ENTREPRENEURSHIP

Entrepreneurship: Business Opportunity Project

Entrepreneurship: Business Opportunity Project

Executive Summary

This entrepreneurship report presents the key sector mega trends for global chocolate and confectionary industry. The second part of this report presents a free-flowing reflective analysis of the process I have used to identify the entrepreneurship opportunity within this industry. To this end, in the five years through 2011, industry revenue is expected to increase by an annualized rate of 0.8% to total $111.7 billion.

Part 1: Mega Trends

The Global Cocoa, Chocolate and Sugar Confectionery Manufacturing industry has managed to remain resilient in the past five years, despite being faced with some sour challenges. The global food movement, especially in the developed world, towards health and nutrition has resulted in clever product innovation backed with aggressive advertising and promotional campaigns. Despite a highly competitive and fragmented industry, the major players have been able to successfully maintain and grow their market share (Aburdene 2007 89). Consumer awareness about the health benefits of eating dark chocolate have resulted in higher levels of consumption, while new growth segments such as organic chocolate and low-sugar or sugar-free confectionery and gum have emerged in light of concerns about obesity and heart disease. In addition, the industry has had to contend with rising input prices, increase in healthy substitute products and a contracting global economy

Recessional resilience

From the late 1980s onwards, chocolate producers have focused on the trend of 'premiumisation', in line with periods of robust economic growth. Consumers, especially in the developed world, looked to trade up to more luxury food products with indulgences in higher priced products and premium brands. The deterioration of the economic climate in late 2008 saw a dramatic fall in discretionary spending as unemployment levels soared and consumer confidence plummeted. Sales of chocolate and confectionery however, remained firmly resilient as it offered temporary respite from more pressing issues such as loan repayments and falling house prices. In 2009 for example, the US National Confectioners Association reported an 8.2% increase in chocolate sales, with chocolate sales rising by 7.5% while non-chocolate candy sales rose 3.8% (Global Research & Data Services 2012).

Over 2010, as global economic conditions begin to trend upward and developing economies continue to grow, sales of chocolate are expected to remain strong. Amongst the developed world, there exist strong opportunities within the organic and fair trade segment, which represent the fastest growing segments in the European Union, North America and Australia. Presently, fair trade cocoa still captures less 2.0% share of the world cocoa market, while the organic segment represents less 1.0% of the world cocoa industry (Global Research & Data Services 2012). Further, as evidence of the economic recovery becomes more pronounced, discretionary spending is also expected to increase with a shift back towards premium brands and indulgent choices.

Revenue

In 2009, industry revenue totaled $104.7 billion, representing an increase of 3.6% from the previous year. One of the most important developments affecting the industry has been the importance of health and nutrition in driving consumption ...