‘Tis the season for sweet treats and a new report says the outlook for chocolate is getting even sweeter. Sales for chocolate candies are expected to exceed $26 billion for the first time by 2018, up from roughly $22 billion in sales by the end of 2015, according to Packaged Facts, a market research firm.
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Even though Americans are looking to eat healthier and cleaner, nearly 81% of them still indulge in chocolate.
“Despite some reports that Americans are starting to eat healthier overall, we still have a long way to go. The consumption of sugary drinks has gone down more than consumption of dessert. Chocolate continues to be a small indulgence that Americans aren't willing to give up,” says George Puro of Puro Research Group, who authored the report.
Puro says chocolate sales have grown because chocolate manufacturers have raised prices, partially to offset the increase in commodity prices.
“Unit sales of chocolate have not been as strong and also consumers have embraced premium chocolate, which often contains dark chocolate and other ingredients perceived as healthy,” he adds.
There has been a growing perception that chocolate and cocoa are superfoods with multi-dimensional nutritional benefits. Additionally, many consumers perceive chocolate candy as an “accessible luxury” encouraging a trade-up to premium products, the report says.
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“This health halo surrounding dark chocolate probably spills over to milk chocolate to some degree, and some consumers certainly think chocolate is healthier than other types of candy,” adds Puro.
All sweetness aside, the industry has faced some challenges over the supply of cocoa and concerns about the farming process.
“The biggest challenge that the industry has faced in recent years and will continue to face is the price of cocoa,” Puro says.
Nearly 70% of the cocoa that is produced and consumed around the world comes from Ghana and the Ivory Coast. And, over the last decade, cocoa prices have been volatile and influenced by many factors including extreme weather, pests, disease and political instability in producing countries.
In 2000, an oversupply of beans caused prices to slump to a 27-year low around $714 a ton and then in 2011, prices skyrocketed to a 32-year high of $3,775 a ton.
Earlier this month, Hershey’s CEO John Bilbrey told FOXBusiness.com that his company is already making steps to improve farming in West Africa. Their program, called Nourishing Minds, will help train 7,500 farmers to source peanuts to provide basic nutrition to children.
“I think we have forgotten that in the U.S., we probably have the most secure, dependable food system in the world. And, we have so much choice,” he said.
The Hershey Company and Mars Inc. are the two dominant players in the market, with more than 70% combined share. But while the market is dominated by a handful of companies, there’s still opportunity for other players says Puro.
“There’s still opportunity for innovative chocolate makers to make their marks and find an audience,” he says.