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Global consumption of cocoa and chocolate shows signs of waning

Global cocoa and chocolate consumption shows signs of waning due to the economic downturn, high prices and health worries, but a little luxury from premium products and dark chocolate seems to be "recession proof".

  • Reuters
  • Published: 00:04 August 2, 2008
  • Gulf News

London: Global cocoa and chocolate consumption shows signs of waning due to the economic downturn, high prices and health worries, but a little luxury from premium products and dark chocolate seems to be "recession proof".

The latest cocoa grindings data, a measure of demand for the key chocolate ingredient, has been disappointing in the US and Europe. Second-quarter US grindings fell 15.89 per cent from a year ago, and Europe's grind was up 1.7 per cent.

The subdued grindings have coincided with a slowdown in global econ-omic growth and a surge in US cocoa futures by 40 per cent so far this year, spurred by a heightened investment fund appetite for the commodity, and tight physical supplies.

Grinding of cocoa beans creates products such as liquor and butter, which are used in the making of chocolate, while cocoa futures are an indicator of physical prices of the commodity.

Frans Remmers, senior cocoa products trader at Dutch trade house Theo Broma, said global cocoa demand was likely flat.

"It's difficult to estimate whether chocolate consumption really is down or whether it is just stagnating a bit, and I think the latter is the case," he said.

The mix of high cocoa prices and the slowing US economy, could cause falling demand for cocoa and chocolate products, said Judy Ganes-Chase of J Ganes Consulting in New York.

The fall in global economic growth and the increase in the price of cocoa beans were expected to have a negative impact on consumer demand for chocolate products, said Laurent Pipitone, senior statistician with the International Cocoa Organisation.

Fortis Commodity Deriv-atives said the latest US grindings data sent a grim signal about consumption.

"Cocoa is unlikely to be exempt from a slowing demand for all kinds of discretionary purchases, as consumers find their former spending powers are curtailed by higher inflation," Fortis said in its latest cocoa market report.

US chocolate confectionery demand eased to 1.63 million tonnes in 2006 from 1.65 million in 2005, say the International Confectionery Association and the European Confectionery Association. 2007 data was not available. The US is the world's biggest market for chocolate confectionery.

Emerging economies, such as China and Russia, are driving demand for cocoa and chocolate products, analysts say.

"The demand for chocolate is strong - and increasing - in areas in which a developed 'chocolate culture' is not well established [e.g. China], or where there is an established chocolate culture that is getting more sophisticated [e.g. Russia, Turkey]," said Mogelonsky.

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