While chocolate does not comprise all of the confectionery industry, chocolate is the largest subcategory in the U.S. Growing disposable income in emerging markets such as China and India has fueled growth globally, in places where confections were once seen as an unaffordable luxury. The increase in consumer purchases in the Asia-Pacific market has put extra pressure on cocoa demand in particular. The sugar confectionery segment of the business is projected to grow at the highest Cagr from 2016 to 2021. Consumers are exhibiting an increased preference for soft and chewy products.
In this respect, global demand for chocolate rose 0.6% to a record 7.1 million tons in 2015, led by a 5.9% jump in Asia, according to Euromonitor International. At the same time, according to the International Cocoa Organization, cocoa production fell 3.9% to 4.2 million tons. Cocoa prices have risen steadily as a result.
CLIMATE CHANGE – The situation is compounded by disease and aging cocoa trees in the main growing regions. Ghana and the Ivory Coast grow 60% of all cocoa and analysts expect production to continue to drop. Climate change could affect the cocoa trees in West Africa, further exacerbating the situation. The International Center for Tropical Agriculture has said an expected annual temperature rise of more than 2 degrees Celsius by 2050 will make it too hot to grow cocoa in West Africa’s cocoa producing areas. Earlier this year, producers rejected roughly half of all cocoa beans from the Ivory Coast, due to quality issues created by adverse weather conditions. The beans were too small and contained high acid levels. Smaller beans contain less cocoa butter, which gives chocolate its texture. More fatty acids tend to erode cocoa butter’s quality. This decline in cocoa production has led to chocolate producers and companies investing a billion dollars to boost cocoa sustainability. Also because cocoa and chocolate are the most widely used types of confectionery ingredients. Changing consumer lifestyles and emphasis on chocolate’s health benefits of chocolate are partly responsible for its popularity.