Market Situation of the Chocolate Confectionery Market - Research Paper Example

Market Situation of the Chocolate Confectionery Market Table of Contents Market Situation of the Chocolate Confectionery Market Table of Contents 2Executive Summary 4 1.0 Introduction 4 1.1 Background of the chocolate confectionery market in United Kingdom 4 1.2 Reasons for choosing the topic 4 1.3 Problem Statement 4 1.4 Research Questions 5 1.5 Chapter outline 5 2.0 Literature Review 6 3.0 Research Methodology 7 3.1 Types of research 7 3.2 Choice of Methodology 7 3.3 Sources of Data 7 4.0 Finding and Discussion 7 Conclusion and Recommendation 9 References 10 Executive Summary The research study aims at studying the current market situation and the future of chocolate confectionery market in United Kingdom. The study also aims at identifying the leading chocolate companies of UK. It will also focus on the different types of chocolate forms in the UK market. The study lays emphasis on the problems faced by the chocolate market industry. Finally, the research study will aim at providing recommendation which can improve the current chocolate market of UK. 1.0 Introduction 1.1 Background of the chocolate confectionery market in United Kingdom The chocolate industry is dominated largely by Western Europe and North America and these countries clearly represent the emerging chocolate market of the future (KPMG, 2012). Western Europe constitutes of 32 percent of the global chocolate market (KPMG, 2012). Chocolate is regarded as more than an indulgence in the United Kingdom (UK); it is regarded as a multi functional consumer product which is used for regular and occasional consumption. In the year 2011, the sales of chocolate bar in UK increased by 37 percent from 2010 (KPMG, 2012). 1.2 Reasons for choosing the topic The chocolate confectionery market is one of the established markets of UK; chocolate being considered as an innovative and functional food product. The purpose of choosing this topic was to highlight the current market situation of chocolate industry in UK and its economic significance in the UK economy. 1.3 Problem Statement The traditional chocolate market of UK is saturated and the chocolate manufacturers are forced to develop innovative marketing strategies to attract potential customers. Firstly, The UK government is pressurizing the chocolate manufacturers to increase the nutritional content and lower the calorie content of the chocolate bars for health reasons. 1.4 Research Questions Based on the research problem and objectives of the study the following questions were formulated. Each of these research questions will be addressed accordingly. 1. Is the UK chocolate confectionery market an emerging market? 2. Has chocolate consumption increased in UK? 1.5 Chapter outline The first chapter deals lays emphasis on three important areas like reasons behind the selection of the topic, problem related to the topic and the background of the chosen industry in UK. The second chapter literature review will lay emphasis on the current market scenario of the chocolate confectionery market in UK. The third chapter will focus on the research methodology concepts, data instruments and sources used while conducting the research proposal. The fourth chapter will lay emphasis on the results derived while conducting the research study. Finally the research study will conclude with recommendations for the problems faced by the UK chocolate industry. 2.0 Literature Review In UK consumers are willing to spend more on chocolates and cosmetics and spend less on luxury products. Consumers of UK are very much conscious about the quality of the chocolate product and it forms an important constituent of their shopping budget. Although as per a latest report conducted by Rabobank, a chocolate bar of 45 grams accounted for less than 1 percent of the shopping budget of UK consumers (KPMG, 2012). In UK, chocolates also form an important part in the religious events like Christmas, Easter. Easter is regarded as one of the most important chocolate festivals in UK and USA; the sales of chocolate increased by 45 percent in the year 2011 from 2010 (KPMG, 2012). In UK, the sales of traditional chocolate manufacturer increases during the festive season otherwise the UK chocolate market is dominated by 1) Kraft/ Cadbury by 35 percent 2) Mars by 27 percent 3) Nestle by 21 percent and the remaining 17 percent comprises of local chocolatiers. Figure 1: Global and UK Chocolate Market Share Source: Trading Visions, 2011 3.0 Research Methodology 3.1 Types of research There are three types of research which are Qualitative, Quantitative and Hybrid research methodology. Qualitative research methodology is very descriptive in nature and solves problems which are complex in nature. It evaluates factors like culture, beliefs, opinions etc. Quantitative methodology covers the numerical aspects of the research study. The researcher collects primary and secondary data in terms of statistic and numbers and the derived solutions are usually specific. Hybrid methodology involves the usage of qualitative and quantitative methods. 3.2 Choice of Methodology The research methodology used for this research study is qualitative methodology. Qualitative methodology would help the researcher to evaluate factors like the UK chocolate culture, opinions of chocolate manufacturers and consumers, efficiency of the market etc. Qualitative methodology would help in understanding and evaluating the intangible aspects of the research study. 3.3 Sources of Data For this research study, data will be collected through primary and secondary sources. Primary data will be collected through mere observation of the chocolate market in UK. Data would be also obtained through secondary sources like journals, newspaper and articles. These sources of secondary data would help us in analyzing the chocolate market trend in UK and consumer opinion on the various chocolate manufacturing companies. 4.0 Finding and Discussion The demand of chocolate products has been growing in UK since 2007. The chocolate confectionery market stood at a market valuation of £5.41 billion in the year 2011 and has been witnessing a growth of 7.5 percent since 2010 (Key Note, 2013a). The chocolate confectionery market of UK accounts for 74 percent of the market value and the remaining 26 percent is made up by the sugar confectionery market ( Key Note, 2013b) The market witnessed revenues of $7.66 million in the year 2011reflecting a compounding annual growth rate of 1.7 percent (Wood, 2013). The chocolate confectionery market of UK consists of packaged chocolates, countlines, straightlines, moulded chocolate bars, novelties etc. The chocolate confectionery market in UK makes up the majority of the market; countlines account for majority share in the chocolate market. The market share of chocolate countlines is 44 percent (Sweet Retailing, 2012). The most coveted and highly demanded chocolate products are the chocolates in packaged and sharing bags form. These chocolates are affordable and have convenient packaging form. There was a decrease in the sales of the chocolate bars in the year 2011 (Sweet Retailing, 2012). The luxury chocolate market in the UK has also been witnessing increased sales since 2007 and brands like Godiva and Lindt have been leading the luxury chocolate markets of UK. These brands generate huge amount of revenue even amidst the economic slowdown. However, it has been observed that the sales of these luxury chocolate products increase during Easter and Christmas. In the year 2011 there was a significant increase in the launch of seasonal chocolate products by 45 percent in UK. Although, the demand of chocolates and availability of chocolates in UK is very high there has been growing fear among the chocolate manufacturers that the chocolate consumption would decrease in the future. Increasing obesity, dental problems etc have been a major cause of consumer for UK government and consumers. This has forced the chocolate manufacturer to focus on the nutritional content of chocolates that can improve the health of the consumers. It is also estimated that the market valuation of chocolate confectionery market by 2016 would be £6.77 billion (Wood, 2013). As observed that most of the UK chocolate shops in High Street (Winterman, 2013) are selling chocolates with high cocoa content which is beneficial for the health of the consumers. It is estimated that sales of the chocolates would increase by 13 percent in UK during the tenure 2012- 2017 and there would be an increase in the sales of chocolates by 5 percent in unit prices (Euromonitor, 2013). The compounded annual growth rate of the chocolate confectionery market would be 1.6 percent during the tenure 2011- 2016 and is expected to have a market valuation of $8.295 million (Wood, 2013). Conclusion and Recommendation From the above findings it was observed that presently the chocolate confectionery market of UK is yielding profits even amidst the economic slowdown and there has been an increase in the demand of chocolates among consumers of UK. It is observed that the chocolate market in UK is very mature and has the capability of becoming the leading chocolate consumer market of the world. It is also observed that the growth of the market depends upon the demand of the consumers and the supply of cocoa beans (BCCCA, n.d). As estimated by various economists that the chocolate confectionery market of UK is expected to grow further however the chocolate manufacturers need to lay emphasis on the food innovation (Monotti, 2008). Through food innovation chocolate manufacturers need to focus on the nutritional content of their chocolates. Chocolate manufactures can add medicinal herbs in their chocolates to improve the health benefits of the consumer. The manufacturers should also focus on manufacturing chocolate energy bars to retain the health benefits and taste of the product. Since, demand of cocoa beans among consumers are high (Winterman, 2013) the chocolate manufacturers should focus on marketing chocolates with a high cocoa content. Chocolates with a cocoa content have high antioxidant properties which can increase the energy of the consumers and food items like nuts, berries and cherries help in increasing the immunity. The chocolate manufacturers can arrange for various awareness programs which will give details about the health benefits of the ingredients of the chocolates. The nutritional benefits of the ingredients of the chocolates should be mentioned in the packaging of the product. This would help the consumers to gain confidence in the product. References BCCCA, n.d. Creating a sustainable chocolate industry [pdf] Available at: < http://www.cocoafarming.org.uk/pdf/times100_casestudy.pdf > [Accessed 15 May 2013]. Euromonitor, 2013. Chocolate Confectionery in the United Kingdom. [online] Available at: [Accessed 15 May 2013]. Key Note, 2013a. Consumers continue to enjoy chocolate and sweets, as market sees 7.5% growth. [online] Available at: < http://www.keynote.co.uk/media-centre/in-the-news/display/consumers-continue-to-enjoy-chocolate-and-sweets-as-market-sees-75%25-growth/?articleId=782> [Accessed 15 May 2013]. Key Note, 2013b. Confectionery [pdf] Available at: < http://www.mbsportal.bl.uk/taster/subjareas/marketing/keynote/129757Confectionery%20Update%202012.pdf > [Accessed 15 May 2013]. KPMG, 2012. The chocolate of tomorrow [pdf] Available at: < http://www.kpmg.com/RU/ru/IssuesAndInsights/ArticlesPublications/Documents/chocolate-of-tomorrow.pdf> [Accessed 15 May 2013]. Monotti, C., 2008. Future chocolate market growth in four EU countries. British Food Journal, 110(7), p.671-690. Sweet Retailing, 2012. UK chocolate market size. [online] Available at: < http://www.sweetretailing.co.uk/index.php/confectionery_advice/view/uk_confectionery_market_update_mintel_2012 > [Accessed 15 May 2013]. Trading Visions, 2011. The chocolate scorecard [pdf] Available at: < http://www.tradingvisions.org/downloads/ChocolateScorecard2011.pdf > [Accessed 15 May 2013]. Winterman, D., 2013. Chocolate: The rise of the cocoa purists. BBC News Magazine, [online] 29 March. Available at: < http://www.bbc.co.uk/news/magazine-21847447 > [Accessed 15 May 2013]. Wood, L., 2013. Research and Markets: Chocolate Confectionery Market in the United Kingdom is expected to Increase to a Value of $8,295.9 Million by the End Of 2016. Yahoo Finance, [online] 12 March. Available at: < http://uk.finance.yahoo.com/news/research-markets-chocolate-confectionery-market-180400379.html > [Accessed 15 May 2013]. Read More