Asia finds a taste for Swiss chocolate

Financial Times
26-Dec-2007
By Haig Simonian

Already, rich Asians have gained a taste for expensive mechanical watches. Now, another pillar of Swiss industry thinks the region's increasingly affluent consumers should discover another national speciality: chocolate.

Consumption of chocolate across Asia varies greatly, depending on affluence, climate and culture. But even in Singapore and Malaysia, where the bitter-sweet product is well established, sales per head remain well below European levels. In more populous countries, such as China and India, the chocolate habit is in its infancy.

While the average Japanese person eats about 2.5kg of chocolate a year, the figure in China is less than 100g and even lower in India.

"Wealth and travel play a big role; climate, surprisingly less so," says Maurizio Decio, president of Asia for Barry Callebaut, the world's biggest chocolate maker.

To capture the potential demand, the Swiss group is next month opening its first factory in China. With output of 25,000 tonnes a year, the Suzhou plant, 90km inland from Shanghai, is modestly sized. But the unit, which will serve trade buyers from the food industry, hotels and restaurants, has been designed to expand threefold if required.

Chocolate has traditionally been rare in China, where savouries overshadow sweets, and milk-based desserts are virtually unknown compared with rice-based products. But consumption is growing as urban Chinese citizens in particular start to develop a sweet tooth.

"Once, you would go round a Chinese office and see people snacking on dried fruits, dried fish or dried meat", says Mr Decio. "Now, it's yoghurt, biscuits and chocolate."

Sales around affluent Shanghai have already reached about 1kg a head. National demand is forecast to grow by at least 10 per cent a year by volume, and 14 per cent by value, reflecting the impact of higher priced premium chocolate. By contrast, total world consumption is expected to climb by just 2-3 per cent a year by volume.

"Until now, we supplied China from Singapore", says Patrick De Maeseneire, Barry Callebaut's chief executive. "But the logistics of shipping liquid chocolate are complex and expensive. It was time to take the next step."

In China, as elsewhere, the main customers of Barry Callebaut will be multinational food groups that need chocolate for biscuits, cakes and ice creams. But Mr De Maeseneire also sees a growing gourmet market, especially in the big cities, as consumer tastes develop.

Barry Callebaut has already opened a "Chocolate Academy" - a training centre for chocolatiers - in Shanghai, in the biggest venture of its kind in Asia. A second academy will open in Mumbai next month. "We want to learn about the market there," says Mr De Maeseneire.

In spite of having even lower consumption than China, India holds promise because sweet tastes are far more established there. But the market, at about 45,000 tonnes compared with China's 107,000 tonnes, remains tiny. "We expect growth around the big cities," Mr De Maeseneire says.

Japan, where eating chocolate is relatively well developed, also has potential - even if subject to local preferences. Nestlé, the world's biggest foods group, produces a green-tea-flavoured version of its worldwide Kit Kat bar for the local market.

Last October, Barry Callebaut signed an outsourcing deal with Morinaga, one of the country's leading confectionery groups. Under the agreement, the Swiss company has taken over a factory whose output will be expanding to 20,000 tonnes a year to supply others too.

In a sign of the times, the world's leading prize for a chocolatier - the Barry Callebaut-sponsored Chocolate Masters award - this year went for the first time to an Asian. The Japanese winner pushed rivals from France and Italy into second and third places - bitter news for Europe.

Companies: Barry Callebaut AG ;

Ticker Symbols: ch:BARN;

Subjects: Company News;

Countries: Switzerland; China; Singapore; Malaysia; India;

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