China and India: The Powerhouses of the Asia Pacific Cocoa Market
Asia Pacific is currently the third largest region for cocoa ingredients (liquor, butter and powder) worldwide after Western Europe and North America; however, it is set to become the second largest region, overtaking North America by 2017, with consumption exceeding 688,000 tonnes. Regional sales are dominated by China, which accounted for 40% of volume sales in 2013, while the second largest market is India, with 11% of volume. Both China and India have seen strong growth in the cocoa ingredients in recent years, with China posting an average annual growth rate of 6% and India 16% over 2008-2103. Similarly, forecast rates are also strong at 5% and 11% over 2013-2018. However, this growth is being driven by quite different consumption patterns in these two countries.
Cocoa ingredients in India, more closely matches that of the worldwide market. Cocoa liquor takes the largest share at 43% (37% worldwide), cocoa butter 29% (33%) and cocoa powder 27% (30%). Meanwhile, China is quite different, with cocoa liquor only accounting for 23% of total cocoa volumes, cocoa butter 17%, but cocoa powder reaching 60%.
Cocoa Ingredients: % Volume Share by Category 2013-2018
Source: Euromonitor International
India’s cocoa category is driven by chocolate confectionery, as is the case in most corners of the world. Indeed chocolate confectionery will account for some 58% of absolute volume growth of cocoa ingredients over 2013-2018. This growth is being driven by increased availability of chocolate confectionery, particularly in rural areas and smaller cities, with major players such as Cadbury India increasing distribution of smaller low-priced products. Sweet biscuits are also a key application for the growth of cocoa ingredients in India. Sales of sweet biscuits in India reached 1.5 million tonnes in 2013, and are forecast a CAGR of 5%. Biscuits are being consumed more as a snack food, including as a breakfast substitute. Premium biscuits are particularly strong, with high growth in cookies and sandwich biscuits, as consumers incomes continue to rise.
Cocoa Ingredients: Absolute Volume Growth by Application 2013-2018
Source: Euromonitor International
China’s cocoa ingredients category is very different to India. Chocolate confectionery will only account for 18% of the country’s absolute volume growth in cocoa ingredients over 2013-2018; however, pastries will contribute 31% to the growth of the category and flavoured milk drinks (milk shakes) 26%. China is the largest market for pastries in the world with sales reaching 4 million tonnes, 2.5 times larger than the US. The category in China posted a 7% CAGR by volume over 2008-2013, and is forecast a 6% CAGR over 2013-2018. Pastries are a traditional part of Chinese cuisine, with regional pastry shops playing a key role in driving sales. Muffins account for the largest share of pastries in China, taking 17% by value in 2013, ahead of croissants, with 15%.
As well as being the largest market for pastries, China is the world’s largest market for flavoured milk drinks. In 2013, sales exceeded 5 billion litres, over four times as big as the US, the second largest market, and 27 times as large as the Indian market. While chocolate is currently not a key flavour (tea, coffee, fruit flavours being most popular), it is likely that sales will increase in the future as tastes become more Westernised. The flavoured milk drinks market in China is also key for international companies and brands – following various health scares in dairy products by local companies in recent years, international brands are more trusted by consumers, opening up the market for chocolate flavoured milk drinks.
So while India and China are often pulled together as similar markets based on their growth potential, they are quite different and offer different opportunities for players, both in cocoa and other related ingredient categories.