NEW YORK Feb 18 Chocolate sales in China should
grow to $4.3 billion by 2019, up nearly 60 percent from $2.7
billion in 2014 and driven by demand from the growing urban
population, a senior Hershey officer forecast on Wednesday.
The increase projected by Hershey International president
Bert Alfonso reflects the chocolate industry's continued bet on
growing emerging market consumption, despite recent indications
of slowing demand in fast-growing Asian markets.
Hershey, which has been making chocolate for more
than a century, expects to benefit from this demand boom, Alonso
said in a webcast heard by Reuters of the Consumer Analyst Group
of New York conference.
He projected the company's China sales would grow by 35
percent to $450 million in 2015. Based on that figure, chocolate
sales in China made up around 4.5 percent of Hershey's $7.4
billion in total revenue in 2014.
The growth comes as Hershey integrates products from its
December 2013 acquisition of a majority share in Chinese candy
maker Shanghai Golden Monkey Food Co.
"Consumers are embracing our brands in China as we outpace
category growth," Alfonso said. "We are excited about the
potential for Shanghai Golden Monkey."
Alfonso noted that chocolate consumption growth in emerging
markets closely tracks GDP growth, and suggested China's
increasing urban population would drive chocolate consumption.
The bullish projections come comes as cocoa grinds in Asia,
a key indicator of demand, reached their lowest level in three
years in the fourth quarter of 2014.
This demand drop has driven the Asian cocoa butter ratio
down to 1.88-2.0 times London futures <0#LCC:>, its lowest level
in 21 months.
Expectations of rising chocolate demand drove major
companies like Cargill and Olam to expand
bean processing operations in fast-growing chocolate consuming
regions like Asia, prompting concerns that the market had added
too much capacity.
Olam has also expressed optimism about growing emerging
market chocolate demand, saying late last year after its
acquisition of rival Archer Daniels Midland's cocoa
processing business that additional grinding and pressing
capacity would be necessary.
(Reporting By Luc Cohen; Editing by Frances Kerry)