Asia's Taste for Chocolate Isn't Bouncing Back as Much as Hoped

Cocoa processors in Asia are only expecting a tepid revival in demand this year as the coronavirus pandemic keeps roiling travel and consumer spending across the world.

Consumption, however, may pick up pace in the second half if vaccine roll-outs are successful, travel restrictions are lifted and the global economy recuperates, according to the Cocoa Association of Asia.

“In terms of absolutely strong recovery in the next couple of quarters, that’s a tall ask,” newly elected chairman Alvin Lee said in an interview, adding that several countries are seeing new waves of infection. “The second half could be stronger because of a combination of increasing demand and restocking.”

Asia has enormous potential for chocolate producers as the region’s growing affluence and changing lifestyles power a surge in grindings -- where beans are turned into butter and powder that’s used to make chocolate bars, drinks, ice cream and biscuits. But breakneck increases in processing were scuppered last year when mass lockdowns hammered demand for chocolate, a luxury item that benefits from impulse buying, gifting and dining out.

Asia's Taste for Chocolate Isn't Bouncing Back as Much as Hoped

Processing is likely to be flat in the first quarter compared with a year ago, and for the full year may rise 2% to 3% from the 830,241 tons in 2020, Lee said. Still, any pickup will be “heavily reliant” on a recovery from Covid-19 and resumption of travel, which means grinds may even shrink if the pandemic worsens. “This is such an unprecedented market with unprecedented curveballs thrown at everyone, regardless of which part of the supply chain you sit in.”

Chocolate Craving

Still, one bright spot for demand are Asia’s tech-savvy, chocoholic millennials. In China, the virus has driven younger consumers to e-commerce online channels to get their fix of sweet treats, Lee said. While confectionery has had little success with the older demographic that prefers traditional fruit-based or other desserts, chocolate has become a lifestyle choice for the younger crowd.

Consumption has boomed through quick service restaurants and the growth of cafes like Starbucks, as well as the rising popularity of luxury treats like single-origin chocolate and chocolate-based beverages and desserts, he said. Millennials are “the great chocolatey hope” in Asia, he said.

India, meanwhile, remains a “very important” market as chocolate is a popular gifting option, Lee said. “India’s interest in chocolate and growth in chocolate consumption is on par, if not stronger, than China.”

©2021 Bloomberg L.P.

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