The growing popularity of chocolate products in Asia is causing the price of cocoa beans to skyrocket worldwide.
Though Asia had the world’s lowest demand for chocolate per capita last year, the candy’s popularity is growing among consumers. In 2013, the consumption of chocolate confectionery in the Asia-Pacific region averaged 200 grams (7 ounces) per person. In the past year, demand grew by 4.5 percent, the fastest rate of expansion globally and nearly six times the worldwide increase of 0.8 percent.
The higher demand has caused the price of cocoa beans to rise to its highest level since 2011. Prices will also continue to rise at least 10 percent through the end of the year, according to Gerard Manley, a managing director at Singapore-based cocoa-bean supplier Olam International Ltd. (OLAM).
The market is also expected to expand at nearly twice the rate worldwide during the next four years, creating shortages of cocoa beans, the key ingredient for chocolate. As consumption increases in countries like China and India, the shortages are only expected to increase and even continue into the next decade; London-based research firm Hardman & Co. projects the global bean deficit to reach 1 million metric tons by 2020.
Euromonitor predicts that the Asia-Pacific region’s chocolate confectionery market will expand to $16.3 billion in 2018, a 23 percent increase from 2013. Manley says Asia will be the “powerhouse” of the world’s consumption of cocoa and chocolate products in years to come. Others, like the London-based Caroline Bain of Capital Economics, aren’t so certain.
“While we see cocoa consumption growing steadily in Asia, we’re more cautious than a lot of forecasters who assume that European-style consumption levels will be reached relatively soon,” Bain said in an e-mail interview with Bloomberg Businessweek.
China’s demand for chocolate is currently ranked 11th in the world in terms of market value, but could take over a decade to exceed the U.S.’s, says Mohamed Elsarky, chief executive officer of Belgian luxury chocolate maker Godiva. Nevertheless, Elsarky is optimistic about his firm’s outlook in China; Godiva has opened over 50 shops in the country since 2009 and plans to double that number within the next five years.
Though chocolate’s future in China looks promising, global shortages of cocoa beans remain a chief concern for companies. Zurich-based Barry Callebaut AG, the largest producer of bulk chocolate in the world, increased its chocolate output to Asia to 90,000 tons this year, double what it was five years ago, but keeping a steady and affordable supply of cocoa beans will be a challenge in years to come, according to Juergen Steinemann, the company’s chief executive officer.
“In the longer term, the scarcity of quality cocoa is a serious concern for our entire industry.”
image credit: tim sackton