Canadian Confectionery Market
Within the confectionery industry, the chewing gum segment (Standard Industrial Classification 1082) consists of establishments primarily engaged in the manufacture of chewing gum and candy gum preparations. The sugar and chocolate confectionery segment (Standard Industrial Classification 1083) consists primarily of firms engaged in caramelizing, syrup kneading, extruding, compressing, stamping or otherwise manufacturing starch goods (jelly candies of all kinds); hard sugar candy; cocoa powder; and chocolate confectionery and cooking chocolate products, unsweetened and sweetened.
Introduction Prior to the mid 1980s, the confectionery sub-sector had, primarily, focussed on serving the domestic market. In 1988, less than 12% of shipments were exported, whereas imports accounted for about 24% of the domestic market (see table). However, changes in the structure and performance of the Canadian confectionery industry occurred with the global integration of economies that began to intensify in the late 1980s.
These changes, stimulated by global trade liberalization, were formalized in the Canada-United States Free Trade Agreement (FTA), the North American Free Trade Agreement (NAFTA), and multilateral negotiations that led to the formation of the new World Trade Organization (WTO). The initial impetus for change came in response to escalating competition from imports (particularly European chocolates and hard candies), but the industry also became more aware of the potential for exploiting emerging export opportunities.
At the same time, the domestic market was exhibiting limited growth. By 1997, exports represented about 32% of confectionery shipments. Historically, many Canadian confectionery manufacturers have faced scale disadvantages compared with American and European firms. At the same time, Canadian exporters, including subsidiary operations of multinational enterprises with product “mandates” for the U. S. market, have enjoyed a relative production-cost advantage in a key ingredient, sugar.
Canadian sugar refiners are unique among those of other industrialized countries in that they purchase most of their raw sugar on the world market. Prices on the world market are normally low and are reflected in lower prices for refined sugar in Canada. Other competitiveness factors relate to global brand-ownership rights and taste differences that necessitate special formulations for the domestic market. These characteristics have helped separate the U. S. and Canadian markets to some extent.
The growth of retail gourmet candy shops, such as Laura Secord in the late 1980s pointed to a new consumer trend toward purchasing high-quality, specialty products at premium prices. Many retail shops sell imported merchandise; however, domestic producers also began to supply the market for quality chocolates and their products, too, have been accepted by consumers. Overall, the confectionery industry has adapted well to the more open global trading environment through a series of rationalizations which have resulted in more efficient and specialized operations. Significance
As with many other industries in the Canadian food and beverage processing sector, the manufacturing of confectionery products progressed from what was, essentially, a cottage industry in the 19th century to a modern, concentrated industry by the middle of this century. Today, confectionery manufacturing is a growing and dynamic segment of the food and beverage processing sector, representing 3-4% of the total value of shipments, number of establishments and number of employees. The confectionery industry shipped product valued at more than $1. 9 billion in 1997. About $1. billion of this was sugar and chocolate confections (25% sugar and 75% chocolate) and about $0. 37 billion was chewing gum. Value-added in confectionery manufacturing is approximately 51% of the total value of shipments, considerably higher than the food processing sector average of 36%. Structure There are 106 establishments (plants) in the sugar and chocolate industry and in the chewing gum segment, employing approximately 10,411 people, (latest statistics, 1997). Confectionery production is located mainly in Ontario, but the industry has representation in all regions of Canada.
Production facilities range in size from small, one- or two-person, seasonal operations, to large plants employing up to 1,000 people. The confectionery industry in Canada is highly concentrated. The leading eight enterprises produce close to 87% of the value of shipments. Foreign ownership of the confectionery industry is high since multi-national enterprises have a major position in the industry. An estimated 60% of industry shipments are accounted for by foreign-controlled enterprises located in Canada.
Within the confectionery industry, characteristic distinctions can be made between sugar candy operations and chocolate operations. Most sugar confectionery companies are small or medium in size and produce a wide variety of products, such as hard candy, gummy bears, licorice, jujubes and toffee, as well as an assortment of hard and soft candies for specialty and novelty markets. Most chocolate operations, on the other hand, are larger and dedicated to three product categories: boxed chocolates, chocolate bars and/or seasonal novelties.
Boxed or novelty chocolates are sold, primarily, as gifts for birthdays, anniversaries, Christmas, Valentine’s Day and Easter. The chocolate bar market tends to be steady year-round, but is highly fragmented – a bar that can capture 4 or 5% of the market is considered successful. Gaps between the top-selling bars are measured in tenths of a share point. Packaging materials represent a significant input cost in the confectionery industry, estimated at 20% of the cost of raw materials (1998).
The primary ingredients used and their approximate percentage of the overall cost of raw materials are cocoa products (20%), sugar (5%), dairy products (7%) and nuts (6%). Firms in the confectionery industry compete on the basis of brand name, advertising and promotion, specialty products, quality and cost. Because confectionery products are usually discretionary and high-impulse purchases, promotion plays a significant role in establishing brand presence in the various regional markets of Canada.
In 1998, the Confectionery Manufacturers Association of Canada (CMAC) estimated that advertising and trade-promotion costs for its member companies totalled $55 million, or 2. 6% of sales. In years when there are many new product launches, confectionery firms spend more on advertising and promotion. In 1997, for example, advertising expenditures for CMAC firms were $57 million. The chocolate and chewing gum components of the confectionery sub-sector tend to be more highly brand-sensitive and advertising-oriented than the sugar confectionery component.
The medium- and large-sized firms in the confectionery industry are generally considered to be capital-intensive, technologically modern and efficient. Entry into the sub-sector, however, can be gained by firms with low levels of technical sophistication. Smaller firms making niche products often use older equipment and run labor-intensive operations because they do not have sufficient sales volumes to warrant investment in some of the newer, high-speed, high-capacity machinery. Performance
Performance in the confectionery industry is influenced by a number of factors, including market conditions that compromise the ability to maintain high rates of capacity utilization, competition from imports, the fluctuating cost of some imported raw materials, the value of the Canadian dollar and brand name rivalry. Throughout the 1990s, as part of its adaptation to various international trade agreements, the confectionery manufacturing industry has continued to undergo rationalization while making needed investment, particularly in new machinery and equipment ($105 million in 1997).
The number of manufacturing establishments decreased from 110 in 1988 to 87 in 1994, but rose again to 106 in 1997. Commensurate with plant rationalization, the value of confectionery shipments increased 24% between 1992 and 1997. (see Figure 1) Correspondingly, employment increased by about 5% between 1992 and 1997. During the same period, labor productivity, measured by real sales per employee, also improved substantially, rising about 24%. Approximately 32% of the growth in shipments was attributable to exports, which increased 390% between 1988 and 1997.
Figure 1. Total Shipments and Employment, 1988-1997 In 1997, $599 million in confectionery shipments were exported (Figure 2). Ninety-five percent of exports go to the U. S. A significant part of Canadian international trade relates to product mandates achieved by Canadian operations of multinational enterprises headquartered in the U. S. Canada’s confectionery exports comprise about 69% chocolate, 27% candy and 4% gum, by value. In 1998, 95% of Canada’s sugar candy and chocolate exports went to the U. S. and about 5% to Japan, Australia, Mexico, the U. K. Hong Kong, the Philippines and South Korea. Figure 2. Imports, Exports and Domestic Shipments, 1997 The majority of chewing gum exports (83%) also go to the U. S. , based on multinational corporate trade. However, the U. K. , Chile, Belgium, France, Japan, Australia, Hong Kong, the Netherlands and South Korea represent other export markets for chewing gum, each accounting for roughly 1-3% of exports in this category. In 1997, Canada imported about $766 million in confectionery products; this comprised $742 million in sugar and chocolate confectionery products and $23. million in chewing gum (Figure 2). Canada’s confectionery imports are made up of approximately 74% chocolate, 23% candy and 3% gum, by value. About 54% of sugar and chocolate confectionery imports are from the U. S. , a further 46% from the U. K. , Germany and Italy. A good deal of this trade is in branded products that are globally recognized. These goods are imported by brokers or retailers, or directly by Canadian-based operations of multinationals to round out their product lines in the Canadian market. In the chewing gum category, approximately 60% of imports are from the U.
S. , about 40% from Mexico, Brazil and Japan. The confectionery industry’s export orientation increased from 12% of factory shipments in 1988 to 32% in 1997, while import penetration increased from 24% of the domestic market to 37% during the same period. Overall, the negative trade balance, measured in current dollars, has changed dramatically since 1988, from a negative trade balance of $166 million in 1988 to $0. 1 million in 1999 (see table on page 11). Figure 3 also indicates that the gap between exports and imports narrowed significantly in 1998 and 1999. Figure 3.
Trade Performance, 1988-1999 It is estimated that the confectionery industry operates at about 75% of full production capacity. This is partly because, in some segments of the industry, specialized equipment is only used for seasonal product lines. While the rates of capacity utilization may vary among countries, the same impediments are faced in varying degrees by all global competitors. In the late 1980s and early 1990s, two confectionery firms in Canada made significant investments in new plants. Generally, investment in buildings and construction has been less intensive since then.
In the sugar and chocolate segment, consistent with cost-cutting and rationalization efforts, gross margins (value-added less wages) rose steadily from an average of 37% in 1988 to 41% in 1992, but by 1997 declined to 37% (margins in the chewing segment are somewhat higher). In 1995, confectionery companies engaged in fierce rivalry for market share – many promotional deals were evident in reduced prices at the retail level. Nevertheless, gross margins in both the chewing gum and the sugar and chocolate confectionery segments are higher than in the food and beverage processing sector overall (27% in 1997).
Figure 4. Capital Investment, 1992-1997 Profits tend to be higher in the sugar confectionery industry than in the chocolate industry. Return on sales in the chocolate bar industry in Canada is less than that in the U. S. and U. K. , for example. Canada is the only country in which the four major multinational chocolate bar companies, all essentially equal in size, co-exist in the same market. The intensely competitive market conditions caused by this unique situation keep profits low.
In recent years, the confectionery industry has demonstrated significant real growth in shipments, employment and productivity since 1988. Furthermore, sustained growth in exports is an encouraging sign that Canadian firms can compete in the global market. Issues, Challenges and Opportunities – Toward the Next Century As the confectionery industry adjusts to market drivers, such as globalization, demographic changes and general economic conditions, it must address a number of issues to remain viable and enhance its competitiveness in both domestic and international markets. Functioning within a globalized environment
Globalization is an economic phenomenon driven by a range of influences, including the development of more efficient means of transporting goods, the internationalization of food product demand, the establishment of information networks that facilitate trade in goods, services and capital, and a more international perspective in marketing and investment activities by industry. To a great extent, globalization has already reshaped the structure and attitude of the Canadian confectionery sub-sector, as noted earlier. However, many issues must be addressed to keep pace with change.
Cost and competitiveness Confectionery companies in Canada are in a somewhat unique position among food processors in that they use only small quantities of Canadian agricultural inputs (other than dairy). Production costs in the confectionery sub-sector are sensitive to even small increases in world sugar, cocoa, raisin or nut prices. The prices of these globally traded commodities are often volatile. When prices increase significantly, processors have no easy way of passing them along to consumers while retaining their traditional share of the snack market.
Canadian firms that export products are less competitive when world commodity prices, particularly for sugar, rise. Generally, Canadian confectionery manufacturers enjoy a cost advantage over American manufacturers when they export to the U. S. The U. S. maintains a high domestic price for sugar, while Canadian processors derive a significant benefit from their ability to purchase refined sugar at world prices, which are normally about 25-30% lower. Some of this benefit is, however, offset by transportation costs incurred by Canadian firms in getting their products to the U. S. market.
The playing field is levelled for U. S. processors that export their products (to Canada). Refined sugar at the world price is available to U. S. industrial sugar users under the U. S. Sugar Re-Export Program. Canada and the U. S. had a difference of view over the validity of the application of this program to Canada because of conditions that were negotiated under the NAFTA. However, an agreement (effective October 1, 1997) was reached which took into account Canada’s concerns about the substantial U. S. reductions in market access for sugar and sugar-containing products when the U.
S. implemented its WTO commitments in 1995. In return, Canada agreed not to pursue NAFTA dispute settlement procedures with respect to the U. S. Sugar Re-Export Program, but will monitor the use of the program in Canada for changes that may have an impact on Canadian interests. For confectioners making chocolate, another important competitiveness issue is the price of dairy ingredients. Canadian dairy prices are considerably higher than those in most other developed countries. Until recently, this situation put milk-chocolate producers at a cost disadvantage relative to imports.
Competitive dairy prices have now been negotiated with the Canadian Dairy Commission for confectionery products destined for both domestic and export markets. It is hoped that this initiative will encourage investment in the construction of new facilities in Canada for manufacturing milk-chocolate ingredients such as chocolate crumb, which are now predominantly imported. Managing costs and other factors related to competitiveness, as well as taking advantage of export opportunities, are often easier for larger companies than for smaller ones.
Larger firms are more adept at purchasing commodity ingredients and can afford to dedicate personnel to monitoring markets from which they purchase in large volumes. For small- and medium-sized confectionery companies, managing ingredient costs, competing with branded products and gaining access to high-caliber distribution channels are often the toughest hurdles to overcome. Access to a large number of retail locations is a key advantage of global firms. Their distribution networks can carry many related products to both central and outlying stores.
Some high-quality chocolate and novelty products are sold, primarily, at a few special times during the year. Managing production, full-time employees, inventory, marketing and cash flow (on a yearly basis) can thus be particularly challenging, especially for smaller firms. Finally, participating in the export market is often a more difficult option for smaller firms, which face high entrance costs associated with advertising to establish brands, finding brokers and distributors and dealing with the risks involved in selling a product under special credit arrangements.
Regulations There are two major issues that have been raised by the confectionery industry as concerns. One, which affects the relative cost of confectionery and other snacks, relates to the federal Goods and Services Tax (GST). This tax applies to all single-serving snack products sold at retail. However, for multi-serving packages, the GST applies to confectionery products but not competing snack foods like cookies and donuts. This continues to be a serious concern of confectionery manufacturers.
The confectionery and snack market is highly competitive and the industry contends that even small price differences “make” or “break” the consumer’s choice. The equitable enforcement of Canadian labelling requirements on products that fall under the Consumer Packaging and Labelling Act and Food and Drugs Act is another issue of concern to confectionery manufacturers. The industry continues to view the problem of mislabelled imports as a threat to its overall competitiveness because firms that do not comply do not incur substantial labelling costs. Technology and innovation
As with most segments of the food and beverage processing sector, technology is an issue that is extremely important to confectionery manufacturers. Most firms are well informed of international developments in processing equipment through industry journals or attendance at trade shows. The vast majority of new technology is available off the shelf, usually from machinery manufacturers in Germany and the U. S. Proprietary process improvements, new product formulations and ingredient improvements occur regularly, especially within larger multinationals.
These advancements are often shared with Canadian subsidiaries. The manufacture of confectionery products can be highly technical, requiring considerable understanding of food technology, including hardware (processing machinery and computers), software and formulation technology. Technical know-how is required to integrate these elements in an effective production system that is efficient and results in a high-quality, innovative product. Artificial sweeteners and natural flavouring systems are fields in which technology advances at a rapid pace.
Sugar-free confectionery is one of the fastest-growing market categories. Although still most popular in chewing gum products and mints, the trend is also growing somewhat toward sugar-free hard candies, as well as sugar- and fat-reduced chocolate products. Sugar-free gum now has a majority share of the chewing gum market. Candies are more difficult to manufacture in sugar-free form because sugar itself is the primary bulking ingredient. Chocolate products, which have both sugar and fat as main ingredients, are also difficult to manufacture in reduced-sugar or reduced-fat form without sacrificing quality and taste.
New ingredients are key drivers in the innovation of sugar-free and fat-reduced confectionery formulations. While regulatory approvals for new ingredients can take time to obtain, many ingredients, particularly those for use in the manufacture of sugar-free candies, have been approved and are currently in use. Examples include low-calorie bulking agents, polyol sweeteners and high-intensity sweeteners. Investments We do not have a subject on “Investments”, our apologies. Employment We do not have a subject on “Employment”, our apologies. Capturing New Markets Opportunities in the domestic market
The real value of the Canadian market for confectionery products rose approximately 24% between 1992 and 1997. In 1997, the average Canadian spent about $60 on confectionery items, purchasing about 10. 3 kg of products (6. 7 kg of chocolate, 2. 9 kg of candy and . 68 kg of other confectionery products, such as chewing gum). The chocolate category has shown the strongest performance in that period, growing from $1. 1 billion in 1993 to $1. 4 billion in 1997. The chocolate category is by far the largest category, over three times larger than the second largest category, sugar confectionery and nearly four times larger than the gum category.
Consumer preferences are changing. Children nowadays have more disposable income. They like licensed products and interactive toys that are sold together with confectionery. Consumers are more indulgent and are willing to pay more. Baby boomers in particular want quality over quantity. Opportunities in international markets There are opportunities for firms to gain market share in response to changing consumer demands. The U. S. market continues to present opportunities for the confectionery industry. In 1997, U. S. per-capita consumption of confectionery products reached 12. kg, representing a . 8% increase over the previous year. A tariff-free environment and lower sugar costs help Canadian products compete in the U. S. market, particularly in the large urban markets close to the Canada-U. S. border, where distance and resulting transportation costs are less of a factor. Opportunities also still exist in the mature Western European market for confectionery products, where gum is the fastest growing category. In 1998, the market for confectionery products in Asia-Pacific declined from $16. 5 billion in 1996 to $12. 9 billion in 1998.
Japan and Australia are currently the two biggest markets, but the highest growth potential is expected in China. Medium-term growth in the Asian region is expected to be about 5-8% a year. Double-digit growth is expected in Indonesia, South Korea, Thailand, Taiwan and China. Although massive in population and geographic size, the Asia-Pacific region has the smallest confectionery market of the world’s three major regions. To succeed in the Asian marketplace, manufacturers may have to adapt their products to taste preferences and other consumer demands.
For example, natural colours and flavours in hard and soft candies are popular with Asian consumers. Market growth has been stilted by the prevailing negative economic conditions in the Pacific Rim, especially the recessed economies of South Korea, Japan, Singapore and Indonesia. There were, however, two success stories in Asia-Pacific confectionery between 1994-1998. Both China and Vietnam experienced double digit growth. China’s overall confectionery market grew from roughly $1. 7 billion to nearly $3. 0 billion from 1994 to 1998.
The Chinese market, because of its sheer size, is becoming an increasingly important opportunity for Western confectionery products. Although per-capita consumption is still considerably lower than in Western countries, imports of confectionery products to China have increased dramatically in recent years, in relation to the growing disposable incomes and a general attraction to products that reflect Western culture. There is good potential for high-quality products. Brand image is important and there are opportunities for the establishment of new brands.
Currently, retail distribution in China is inefficient because of a poorly developed system of roads, rail, telecommunications and refrigeration. Recently, however, there have been moves to allow commercial distributors (which have economies of scale and various subsidies), to compete with state operations. The distribution sector is thus starting to become more market-oriented and efficient. Manufacturers and importers are working together to set up their own networks, whereby they appoint a certain company to act as their sole distributor in a particular region.
Exporters can penetrate the Chinese market by setting up a local office or by using the services of an agent in Hong Kong for advice on product positioning, navigating through the regulatory environment and bureaucracy, and avoiding misunderstandings due to cultural differences. Another important market in the region is Vietnam, whose overall confectionery market grew from $28 million in 1994 to $53 million in 1998. Consumption growth rates have been high especially in the chocolate category.
Rising incomes and increased trade prospects under a potentially expanded NAFTA make Latin America another attractive market for confectionery products. There are notable growth opportunities in the Brazilian market for chocolate, the Chilean market for sugar confectionery and the Colombian market for chewing gum. Geographically, Brazil is the third largest country in the Americas, after Canada and the U. S. , and has the second largest population (160 million). Recent positive trends for business include economic stability, reduced inflation, privatization and freer trade.
As the Brazilian economy moves forward, consumer demand for value-added products, including confectionery, is growing. The Brazilian chocolate products market is the largest and most dynamic in Latin America, and the sixth largest in the world, worth more than U. S. $4. 7 billion in 1998. The overall value of the Brazilian market is second only to the U. S. in North and South America. Challenges There are a number of challenges facing the confectionery industry in Canada if it is to continue growing, enhancing its competitiveness and taking advantage of new market opportunities.
Multinational enterprises are expected to continue to have an increasingly important role. These firms establish a benchmark or standard against which smaller firms measure their success, both in relation to their ability to reduce costs and meet changing market requirements. Multinationals operating in Canada will have the challenge of maintaining or expanding their product mandates (mostly North American) within their corporate structures and seeking new export opportunities. Like all food processors, this industry is assessing how to deal with the emergence of E-commerce.
The confectionery industry will have to determine if it can effectively use this medium to increase efficiencies through business-to-business solutions and the development of web-based marketing strategies. For small- and medium-sized enterprises, the challenge will be to exploit opportunities, particularly in areas where multinationals are not competitive and where flexibility and sensitivity to regional tastes may be important factors. Access to investment and the capital needed for technology and product development, as well as the ability to enter into strategic alliances (e. . , with other confectioners or distributors) in developing export markets will also be a challenge for these firms. More general challenges for the confectionery industry include: * developing a regulatory framework consistent with globalization (e. g. , working with government to address the issue of enforcing Canadian labelling requirements equally on domestic and imported products, and harmonizing standards with Canada’s major trading partners); and * enhancing competitiveness through: * supply chain management (e. g. working with government and the dairy industry to ensure that the Special Milk Class Permit System for confectionery manufacturers keeps dairy input prices competitive); * fostering new product innovation (e. g. , sugar-free, low-fat and natural-flavouring technologies); and * enhancing technical, export and marketing skills. Industry Association Confectionery Manufacturers Association of Canada 885 Don Mills Road, Suite 301 Don Mills, Ontario M3C 1V9 Tel: 416-510-8034 Fax: 416-510-8044 E-mail: [email protected] ca Agriculture and Agri-Food Canada Contact Bill Goodman Food Bureau
Agriculture and Agri-Food Canada 930 Carling Avenue Ottawa, Ontario K1A 0C5 Telephone: 613-759-7548 Facsimile: 613-759-7480 E-mail: bill. [email protected] gc. ca The Canadian Confectionery Industry SIC 1082/83, 1988-96: The Canadian Confectionery Industry http://www4. agr. gc. ca/AAFC-AAC/display-afficher. do? id=1171977485451&lang=eng Sample 2: http://www. canada. com/vancouversun/news/business/story. html? id=5f3e5232-fcad-4e6b-8c7f-1d62cb5dadd1 Chocolate market goes high-end OTTAWA — Last year, Gatineau chocolatier Gaetan Tessier turned 250 kilograms of raw, pure chocolate into delectable, high-end Easter treats.
March 21, 2008Be the first to post a comment OTTAWA — Last year, Gatineau chocolatier Gaetan Tessier turned 250 kilograms of raw, pure chocolate into delectable, high-end Easter treats. This year, he figures he’ll be going through about three times that amount of chocolate, so strong is demand. “I’m afraid of running out,” he says. Chocolate has for decades been associated with Easter. But Easter chocolate is not just about creme-filled eggs and moulded bunnies anymore. Fancy chocolate confections aimed at adults represent a growing, and lucrative, market.
The chocolate Easter bunnies are all still there (at least until their ears get nibbled off on Sunday), but all around the world, companies have realized there’s money to be made selling chocolate to adults year-round. Earlier this month, for example, international chocolate giant Nestle announced it was investing $20 million in a research centre in Switzerland that will develop new products to meet anticipated growth in demand for luxury and premium confections. Nestle said the $3. 7-billion market for luxury chocolate expanded by eight per cent annually between 2004 and 2006.
The company added that it valued the potential premium chocolate market at about $14 billion and that it expects markets for luxury and premium chocolate to increase by more than 10 per cent in the next new years. “Premium chocolate continues to grow,” said Joan Steuer, the U. S. -based founder of founded Chocolate Marketing, LLC, a consulting firm specializing in the chocolate industry. Steuer says there are two sides to the growth. On the one hand, there’s the chocolate confections themselves — fancy artisan chocolates such as those produced by Tessier’s company, ChocoMotive.
And then there’s there’s packaging. Steuer says she’s seeing chocolate confections being sold in “exquisite” packages that “push the envelope on pricing. ” Steuer says the Easter holiday offers one example of how the chocolate market is becoming more adult-oriented. “I’ve seen a lot of really neat premium packaging that seems to be adult-oriented for Easter,” she said. But the fancy packaging is optional — people are more likely to buy it if the chocolate is a gift. A large part of the adult chocolate market is aimed at people who just want to indulge. It’s an accessible luxury item,” said Steuer, adding that chocolate is also a comfort food. “And targeting adults with some of these confections is really about the ‘time out,’ ‘escape,’ and ‘reward for me’ market,” she said. Tessier, a well-established chef and teacher based in Buckingham, Que. , said he’d been hearing for years that the Ottawa-Gatineau high-end chocolate market was under-served. His original intention was to create chocolate confections for bakeries, restaurants, hotels and pastry shops, but he figured he should have a retail outlet as well.
He opened a first retail counter in Montebello, Que. , and demand led him to open a second counter in Gatineau last year. Now, he says, clients are urging him to set up shop in Ottawa, too. Tessier says he’s surprised not only by the demand, but also by how interested consumers are in the product. ChocoMotive uses fair trade chocolate from the La Siembra co-op. When he started out, Tessier said he thought fair trade chocolate would be a fad. Instead, it’s become such a hit that he stopped using regular chocolate. He said consumers are looking for high-end fair trade and organic products.
From a macro point of view, there are some clouds on the horizon for chocolate, as there are for many agricultural commodities. All around the world, agricultural commodity prices are going up. That’s because of increasing global demand for food (people in newly industrializing countries are richer and are therefore eating better) and because more and more cropland is being used to grow biofuels instead of food. Cocoa prices, for example, have risen by 34 per cent in the last year. So have prices for such things as sugar and of course oil, which is used in transportation.
Tessier says that so far, rising commodity price have not affected him greatly. He gets 100 pralines out of a kilo of chocolate, so even if the kilo costs more, the increase is spread broadly. Still, he says, not everyone is willing to pay premium prices for chocolate confections. He says he still has to explain why his treats cost so much more than, say, a moulded milk chocolate SpongeBob SquarePants at the local drug store. Tessier figures about half of his customers are regulars, coming back month after month for a chocolate fix. People come into the shop and they become like children,” said Tessier, adding that he’s had people ask “What can I get for $10? ” in the same way a kid in a candy store might ask “What can I get for 50 cents? ” Canwest News Service © (c) CanWest MediaWorks Publications Inc. http://companycheck. co. uk/company/00650747 Godiva data Employee 2200 https://www. sochoklat. com/difference. asp http://www. oppapers. com/essays/Case-Study-Roger-s-Chocolates/373894? read_essay http://www. allfreeessays. com/essays/Rogers-Chocolate-Case-Study/218642. html