Asia Cocoa Sector Boom At Risk Of Bean Scarcity
BMI View: The ongoing boom in investment in the cocoa processing sector in Asia should intensify in the coming years, as trading firms and chocolate makers try to tap Asia's robust demand for chocolate. However , we continue to believe the cocoa processing sector s in Malaysia and Indonesia are at risk of overcapacity and depressed margins. Moreover, dwindling cocoa bean supply from Indonesia will make Asian countries dependent on West Africa , where production is volatile .
Interest in Asia's cocoa and chocolate sectors is rising, with many local and international players entering the cocoa grindings and chocolate making business in the region. These sectors hold a promising future, as they will benefit from strong demand for chocolate confectionery in Asia in the coming years. Although there is no traditional culture of eating chocolate in the region, consumption has been growing in recent years in some countries, driven by increasing purchasing power and the westernisation of diets. Asian countries currently consume a limited amount of chocolate per capita, with consumers in China eating as little as 0.3 kg per capita of chocolate a year, compared with 3.2kg in Japan, 5.6kg in Australia and 14.4kg in Germany. Vietnamese are one of the largest chocolate eaters per capita amongst Emerging Asian countries, with consumption per capita at 0.5kg a year, while Indian, Indonesian and Thai consumers eat 0.1kg a year.
Although we forecast limited growth in per capita chocolate consumption across Emerging Asian countries, the aggregate volume growth potential in absolute terms are tremendous given the size of the key markets. We forecast China's consumption to grow to 0.4kg per capita by 2018, while Indian demand will grow to 0.2kg per capita and Vietnam's to 0.7kg per capita. Malaysia has one of the highest chocolate consumption per capita rates, which should limit demand growth in the coming years. Meanwhile, Japan and Australia will remain the largest consumers by far, but will see lacklustre growth. The value of the chocolate market in these two countries continues to rise, however, driven by the introduction of innovative and value-added chocolate products.
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