Research on cocoa's health benefits have strengthened industry demand.
New York, NY (PRWEB) August 02, 2014
The Cocoa and Drinking Chocolate Production industry has grown at an average annual rate in the past five years, despite an expected dip in 2014. 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, import penetration has partially stunted revenue growth, accounting for the expected dip in 2014 revenue. But overall, since 2010, consumers have had more spending money and, thus, have been willing to spend it on nonessential beverages such as cocoa and drinking chocolate, boosting industry revenue.
Over the past five years, health consciousness and food trends have impacted the industry. According to IBISWorld Industry Analyst Antal Neville, “Due to the link between excessive sugar intake and health issues, consumers were more cautious about cocoa and drinking chocolate with high amounts of sugar, which curbed industry revenue.” 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, input costs have fallen, further contributing to profit gains. The price of sugar has dropped annually per year on average in the five years to 2014.
In the next five years, the industry is expected to grow at an annualized rate. With an increase in per capita disposable income during this time, more consumers will be able to afford and indulge in discretionary products such as 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,” says Neville. Due to this positive performance, a greater number of companies are likely to enter the industry. Still, competition from foreign producers will remain a threat to the industry.
For more information, visit IBISWorld’s Cocoa & 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.
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