Rabobank: Hybrid Consumer Boosting Growth in Value and Premium Chocolate
22 Jan 2014 --- The trend of hybrid consumption is making itself felt throughout the chocolate confectionery market in Western Europe. Consumers are ignoring mid-market products in favour of premium or value chocolate. According to a new report from Rabobank, Finding the Sweet Spots, processing companies and chocolate confectioners looking to capitalise on the hybrid trend will need to choose their position wisely: premium or value.
To find the sweet spots in this dynamic and developing market, companies should consider targeted marketing to key demographic drivers, adapting package sizes and styles, and in some cases, business consolidation.
"Long-term socio-demographic trends, such as the financial empowerment of women and the growing importance of millennials, has seen consumer spending increasingly shift to the extreme ends of the food spectrum", states Rabobank analyst, Marc Kennis. "Consumers have increasingly been trading down to the value end of the food spectrum for everyday, value-for-money items, while occasionally splurging on food products at the premium end".
Hybrid consumption patterns have clearly set in across the chocolate confectionery sector, and Rabobank's new report expects spending patterns will continue to exhibit hybrid consumption patterns. The trend is clearly visible in Europe where confectionery market totals more than EUR 29 billion, and has been growing at an average of 2.3 percent from 2008 to 2013.
"In this context, an important question for industry players will be how they can capitalise on the hybrid opportunity", continues Kennis.
Chocolate companies are already reacting to the main demographic drivers of the hybrid phenomenon by marketing, for example, specifically to women. However, Rabobank believes using social media to target specific consumer groups, like millennials, will be instrumental in future marketing strategies. On the value end, companies will need to adapt packaging and portion sizes in order to address continuing consumer budget constraints, and meet lower price points imposed by value and discount retail outlets. Conversely, innovative packaging will also be an effective tool for projecting exclusivity at the premium end. This all has a potential impact on processing companies; those that take heed of this trend and adapt accordingly will position themselves most beneficially.
The mid-market, which has been losing market share in all but two chocolate subcategories since 2008, will need to recalibrate its strategy as mid-market products are expected to continue to lag behind premium and value product growth. Rabobank believes that restructuring, portfolio pruning, and consolidation among these companies will be inevitable to adapt to the new environment and changing consumer taste.
Source: Rabobank
