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The global real and compound chocolate market size was USD 25.38 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market showed negative growth of 3.60% in 2020. The market is estimated to grow from USD 27.09 billion in 2021 to USD 40.64 billion in 2028 at a CAGR of 5.96% in the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
The real and compound chocolate market growth is mainly attributed to the rising consumer inclination towards indulgent confectionery products. Real chocolate mainly comprises cocoa mass and cocoa butter, while compound chocolate uses vegetable oil instead of cocoa butter and cocoa powder. Real chocolate is prepared from a nutritious seed, roasted to bring out its flavors. However, the efficacy of chocolate (compound type) lies in its technical advantages such as high heat resistance, bloom resistance, and others which make it suitable for consumption in warmer countries and wider application ease.
The demand for innovative chocolate products, ingredients, and premium chocolate confectioneries in emerging and developed economies has witnessed positive growth in recent years. This growth has been attributed to rising consumer expenditure on indulgent confectionery products, especially chocolate confectioneries. This trend has boosted the sales of these chocolates.
Disruptions in Cocoa Supply Chain and Closure of Hospitality Sector amid COVID-19 to Negatively Impact Market
The COVID-19 pandemic has heavily affected the food & beverage processing industry. The socio-economic situation has affected the consumption patterns of particular products negatively. Since most countries went under lockdown in 2020 to stop the spread of the virus, the demand for real and compound chocolate in the hospitality sector saw a significant decline. Asia’s cocoa grindings fell by almost 6% in the second quarter of 2020. During the early stages of the COVID-19 impact, cocoa prices fell, and transportation costs rose. The biggest challenge was to collect cocoa from smallholder farmers and supply it to cocoa exporters and cocoa processors for chocolate production. Transport restrictions and border closures worsened the situation. As a result, chocolate manufacturers faced raw material supply shortages, thereby affecting their sales. For instance, Barry Callebaut AG, a leading manufacturer of premium chocolate, reported a slowdown for the first six months of FY 2020 due to the pandemic.
The rapid establishment and speedy expansion of online retail, e-commerce, and other distribution channels amidst the COVID-19 pandemic have unlocked new opportunities for manufacturers in the retail sector and are anticipated to boost the market in forthcoming years.
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Evolving Plant-based and Certified Chocolate Consumption to Promote Growth
The chocolate confectionery category is traditionally driven by indulgence, and the sector has experienced a surge in demand for chocolates with better-for-you options over the past few years. The rise in flexitarianism is another factor contributing to the fueling demand for plant-based chocolates. As consumer expectations are changing, and they are seeking products beyond dairy allergies and lactose intolerance, while millennials look for tasty yet "ethical" plant chocolates that are harmless to the planet and animals.
Organic chocolate has evolved into the mainstream with the latest trends as chocolatiers and chocolate makers expand their reach. As consumers are growing more interested in organic products, it offers various opportunities for confectionery products manufacturers to meet the demands. More organic chocolate variants manufactured by traditional iconic brands and boutiques and independent producers appear on shelves, creating a positive product image among consumers. Retailers are highly aware of the potential of this label, which has nudged them to develop innovative products. For instance, in March 2021, Puratos USA announced the newest creation in their real Belgian Chocolate portfolio: Belcolade Selection Amber Cacao-Trace. It is an all-natural, clean-labeled, non-GMO, and contains no artificial flavors.
Increased Demand for Premium and Innovative Confectioneries to Boost Compound and Real Chocolates’ Sales
Confectionery relies on premiumization in a market that has matured but continues to grow modestly. In the U.S., there is particular interest in artisan and gourmet style options, often focusing on the origin of cocoa, its content in the finished product, and the use of additional ingredients and flavors of great importance. While consumers focus on getting health benefits, their desire to indulge themselves remains strong. Taste and texture remain the main factor for the consumers in making chocolate confectionery purchasing decisions. Brands continue to innovate with new variations of sweet and savory flavors. Companies like Barry Callebaut also incorporate contrasting creamy and crunchy textures into chocolate products as they strive to create more memorable and engaging sensory experiences for consumers.
Technical Advantage and Cost-Effectiveness of Compound Chocolate to Drive Global Market
Compound type chocolate is a low-cost alternative to original chocolate as it uses inexpensive hard vegetable fats such as coconut oil and palm kernel oil instead of comparatively expensive cocoa butter. Cocoa butter must be tempered to retain coating and gloss. However, since there is no need to temper the compound type chocolate, this makes them easier to work with and cost-effective. In developing countries such as India, China, and others, where the foodservice industry is growing due to the rising population, the compound chocolate demand is witnessing a significant upsurge.
Fluctuations in Raw Material Price and Political Factors to Restraint Market Growth
This market relies on the supply, quality, and cost of raw materials worldwide. The fluctuations in the price and supply of raw materials such as cocoa due to crop disease, climate, and labor unavailability can negatively impact the market. Failure to recover higher or shortfalls in availability or quality of raw materials such as cocoa butter, cocoa powder, sugar, and others could adversely impact the market. The significant change in regulatory controls, legal systems, and customs in the regions also affects product supply and hamper market growth.
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Real Chocolate to Emerge as Dominant Category, Owing to its High-Quality and Taste
Based on product category, the market is segmented into real chocolate and compound chocolate, with real type of chocolate remaining the leading type due to the growth prospects of specialty chocolate products and high-quality products. The presence of cocoa butter gives real chocolate a creamy, mellow flavor and delicate taste. Cocoa extract is becoming the ingredient of choice for various applications, including ice cream, candy, non-alcoholic beverages, delicious baked goods, and nutritious beverages.
Palm oil, shea butter, salted nut oil, and others are the primary substitute for cocoa butter used in the production of compound type chocolate. The reasonable prices of these substitutes have prompted compound chocolate manufacturers to expand their production capacity. The use of cocoa butter alternatives to expand chocolate production is expected to support the growth of the compound chocolate market.
Milk Chocolate to Hold the Major Share Due to its Wide Consumption and Utilization in Confectionery
On the basis of analysis by type, milk chocolate has wider consumption and incorporation in various chocolate-based confectionery items due to its versatile taste and texture. Milk chocolate is made with milk solids and usually contains only cocoa butter, which creamy texture and mouthfeel. Real and compound milk chocolate is increasingly used in the formulation of various beverages and confectionery products, such as cakes, shakes, croissants, and hot chocolate, which has contributed to the growth of the milk chocolate market.
Dark chocolate provides consumers with premium appeal along with health, sensory, and texture benefits. Dark chocolates are rich in antioxidants, can balance blood pressure levels, and provide many other benefits, thereby enticing consumers to purchase them.
Adaptability in Various Application Areas Makes the Coatings Leading Segment
Coatings are the most widely used form of real and compound chocolate and are likely to lead in forecasted years. Using different fats means that compound coatings can have many different textures and be used in various applications, like coatings in ice cream sticks and baked goods. The compound coating does not require tempering, so it is more suitable for different temperatures and applications. In addition, since there are not so many guidelines on ingredients, compound coatings can be enhanced or flavored with anything and can offer unlimited options.
Chocolate chips are also experiencing significant growth, especially in the artisanal baking industry, used for cookies development. In addition, most chocolate chip recipes are made with dark chocolate, which provides added value in terms of solid antioxidant potential.
The Confectionery Segment to Dominates the Market Owing to the High Inclusion of Real and Compound Chocolate in their Production
The demand for chocolate can be recognized by producing a richer chocolate flavor. Real chocolate is glossier and readily melts in the mouth, and has a fine texture because of cocoa butter and chocolate liquor content. Compound chocolates are stable in warmer conditions and are more resilient. They are ideally suited for confectionery products' creations and production processes as they are set up well without the extra effort of tempering.
Both these chocolates are also widely used in the bakery industry. It enables bakers to get more creative in product innovation and provide sensory experience in baked goods; thereby, offering promising growth opportunities.
Europe Real and Compound Chocolate Market Size, 2020 (USD Billion)
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Europe to Exhibit Highest Growth Supported by Large Cocoa Processing Base
Europe's real and compound chocolate market stood at USD 12.39 billion in 2020. Europe is expected to hold the largest share, owing to the large cocoa processing base and strong manufacturing industry present in the region. According to Production Communautaire (PRODCOM), the European Union produced around 6.5 million tonnes of cocoa-containing products in 2018, worth $20.57 billion. These products include chocolate bars, pralines, and confectionery containing cocoa. Although the demand is high, European chocolate manufacturers often process cocoa beans themselves or buy semi-finished products from European processors, making the competition fierce.
According to the Centre for the Promotion of Imports from developing countries (CBI), the largest real chocolate importer in Europe is France, followed by Germany, with 168,000 tons and 142,000 tons respectively, in 2019. About 22% of France's imports come directly from cocoa-producing countries. Multinational companies such as Barry Callebaut AG, Cargill Inc., Cémoi Group, and Olam International are based in Europe and supply a full range of semi-finished cocoa products for the European food beverages and confectionery industry.
North America consists of a huge customer base and the second-largest market, owing to the high per capita consumption of chocolate-based products. Coupled with this, the growing awareness regarding the benefits of healthy confectioneries among consumers has augmented the market growth. The shift to at-home consumption is reshaping and accelerating change in consumer behavior. Chocolate remains a leading flavor in several treats, so manufacturers and brands are bringing cocoa into new formats and varieties like compounds, cocoa nibs to satisfy consumers’ demand. The need for "better-for-me" alternative products is anticipated to accelerate, as health & well-being has become a top priority in the region. Furthermore, the demand for premium and seasonal confectioneries on various festivals and celebratory occasions also drives the region's market growth.
Asia Pacific holds the third-largest market share due to the growing millennial population in the region and their rising inclination towards high-quality chocolate confectioneries in emerging economies like India and China. For instance, in 2019, Japan-based chocolatier Cacao launched sake-infused chocolate series to demonstrate how the drink can also be paired with sweet flavors. Furthermore, cocoa processing at origin for fine flavor cocoa is also a key factor for regions' growth. According to the Centre for the Promotion of Imports from developing countries, in 2019, the Asia Pacific region accounted for 23% of the global grindings, and Indonesia is the most significant contributor; the country is also the world's third-largest cocoa grinder. The three multinational giants Cargill Inc., Olam International, and Barry Callebaut AG are behind Indonesia's strong position in cocoa grinding.
These companies dominate the cocoa processing at their place of origin, making the semi-finished cocoa products market more competitive. Therefore, it is becoming increasingly important for small and medium-sized enterprises (SMEs) to provide value-added cocoa products made from specialty cocoa in the market hence contributing to the growth of compound and real chocolate in the region.
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South America, the Middle East and Africa hold the least market share; however, the evolving taste preferences and the rising demand of consumers for chocolate confectioneries have boosted the market in the region. Consumers are increasingly interested in the artisanal elements that make up the taste and the product's origin. As a result, consumers have started to look for exclusive chocolate and sugar confectionery products that are less mainstream. Compared to traditional sweets, UAE consumers prefer to give away high-quality boxed chocolates, which come in different shapes and sizes and have exquisite packaging. This factor has further increased the influx of global premium chocolate brands like Mars Inc. into the country and positively aided in the region's market growth.
Focus on Geographical Expansion and New Product Launches to Effectively Penetrate Market
The global real and compound chocolate industry is highly developed, with several multinational companies occupying the majority. Barry Callebaut AG, Puratos Group, and Mondelez International dominate the market. The primary strategy adopted by the major market players is to focus on new product innovations that focus on health, taste, and packaging. For instance, in 2021, Mondelez International acquired Hu Master Holdings, a leader in premium chocolate in the U.S., to expand vegan and paleo-friendly chocolate bars, which follow a strict set of Ultrasimple™ ingredient guardrails and sourcing practices.
An Infographic Representation of Real and Compound Chocolate Market
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The real and compound chocolate market research report offers qualitative and quantitative insights into the chocolate and chocolate confectionery industry. It focuses on significant aspects such as competitive landscape, product type, and product application areas. Besides this, it offers insights into the various market trends and highlights vital industry developments. In addition to these mentioned factors, it encompasses several other factors that have contributed to the market's growth in recent years.
Value (USD Billion)
By Product Category
Fortune Business Insights says that the value of the market was at USD 25.38 billion in 2020 and is projected to reach USD 40.64 billion by 2028.
The market is expected to grow at a CAGR of 5.96% during the forecast period (2021-2028).
The real chocolate segment is expected to be the leading segment based on category in the global market during the forecast period.
Increasing consumer inclination towards premium and innovative confectioneries is a key factor that drives the markets growth.
Barry Callebaut AG, Puratos Group, Mondelez International, and Nestle S.A. are key players in the market.
Europe is expected to hold the highest market share.
The milk chocolate segment is expected to be the leading product type for the products sales.
Evolving plant-based and certified chocolate consumption is a key market trend.
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