Chocolate's appeal to cash-strapped consumers helped stave off recessionary declines
Los Angeles, CA (PRWEB) March 14, 2013
The Chocolate Stores industry is a mature one, providing widely accepted chocolate products to downstream consumers. According to IBISWorld industry analyst Radia Amari, “Revenue growth is determined by demand from households, which is ultimately driven by consumer spending and preferences.” During the five years to 2013, industry revenue has grown at an estimated average annual rate of 3.4% to $895.3 million, including anticipated growth of 3.8% in 2013. Sustained, albeit nominal, increases in disposable income have underpinned growth. The recession that started in 2008 and continued through 2009 only marginally hindered the industry, causing revenue to contract a slight 0.5% in 2008.
Consumers regard chocolate products as small, yet affordable luxuries. Therefore, they continue to purchase chocolate products even during economic downturns. This pattern of behavior is known as the Lipstick Effect, which refers to consumers' expenditure on less costly luxury items, like lipstick (or chocolate), during a recession to satisfy their need to shop and feel luxurious. The Chocolate Stores industry is influenced by other demand factors, including sugar and sweetener consumption, the price of cocoa and the level of external competition from alternate retailers, such as superstores.
“Profit margins are moderate for the average operator, though they vary depending on the products sold. Premium chocolates, for example, have higher margins than their nonpremium counterparts,” says Amari. Industry margins have increased during the past five years due to a combination of rising demand and higher selling prices. Responding to increases in the price of cocoa, a key input in chocolate production, manufacturers have passed on these costs to retailers in the form of higher prices. In turn, retailers have passed on these increases to their customers, helping to bolster revenue and profit growth.
Revenue is projected to continue expanding during the next five years. Per capita disposable income is expected to continue rising, resulting in stronger demand from consumers. As a result, a greater number of companies are likely to enter the industry, making up for the exits that occurred during the recession. Nonetheless, the industry’s top players, including Godiva and See’s, will continue to control the majority of the industry’s market. In addition, competition from alternative retailers will remain a key feature of the industry. For more information, visit IBISWorld’s Chocolate Stores in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes specialty shops and boutiques that retail chocolate products to consumers. Supermarkets, department stores, drug stores, mass merchandisers and online retailers are excluded from this industry. Establishments such as coffee shops, bakeries and franchise retail establishments that sell chocolate products also are excluded from this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.