Los Angeles, CA (PRWEB) August 08, 2013
The Cocoa and Drinking Chocolate Production industry has grown at an average annual rate of 1.8% to $840.4 million in the past five years, including expected growth of 1.7% from 2012 to 2013. Demand and revenue are primarily determined by demand from supermarkets and grocery stores, which is ultimately driven by consumer spending and preferences. Although the industry has posted overall growth in the past five years, the recession hurt the industry, causing revenue to contract 2.1% in 2009, according to IBISWorld industry analyst Lauren Setar. But since 2010 consumers have had more spending money and, thus, have been willing to spend it on nonessential beverages like cocoa and drinking chocolate, boosting industry revenue.
Over the past five years, health consciousness and food trends have impacted the industry. “Due to the link between excessive sugar intake and health issues, consumers have been more cautious about cocoa and drinking chocolate with high amounts of sugar,” Setar says, “which curbed Cocoa and Drinking Chocolate Production industry revenue growth.” In response, producers developed specialty and high-end dark chocolate and organic cocoa and drinking chocolate. Product developments combined with studies focusing on the benefits of cocoa consumption renewed consumer demand and helped sustain revenue growth in recent years.
Because these new cocoa and drinking chocolate products are being sold at higher price points, industry operators have been able to earn higher profit margins. At the same time, the high costs of inputs have curbed profit expansion, leading to an overall decrease over the past five years. The price of sugar grew at an average rate of 2.1% per year over the five years to 2013, including double-digit spikes in 2009 and 2010.
With an anticipated increase in per capita disposable income over the next five years, more consumers will be able to afford and indulge in discretionary products like cocoa and drinking chocolate. Additionally, customers will flock to more health-conscious products offered by the industry, such as low-sugar, dark chocolate, organic and unprocessed cocoa and drinking chocolate, boosting industry revenue. Due to this positive performance, a greater number of companies are likely to enter the industry. Nestle and ConAgra Foods Inc. (through its Swiss Miss brand) currently dominate the industry. Still, competition from foreign producers will remain a threat to the industry. For more information, visit IBISWorld’s Cocoa and Drinking Chocolate Production in the US industry report page.
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IBISWorld industry Report Key Topics
This industry primarily produces hot chocolate, which is also known as hot cocoa or drinking chocolate. Industry firms generally process cocoa beans and other ingredients to make a powder that is then mixed with a warm liquid, such as milk or water. This industry does not produce syrup that is poured into milk to make hot chocolate. Ready-to-drink dairy-based chocolate milk products are also excluded.
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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