Dark temptation: Demand for chocolate is on the rise


Winter is definitely here. It is cold, it is snowy, and it is a good time of year to go to the movies and spend a few hours escaping.

A treat that goes a long way to giving you a good warm feeling to go with the movie is chocolate. I love chocolate—I will just state the fact upfront. I love it in all its forms, but I prefer the darker versions. And I am not alone, as consumption of dark chocolate is on a global rise. But then so are all types of chocolate. As an escape from our normal discourse on legal topics and how to increase revenue, this month I bring you a review of chocolate. Current trends, pricing, and understanding the “sustainability” of chocolate are all on the table. (Hopefully some chocolate too, while you read.)

The most important trend to recognize is that global demand for chocolate is increasing. There are several reasons for this, but the two primary reasons are health trends and developing economies. On the health side, dark chocolate has been proven in numerous studies to actually be good for you. It contains many of the same antioxidants as red wine. Dark chocolate now accounts for 20% of the U.S. market and 30% of the Swiss chocolate market, according to Euromonitor. This growth in dark chocolate has also happened at the same time that gourmet chocolate has become a staple in the U.S. market. The combination has given the retail chocolate market a wider berth and increased overall demand for the product.

The second big reason for the global rise in demand is the growth in developing economies, specifically Brazil, India and China. The Asia-Pacific region alone holds more than 50% of the world’s population but currently only accounts for 10% of total chocolate consumption. China’s chocolate sales have more than doubled over the past decade and they are projected to continue to increase. China’s size alone makes it a major new developing market for chocolate, and many other consumer products, as you are probably well aware. The interesting thing is that chocolate is not just new to the market; it’s new to their palette. Candy in general is not served in Chinese theatres, and parents do not indulge their children in sugar in the way Western countries are used to. This evolving trend is an interesting aspect of China’s changing reality.

Global chocolate sales are expected to increase by over 6% in 2014 and reach a record $117 billion, according to Euromonitor. The effect of this is a higher overall price for chocolate. Cocoa prices climbed 24% in 2013 alone. Some of this is due to seasonal problems that occurred during 2013, especially in the Ivory Coast, the world’s largest producer of cocoa. Ghana, the world’s second-largest cocoa producer, is also expected to miss production targets. These would be considered short-term issues driving up price. But the overall rise in demand is producing a long, sustained climb in price. According to Bloomberg, Global cocoa production will trail demand through at least 2018 and mark the longest cocoa supply shortfall in over 50 years.

Speaking of “sustained,” the other trend that is affecting price is the global push to support “cocoa sustainability.” It is a subject that is highly interlaced with demand and pricing. Cocoa farming only occurs within 15 degrees north or south of the equator. So the majority of cocoa farming happens in South America and Africa. Traditionally, cocoa plants are grown in the shade and can take three years to produce a crop.

But as demand has risen, farmers have moved their cocoa plants from their traditional position in shaded areas to areas of direct sunlight, which yields a much faster crop, although the resulting cocoa is of lesser quality. This has led to higher weed problems that get treated with herbicides. In addition, this new farming technique has also led to greater deforestation. It is a circular problem because the herbicides and cleared land quickly lead to lower yields as the natural ability of the land to keep its nutrients is removed.

Organizations such as the World Cocoa Foundation, the Rainforest Alliance and the Roundtable for a Sustainable Cocoa Economy have begun aggressive campaigns to revert farmers back to traditional farming techniques and help small family farms survive and thrive as cocoa producers. It’s back to the basics of sustainable farming: how to not over-farm, strip bare and slowly kill the land that is actually feeding you. I grew up on a farm, and I understand the concept very well. It’s akin to realizing that overstressing anything—your car, your body, or your land—eventually catches up with you. This is what sustainable cocoa is all about: putting support strategies in place to help with the production of cocoa so that high-quality, naturally grown cocoa beans can support the demand for chocolate. It’s not just protecting the environment; it’s actually protecting the source of the product at its core.

This is a very interesting subject that directly affects our business, since we sell lots of yummy chocolate. If you want to learn more, the World Cocoa Foundation is a great place to start. Keeping chocolate supply meeting chocolate demand at prices that are affordable is important, especially if you need it daily, like me.

Send your comments to Anita Watts at anitaw@reactornet.com