THE PREMIUM CHOCOLATE MARKET The U.S. market for chocolates was US$19.3 billion1 in 2011, and had been growing at about 6 per cent annually. The premium chocolate market ($2.7 billion), which had higher margins, was growing at 10 per cent annually, and imports of ethically produced cocoa grew by 156 per cent2 as aging baby boomers emphasized quality and ethics in their purchases. Incumbents such as Hershey’s and Cadburys had moved into the premium chocolate market through acquisitions or upmarket launches. About one-quarter of annual chocolate sales typically occur in the eight weeks prior to Christmas. Twenty per cent of “heavy users” account for more than half of these pre-Christmas sales. These heavy users tend to be established families, middle aged childless couples
THE PREMIUM CHOCOLATE MARKET
The U.S. market for chocolates was US$19.3 billion1 in 2011, and had been growing at about 6 per cent annually. The premium chocolate market ($2.7 billion), which had higher margins, was growing at 10 per cent annually, and imports of ethically produced cocoa grew by 156 per cent2 as aging baby boomers emphasized quality and ethics in their purchases. Incumbents such as Hershey’s and Cadburys had moved into the premium chocolate market through acquisitions or upmarket launches.
About one-quarter of annual chocolate sales typically occur in the eight weeks prior to Christmas. Twenty per cent of “heavy users” account for more than half of these pre-Christmas sales. These heavy users tend to be established families, middle aged childless couples and empty nesters with high incomes. They purchase more high quality boxed chocolate than bars or lower quality chocolate.3
In line with social trends, demand was growing for organic chocolate and dark chocolate due to its heart-healthy anti-oxidant properties. At the same time, however, large chocolate manufacturers wanted the United States Food and Drug Administration to redefine the term “chocolate” to allow them to produce cheaper versions (with less chocolate content) and still call it chocolate. Consumers and employees also increasingly demanded corporate social responsibility. Chocolate companies were targeted because forced labor and child labor was still sometimes used in cocoa bean production in West Africa. Environmental concerns influenced packaging, procurement and operational decisions.
To organize facts related to the sociocultural, ecological, and economic trends within the premium chocolate industry, which strategic management framework is most appropriate?
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a) Porter's Five Forces
b) STEEP
c) VRIO
d) Financial Ratio Analysis
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