Chocolate confectionery sales in the Middle East and Africa are benefiting from better economic prospects and stronger demand from middle-class consumers. Healthy-perceived snack bars, however, might challenge future growth.
Healthy growth in 2010
Retail value sales of chocolate confectionery will reach US$3.9 billion in 2010 in the Middle East and Africa, according to Euromonitor International’s projections. This represents an increase of 5% (US$ fixed exchange rates) on the previous year. In retail volume terms, sales will grow by 4% in 2010, up from the 3% achieved in 2008.
Research shows that chocolate confectionery sales will benefit from strong demographic growth and better economic prospects. According to Euromonitor International’s Countries and Consumers database, real GDP in the region is projected to grow by 5% in 2010, compared with the mere 2% increase registered the previous year.
In 2010, four countries – South Africa, Iran, Saudi Arabia and Algeria – will account for over 60% of total chocolate confectionery retail value in the Middle East and Africa.
Chocolate boxed assortments benefit from strong innovation activity in Iran
In Iran, retail volume sales of chocolate confectionery are predicted to grow by 2% in 2010, according to Euromonitor International’s projections. Interestingly, GDP is forecast to rise by 3% in real terms in 2010, up from the 2% registered the previous year.
This improvement in economic prospects will benefit categories such as chocolate boxed assortments, which is projected to grow by 3% in retail volume in 2010. Furthermore, demand for boxed assortments is benefiting from intense innovation and promotional activity from local manufacturers such as Dadash Baradar Co and Shirin Asal Co.
According to Euromonitor International’s estimates, countlines will continue to be the most popular category in chocolate confectionery, accounting for nearly half of retail value sales in 2010. Research shows that children represent the largest consumer group for countlines, and are also the main target audience for marketing and promotional activities in the category.
Plain dark chocolate tablets go from strength to strength in Saudi Arabia
In Saudi Arabia, chocolate confectionery sales are projected to grow by 5% in retail volume over 2010, according to Euromonitor International’s estimates. Research suggests that strong growth will be seen in tablets due to aggressive company activity in terms of new product launches and advertising.
Filled chocolate is expected to remain the most popular tablet format in 2010, accounting for a 40% value share. Other popular chocolate flavours and fillings in the country include caramel, nuts, almonds and fruit and nut. Continuing the trend of 2009, filled tablets will lose some ground to plain dark chocolate and plain milk chocolate during 2010.
The increasing popularity of highly advertised brands such as Lindt Excellence (Chocoladefabriken Lindt & Sprüngli AG) or new launches such as Galaxy Smooth Dark (Master Foods) will contribute largely to stronger demand for plain dark chocolate, which is perceived as being ‘healthy’ chocolate. Sugar-free chocolate will continue to see close-to-negligible sales in Saudi Arabia despite rising obesity concerns among middle-class consumers in urban areas.
Snack bars threaten future chocolate growth in South Africa
In South Africa, retail volume sales of chocolate confectionery are projected to grow by 3% in 2010, according to Euromonitor International’s estimates. Imported premium brands, such as Ferrero Rocher and Lindt, continued to grow in 2009 although still accounted for just a 2% combined share of total chocolate confectionery retail value.
Interestingly, demand for chocolate was underpinned by Cadbury’s new range of tablets, including premium ingredients such as cashews and almonds but available at mass-market price levels. Research shows that further growth in chocolate confectionery will be constrained by the increasing popularity of snack bars.
The latter are becoming very popular among middle-class South African consumers, who are willing to pay a premium for snacks offering not only indulgence but also health properties.
Self-consumption trend underpins demand for countlines in Algeria
In Algeria, retail volume sales of chocolate confectionery are predicted to grow by 11% in 2010. This robust performance will be underpinned by better economic prospects and strong demographic growth.
Testament to the significant influence of general economic and demographic conditions on the Algerian confectionery environment is the fastest growing niche of countlines, predicted to grow by 15% in retail volume in 2010. The increasing individualisation of Algerian society is evident in the chocolate consumption patterns in the country.
This will be a factor boosting demand for countlines in 2010 as consumers focus increasingly on indulgence products for their individual consumption. Another category predicted to perform well in Algeria is chocolate boxed assortments.
The latter will grow by 13% in retail volume in 2010, according to Euromonitor International’s projections. Mid-priced boxed assortments are becoming quite popular among middle-class consumers and are no longer exclusively consumed by upper-class Algerians.
Retail volume sales of chocolate confectionery in the Middle East and Africa will grow by 20% over the 2010-2015 period, according to Euromonitor International’s projections.
Research shows that demand in the region will be driven by gradual economic recovery and the expansion of relatively more expensive confectionery categories like chocolate among middle-class consumers. Conversely, sales growth will be partly constrained by health/obesity concerns surrounding sugar and chocolate confectionery in large urban areas.
Boxed assortments is predicted to register one of the strongest performances, with sales projected to grow by 30% in retail volume over the 2010-2015 period. Demand for these products will benefit from wider availability in supermarkets/hypermarkets as mass-market brands increase their penetration among middle-income urban households.
Conversely, demand for chocolate tablets will be slowed at regional level by the sluggish performance expected in countries like South Africa. Chocolate tablet sales in the latter are predicted to grow by a mere 5% in retail volume over the 2010-2015 period as demand starts to show signs of maturity in urban areas.