Chocolate report

The state of the SA chocolate industry

There has been a marked decline in SA’s chocolate consumption, according to a new report by Insight Survey, a doubly whammy as a result of the country’s consumer spending woes and the global health revolution.

“It is not only the rise of such healthy dietary dogma that has seen chocolate sales wane, but also the increasing pressure that the current economic climate is putting on the ability of consumers to exercise confectionary indulgence,” notes the company of its latest SA Chocolate Landscape Report 2016.

The report, it says, “addresses the impact that this is having on the industry, by unpacking the direct correlation between these restraints and volume sales; to providing a comprehensive understanding of the current industry environment and market dynamics”.

Points from the press release:
This decline in consumption which South Africa is experiencing is not in line with global trends. 7.2-million metric tons of chocolate was consumed globally in 2015, with average year-over-year demand growth since 2008 being steady at just over 3%.

One of the primary drivers of this 3% increase is the growing middle class in China, India, and Brazil. Thus, this would suggest that the primary reason for the marked decline in SA chocolate consumption is, in fact, the economic climate (with the ‘health trend’ playing a more peripheral role).

South Africa has one of the most well-established chocolate confectionary markets in Africa, valued at R5.03-billion and with a per capita consumption of about 1.3kg in 2015.

However, due to a slackening in the global supply of cocoa, the cost of the raw material has increased, adding pressure to price increases. This, in addition to the influence of the health trend, has certainly become an unhealthy turn of events for the SA chocolate industry.

As illustrated in the graph below, the proportion of South African chocolate bar consumers declined between 2010 and 2015, from 55.8% to 49.2%; similarly, the percentage of South Africa’s chocolate slab consumers declined from 39.6% to 35.7%; while purchasers of chocolate assortment boxes in the past four weeks have decreased from 29.0% to 22.3%.Chocolate report graph
It is evident that this trend of decline provides an indication of the interplay between the ongoing recession period and consumer purchase dynamics. However, it also gives an indication of the impact that the dubious health trend is having on consumer behaviour.

Therefore, the average chocolate may not only be reverting back to being a ‘luxury FMCG’, but also a scrutinised symbol of dietary sacrilege.

The report also outlines how niche players are eroding big player’s market shares, as discerning consumers take a liking to top quality, artisanal products.

The South African Chocolate Landscape Report (79 pages) provides a dynamic synthesis of industry research, examining the local and chocolate industry from a uniquely holistic perspective, with detailed insights into the entire value chain – from manufacturing to retail and consumption.

Download a full brochure of the report here