East is driving the global demand for chocolate with China and India at the forefront, discovers Victoria Burrows.
People have been captivated by the rich taste of chocolate for at least 4,000 years. The earliest evidence of a chocolate product dates to 1900BCE, when the Mokaya people of Mexico and Guatemala drank chocolate as a beverage. Four millennia later and we’re still enamoured. But while we associate chocolate more with western eating habits, it’s now the East that’s driving global demand for the sweet confectionery.
Asian demand for chocolate will climb three per cent to four per cent annually in coming years, predict industry insiders, outstripping the demand for the confectionery in the west.
China and India are at the forefront, with India’s annual growth in chocolate and cocoa consumption over the next five years expected to reach 15 per cent, according to Bloomberg. Demand in China has been flat in the last few years, but it may rebound to 3 per cent in the future.
“Across Asia more generally, the data that we receive from leading market intelligence firms show that developed markets in Asia, though small in population, represent a high chocolate per capita consumption, particularly Australia and New Zealand; Japan, Singapore, and South Korea follow suit,” says Rohit Grover, vice president and general manager Greater China at the Hershey Company.
“At Hershey, we’re seeing growing demand for chocolate in emerging economies in Asia, especially in China and India. China is now among the top three overseas markets for Hershey.”
The demand in Asia is particularly strong for luxury chocolate. “The trend started more than 10 years ago in Asia, with all the well-known brands starting to set up boutiques all over Asia. That was the moment when the idea of ‘artisanal chocolate’ came into the picture,” says Geraldine Chan, Brand Manager Asia-Pacific for Valrhona.
Since then, Asia’s love for luxury artisanal chocolate has continued to grow. Chocolate companies thank a younger generation of consumers with buying power for Asia’s increasing appetite for luxury and premium chocolate. Chocolate is no longer just an indulgence reserved for celebrations and special occasions, it has become a snack.
“China’s growing economy is not only pushing up consumption power, but is also building up more dynamic and fragmented consumption occasions for chocolate, which empowers business development across multiple channels including hotels, on-premise and e-commerce,” says Grover.
“To give you an idea of the potential of the China market in particular, in 2016 chocolate consumption per capita was 0.166kg, much lower than the 8.61kg per capita in the United Kingdom, the world’s number one chocolate consumer market, according to data from Mintel. With the rise of the middle class and evolving consumer tastes, the China market is undergoing segmentation, with an increasing appetite for premium chocolate brands. At the same time, online retail is also driving demand for chocolate overall. In 2016, China’s chocolate e-commerce sales rose by 27.3 per cent, with more than 2.5 million urban families joining the online purchasing force, an increase of 400,000 compared with the year prior, according to data from Kantar Worldpanel.”
Against this backdrop, the Hershey Company has been focused on their online retailing and have designed chocolate products specifically designed for Chinese consumers. These products combine new flavours with innovative packaging and creative marketing and aim to appeal to millennial and Gen-Z consumers.
On Chinese Valentine’s Day this year, for example, Hershey created a special heart-shaped chocolate box that included a device to allow consumers to record a message to their loved ones. The marketing campaign included engaging students at Tsinghua University, one of the top universities in China.
They also launched a VR technology pack, new Hello Kitty packaging, and e-wedding cards. These marketing innovations “contributed to tremendous sales success” on Hershey’s flagship stores on Tmall and JD.com, the two largest online sales platforms in China, according to Mr Grover.
A major global trend that no chocolate manufacturer could ignore is a growing awareness of health issues associated with a diet high in sugar and fat.
“The future of chocolate in Asia is definitely promising and the strong demand will last for years to come,” says Chan. “Nevertheless, there will be a strong demand for chocolate that is sugar free, vegan, and so on because the trend to eat healthily is growing. People want to eat chocolate without feeling guilty about it.”
Health concerns are creating an opportunity for dark chocolate products, according Grover. “With dark chocolate’s proven health benefits for the heart and muscles, we’re also seeing dark chocolate as a driving force for growth in the China market. This health trend is also visible across Asia. Consumers in Asia are more concerned about low salt, low sugar, low fat, and low calories these days.”
Hershey last year announced that by 2022, they would be making 50 per cent of their total portfolio of individually wrapped standard- and king-size confectionery products with 200 calories or less.