Per capita, the Swiss consume about 12 kilograms (26 pounds)—about the weight of a two-year-old—each year. So it may come as a bit of a shock to Swiss chocolate companies that the annual per capita chocolate consumption in China is only about 0.03 kilos.
Unfortunately, as one chocolate maker puts it: “They [China] are the only guys who have money at the moment.”
This comment– made by Ralph Siegl, managing director of Confiseur Laderach AG, the largest handcrafted chocolate maker in Switzerland—sums up the conundrum faced by chocolate makers as the rest of the luxury industry rushes to the Far East coast.
About half of the Swiss chocolate industry is labeled “luxury,” while the other half is just really good chocolate. Leading consumers of this Swiss treat are Switzerland (per capita 12 kilos/year), Germany (per capita 11.4 kilos/year), and Britain (per capita 10 kilos/year).
China, where native tastebuds prefer salty snacks over sweet, doesn’t even register on Swiss sales pie charts. And while Chinese chocolate sales have been showing incredible growth rates—an estimated 8 to 10 percent annual growth—the base sales figures are so low that the gains don’t translate to as impressive dollar amounts. In an $83 billion worldwide chocolate market, China accounts for $976 million—about 1.2 percent of the world market. And that number is a big improvement over 2008’s meager $633 million of Chinese sales.
But a saturated European market, along with the current race for China, is forcing chocolate makers to turn their thoughts eastwards. They are not necessarily liking what they see.
“We’re still waiting for China and I think we will still be waiting for a while,” said Marcia Mogelonsky, global food analyst for the Mintel International research firm. “It just hasn’t grown by much. The upscale, urban middle class might buy it but it’s never going to be part of their diet.”
Nevertheless, analysts insist that ignoring population-dense China is a mistake.
“As a leading chocolate maker, if you don’t have a foothold in China, you are going to lose out,” said Howard Abe of the A.T. Kearney consultancy’s Shanghai Office. “It just doesn’t make sense given the market opportunities.”
Unfortunately, Swiss chocolate makers are not in a financial position to be investing in questionable markets right now. Unfavorable exchange rates and increased production costs have given companies enough trouble at home. Civil war in the Ivory Coast, producer of 40 percent of the world’s supply of cocoa, pushed bean prices to a 30-year high in February this year.
“China [has] lots of potential for the future [but] for us currently, not the highest priority,” said Christoph Inauen, head of sustainability and communications at Chocolats Halba, a division of Switzerland’s second-largest retail group, Coop.
image credit: laderach