global Market, International Trade and Export

On the 8th of May 2020 CRIF Turkey has held a webinar themed “Target acquisition in the potential customer market”, which I would also like to share with you.
This paper discusses the global chocolate market, including market size in terms of value and consumption growth. Summarizing, this report introduces three main points, namely;
• Global & regional chocolate market
• Impacts of COVID-19 on the chocolate market
• Turkey’s export market on a monthly and yearly base
Firstly, a general information about the chocolate market will be presented on a global and regional base. Afterwards, the impacts of COVID-19 on the chocolate market will be presented. Also here, a general information of COVID-19 will be published. Finally, Turkey’s export market will be examined in different time periods.

One of the most consumed and popular food products among consumers around the world is chocolate. Based on the amount of cocoa used during preparation, different types of chocolate are produced worldwide. As the global chocolate market is strongly influenced by consumer taste preferences, it is essential that companies focus on product development and marketing strategies to reach a broader consumer base and enter new markets.
In terms of region, the global chocolate market is divided into Europe, North America, Asia Pacific and the rest of the world. In the midst of all this, Asia Pacific has become a leading consumer of chocolates due to the increasing influence of Western culture and habits in the countries of the region. The success of several international chocolate brands is expected to further increase the demand for chocolate in the region.

The paper provides an up-to-date analysis of the current global market scenario, the latest trends and drivers and the overall market environment. The market is driven by the increasing premiumisation of chocolates. In addition, new product introductions are expected to stimulate growth in the global chocolate market.

The leading companies in the global chocolate market focus on product differentiation in terms of taste, aroma and price in order to achieve a stronghold in the market. Some of the main players are Mondelez, Nestle SA, Lindt & Sprungli, Moonstruck Chocolatier Co., Mars Inc., Ghirardelli Chocolate Co., Ferrero Group, Hershey Foods Corp. and so on.

The chocolate market structure is strongly consolidated due to the dominance of some key giants and their presence in the market. Manufacturers are making intensive use of strengthening their distribution networks, implementing cost reduction techniques and placing various products on the global market. The market leader is Mondelez with a share of 20.0%, followed by Nestle (12.0%) and Lindt & Sprungli (10.7%). This unique set of strategic companies comes from the publisher’s online database (over 10,000 companies, over 25,000 market shares)

1. Mondelez (20.0%) in 62 markets
2. Nestle (12.0%) in 72 markets
   
3. Lindt & Sprungli (10.7%) in 32 markets
   
4. Mars (9.6%) in 40 markets
   
5. Ferrero (5.5%) in 36 markets
   
6. Guta Group (3.2%) in 3 markets
   
7. Alfred Ritter (2.5%) in 11 markets
   
8. Storck (2.1%) in 13 markets
   
9. Toms (2.0%) in 11 markets
   
10. Fazer (1.5%) in 14 markets

As mentioned earlier, the growth of the global chocolate market is primarily due to increasing consumer awareness of the health benefits of dark chocolate candies rich in cocoa. This trend is expected to increase the popularity of chocolate around the world. The popularity of dark chocolate is expected to increase in the coming years because, among other benefits, it also helps prevent heart disease.

The growing disposable income of consumers in developing countries in the Asia-Pacific region is one of the main reasons for the increasing demand for chocolates. In countries like South Korea, Japan, India and China, the presence of regional brands has boosted the sale of chocolates in recent years. Multinational brands such as Ghirardelli, Mars, Ferrero and Hershey have also grown in popularity in these countries due to changing taste preferences and increasing brand loyalty.

The demand for chocolate is highest on seasonal and festive occasions. The increasing use of chocolate is another factor that is likely to have a positive impact on the growth of the global chocolate market. Fluctuating raw material prices, especially cocoa, the instability of supply and the political instability in the cocoa producing countries are likely to slow the growth of the market in the coming years.

COVID-19’s global impact on the size of the chocolate market is expected to reach $ 188.52 billion in 2020. As the number of coronavirus cases continues to increase worldwide, and is currently 2.8 million with more than 200,000 deaths, nations have imposed severe barriers and mass quarantines to suppress the spread of the infection.

For example, Italy, one of the hardest hit countries, has implemented a nationwide ban, quarantined 60 million people, and stopped all types of economic activity. Similar scenes have been seen in countries such as France, the UK, China and India. The sudden cessation of economic activity has severely impacted the growth of the chocolate market, as people have limited their purchases to essential items only, while stopping the consumption of leisure products such as chocolates and baked goods.

The advent of COVID-19 has brought the world to a standstill. We understand that this health crisis is affecting companies across industries. However, this will also go away. Increasing support from governments and several companies can help fight this highly contagious disease. Some industries are struggling and others are thriving. Overall, the pandemic is expected to affect almost every sector.

We are constantly striving to support and grow your company in the COVID-19 pandemic. Based on our experience and expertise, we offer a cross-industry impact analysis of the outbreak of corona viruses to prepare you for the future.
The COVID 19 outbreak is likely to have a negative impact on the chocolate market as the majority of countries have resorted to closures to control the spread of the disease.

The majority of the world’s population is blocked due to the rapid spread of the disease. To date, approximately 2.4 million confirmed cases and 165,229 deaths have been reported. The pandemic situation has resulted in various operations around the world being completely discontinued. Many key industries are at risk of falling sales. The food and beverage industry shows a slight decline in sales due to the complete blocking of various countries. This has had a negative impact on the chocolate market as people only buy essential products such as instant food, baked goods, ready meals, snacks and other packaged products. Chocolate products, which are a leisure food, are unlikely to generate much sales due to the COVID 19 outbreak.

Based on Fortune Business Insights analysis, the global chocolate market was $ 196.56 billion in 2019 and should reach $ 202.63 billion in 2020 before the onset of the disease. After the outbreak, the global market is expected to be worth $ 188.52 billion in 2020.

Graph 1: Impact of COVİD – 19 on Chocolate Market

The outbreak of COVID-19 in 180 countries has led to the distribution of available stocks and interrupted the new production processes. Existing stocks are distributed around the world, which consumers’ access through retail stores. Different countries have different rules on blocking.

For example, in India only the hotspot areas are incompletely closed, which includes sealing all stores, hypermarkets / supermarkets and even stopping online purchase deliveries with the exception of 2-3 retail stores per street. The partial blockage in other cities and states includes access to all shops with limited hours. These regulations vary from country to country and have a negative impact on the chocolate market as less / no labor is available for production.

For example, in the United States, the Hershey Company temporarily closed all of its facilities effective March 15, 2020. The company has also closed its worldwide offices and will not be resumed until further information from the government on the situation.

Different government agencies have issued different rules and regulations for the purchase of essential goods. For example, in the United States, consumers get 10 minutes per person and are only allowed to buy 10 products. In this way, panic purchases and bulk purchases are avoided. However, this has a negative impact on the chocolate market, as consumers only have access to important products such as milk, bread, eggs and other packaged foods.

Currently, the majority of consumers have access to staples. People are storing important products to survive the pandemic crisis. A small sale of chocolate goods can be observed during this blocking period, but the sale of rubber and sugar chocolate has declined rapidly. This is due to the fact that consumers have access to the consumption of toffees and everyday chocolates. However, sales of premium and seasonal chocolates should decline significantly

The imports and exports of various products were interrupted due to the pandemic situation. Only essential goods and pharmaceutical products can be traded worldwide. This is due to the transmission of diseases through various metals and plastic products that require large labor and the availability of fewer stocks in the country. The raw material exports required for chocolates decreased compared to the previous year, which will affect the overall market. The majority of chocolate manufacturers have a shutdown, which also reduces the need for imported raw materials.

Various chocolate events planned this year have been canceled due to the pandemic. Events like the National Products Expo West, the Western Candy Conference, the Professional Manufacturing Confectioners Association, the Interpack Process and Packaging Conference, the NCA Sweets and Snacks Expo, the RCI National Conference in June, the SHIFT’20 conference of the Institute of Food Technology and the Specialty Food Association 2020 conference. These are the events that were canceled due to the pandemic situation caused by COVID-19. These chocolate events help small confectioners present their products and expand their product portfolio. Only a few events have planned a digital conference where the desired result is not achieved.

Graph 2: Share of chocolate market versus other markets in 2019 (U.S. billion)

The chocolate segment is expected to grow better than the other chocolate segments such as gum and sugar. Due to the presence of children in the quarantine period, the purchase of everyday chocolates and toffees is the main factor behind this growth. In the chocolate segment, the premium sub-segment will show a sharp decline. The closure of various airports around the world has resulted in a decrease in the purchase of duty-free chocolate products.

The report provides a detailed qualitative and quantitative analysis of the effectiveness of COVID-19 in various chocolate market segments.

Table 1: Export Values of Turkey for chocolate and other preparations containing Cocoa (Yearly, x1000 $)

Firstly, chocolates and other preparations containing Cocoa imports exported by Turkey will be inspected. In other words, Turkey’s import partners will be seen for a time period of five years (2015- 2019). Afterward, monthly valuations by different countries will be taken into consideration in order to examine the seasonal consequences which are driven by COVİD-19.

Turkey’s chocolate and other preparations containing Cocoa export data for the last 5 years was obtained from TradeMap.

Graph 3: Export Values of Turkey for chocolate and other preparations containing Cocoa (yearly, x1000 $)

The sorting method used to create the data set trends on the basis of 2019 data on imports from Turkey, rather than total export amounts of countries for last 5 years. The reason for this evaluation is to determine if there is a rising trend for any countries.
Turkey’s export value represents 1.9% of world exports for this product and its ranking in world exports is 13. According to the data set, Iraq, USA, Belgium, China and Saudi Arabia have been the first 5 countries that Turkey has exported on the basis of this product (exported value in 2019 taken into consideration).

Iraq has become Turkey’s leading trade partner in the chocolate industry with 111,891 million U.S. dollars in total. Yet, as the data of 2019 is taken into consideration, almost all of total import occurred in 2019. Turkey has exported 28,946 million dollars’ worth of this product in 2019.

Second country which is improving its collaboration with Turkey is the USA. The USA has imported 27,082 million U.S. dollars’ worth of HS code based product from Turkey in total. Yet, in 2019 USA’s import value reached 12,807 million U.S. dollars. Until 2017, USA imports characterise a stable import but after 2017 these values jumped by 4 times and one can observe a concave line which is a positive sign for Turkey. The USA is one of the very highest importer countries in the world but when the based year (2019) is taken into consideration, it is nominated to be one of the major importer of Turkey based on this product.

Another country which Turkey has strong correlation is Belgium. Belgium has imported 6,837 million dollars in total but the import value of 2019 has escalated to 5,484 million dollars. If the partnership between Belgium and Turkey keeps up to this level, Belgium will be one of the leading trade partners.

Regarding Graph 3, China is 4th country that is importing the based product from Turkey. When looking at the exported value data of China, in 2018 the exported value of Ukraine was 4,372 million dollars and the amount has dropped to 4,147 million dollars in following year. In the first three years, China represents a steady import growth, meaning also the relationship between these countries (Turkey and China) displays an enhancement.

Finally, 5th country in Turkey’s exporting is the Saudi Arabia. Saudi Arabia’s import values was reported to be 3,613 million dollars’ worth of this HS coded value in 2019 and 10,813 million dollars during these five years.

Table 2: Export Values of Turkey for chocolate and other preparations containing Cocoa (monthly, x1000 $)

As already seen in Table 2, Iraq, Libya, and the US are the most relevant partners. Also, Palestine and Belgium are considered as important partners that export from Turkey. If compared with the yearly data sets, Iraq, the USA and Belgium appear again.

Table 3: Export Values of Turkey for chocolate and other preparations containing Cocoa in December 2018 and December 2019 (x1000 $)

Graph 4: Export Values of Turkey for chocolate and other preparations containing Cocoa in December 2018 and December 2019 (x1000 $)

Comparing the December 2018 data with the December 2019 data, it can be observed that the export amount of chocolates and other preperations containing cocoa has increased by $ 2,233 million worldwide. Similarly, comparing December 2018 data and December 2019 data for Iraq, it is the same situation. So also fort his country one can see an increase of 747 thousand dollars for the same time period. As one of the worldwide leading country, the USA represents also a sharp enhancement in its import values. But Belgium ranked the first place with an import share of 39% and with an increase of 654 thousand dollars in December 2019.

Table 4: Export Values of Turkey for chocolate and other preparations containing Cocoa in Januar 2019 and January 2020 (x1000 $)

Graph 5: Export Values of Turkey for chocolate and other preparations containing Cocoa in January 2019 and January 2020 (x1000 $)

Here, it can be seen that industry’s largest player, Iraq, is the most powerful importer in Turkey’s market on the basis of this product. In January 2019 as well as in January 2020, the country holds it’s place and was remains as the first importer.

Worlwide consumption of chocolate and other preparations containing cocoa has increased by 1,970 million dollars, representing a growth of closed 11% (only in January). Hereby, ıt can be said that COVİD-19 has not started to effect export of chocolates and other preparations containing cocoa. Especially for the USA, if both years are compared, it can be clearly seen that chocolate exports jumped by 6 times. Expressing this in other words, the USA published a success in of 448 thousand dollars (77%) in January 2020.

Table 5: Export Values of Turkey for chocolate and other preparations containing Cocoa in February 2019 and February 2020 (x1000 $)

Graph 6: Export Values of Turkey for chocolate and other preparations containing Cocoa in February 2019 and February 2020 (x1000 $)

The datasets provided above provide a clear understanding of the the leading importers regarding chocolate and other preparations containing cocoa. Iraq with respect to its imported amount is the largest importer of Turkey with a value of 3,096 million USD in 2020.

For all three countries, it can be seen that the export amounts have increased significantly in February 2020.

As a result, when we look at all the data, we observe that the chocolate industry is highly affected by the CoronaVirus epidemic. There can be a huge economic constriction in the chocolate sector in the following months because these products cannot be included in the category of basic food. However, demand for these products is expected to increase as long as people stay at home.

Even if the COVİD-19 ends, the negative effect of this situation on the food industry is expected to continue for a long time because it is expected that new health regulations will come into force worldwide.