(Bloomberg) -- Indonesia may have lost its position as the world’s third-biggest cocoa producer because of slumping output, but its large population means the country is now an increasingly important market for chocolate, according to Mondelez International Inc.
The owner of Cadbury and Toblerone brands sees chocolate consumption expanding strongly in Southeast Asia’s top economy, according to President Director of PT Mondelez Indonesia Sachin Prasad. One example is sales growth of 36% annually for Cadbury chocolate in the past three years, he said in an interview, and he expects sales to expand by more than 40% this year.
The comments from Mondelez echo those from other executives from Olam International Ltd. to the International Cocoa Organization at a conference in Bali last week, who forecast strong consumption, especially in Asia, at a time of tight supply. The outlook for robust demand has helped push prices in New York to the highest level since May 2018.
“People are spending a lot of time in commute, in traffic and everything, and lesser time is available for a proper meal,” Prasad said on Friday. “They’re engaging a little more time at their snack, so the number of snacking occasions is going up. There’s no stopping of growth” for chocolate overall, he said.
Price is still an issue. To address that, Mondelez plans to sell more affordable chocolate -- at about one-third of the cheapest products in Indonesia -- to entice more consumer groups, Prasad said. In Asia, he sees Japan as one of the strong markets, driven mostly by local chocolate makers. The market is “very big, very mature, very evolved, and the moment that the consumer accepted the health benefits, it took a big upswing,” he said.
Cocoa bean output in Indonesia has shrunk by more than half in the past decade as farmers battle disease and aging trees, and switch to more profitable crops such as palm oil. That’s turned the nation into a bean importer from major exporter. The ICCO estimates that the country may produce 220,000 tons of beans this year, making it only the world’s sixth-largest grower.
The country bought a record amount of beans from overseas in 2018, and imports may rise further this year on higher grindings, according to the Cocoa Industry Association in May.
To fix that, the Agriculture Ministry plans to start a long-term program to boost production to about 1.4 million tons by 2024 and to 2 million tons by 2045. Prasad called on cocoa stakeholders to work together to increase output. “If many parties can come together, the needle moves,” he said.
Cocoa futures in New York for March delivery fell for the first time in seven days on Monday, declining 0.6% to $2,664 a ton.
(Updates to add Monday price move in last paragraph)
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