Sweet success for GCC chocolate industry

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middle east chocolate market

Middle East is open to innovation, says KPMG, reporting that 8 percent of launches between 2008 and May 2013 happened in the region, where consumers are more interested in new flavors than in traditional markets.

The ‘Wow’ effect

UAE based Al Nassma Chocolate is offering something new – chocolate based on camel milk. Patrick Dorais, Director of Sales highlights that their camel milk chocolates are truly a product by and for the region, so they have a great popularity within the Gulf. “Locals who grew up on camel milk, expats for whom our chocolates are a great take-home gift, and tourists who are either visiting the GCC or merely transiting, are all quite keen on trying something truly unique, made in the UAE”, said Mr. Dorais in a statement for bq.

Like in many other fields, region’s taste for chocolate is unique – costumers demand luxury products which equate simplicity with quality, naturalness and health, while customization is one of the most important trends. For example, two years ago the world’s most expensive chocolate, priced at USD 105 per half kilo was launched in Dubai by French chocolatier Debauve & Gallais.

“Chocolate has always been popular in the Middle Eastern region as a dessert as well as a gift for special occasions. Currently we see a tremendous change in consumer expectations with an exponentially growing number of consumers paying more attention to quality and exclusivity. Price no longer plays a primary role in terms of purchase motivation and the ‘wow’ effect is more and more a criteria for product selection, explains Mr. Dorais the consumer trends in GCC region.

Chocolate confectionery is flourishing in the GCC countries, but market is still dominated by industrially-produced chocolate and experts say it will take some time to educate consumers on the difference between an industrially-produced chocolate and an artisan chocolate. In Saudi Arabia, the world’s largest confectioner Mars, has opened its first production facility in the Kingdom last year, and it has 45 percent of the market. According to AgriExchange web portal, Saudi Arabia imported more than 100.000 tones of cocoa products in 2012, and chocolate products constitute 55 percent of the confectionery market, forecast to reach USD 2.26bn by 2018.

 

Chocolate dates GCC

 

The rise of artisan chocolate

The chocolate market in the UAE is projected to grow at a CAGR 6.09 percent during 2014-2019 in value terms, according to TechSci Research “UAE Chocolate Market Forecast & Opportunities, 2019”. Like in neighboring Saudi Arabia, Mars, Nestle and other global chocolate players are dominating the market, but in UAE artisan chocolate is on the rise, and the competition is high.

“With camel milk as the core differentiation element in our chocolate, we have a very unique and exquisite product. Therefore it is hard to compare our business dynamics with any other company in the sector whether local or global and this gives us an undeniable unique selling proposition vis-à-vis the competition. Quality-wise we need to take into consideration that on a worldwide level there are only a handful of real chocolatiers working from the cocoa bean itself. Most chocolate “producers” indeed buy ready-made chocolate mass from suppliers like Cargill or Barry Callebaut and then mold their own products out of these masses. We are one of the few remaining companies producing chocolate from scratch, not using any ready-produced chocolate mass. In fact we are by definition bound to produce our own chocolate, as we are the only company in the world offering camel milk chocolate. The advantage of controlling all steps of the production process is that we are in full control of all ingredients and can therefore vouch for premium quality. When it comes to distribution of our products, our channel selection is based on the fact that Al Nassma camel milk chocolate is an exclusive artisan chocolate. It is not in our optic to become a mass distributed product, we will never be sold in mass outlets like hypermarkets. We focus on elite travel retailers and selected gourmet houses, present for example in Selfridges in London, Julius Meinl am Graben in Vienna and Prag, 2Beans in New York or in airport duty free shops from Europe to Asia”, explains Patrick Dorias their way to fight the competition. Other artisan chocolatiers have their own way, but every one of them is trying to lure customers with lavish displays of their often hand-made products. TechSci Research said that private label penetration was quite high in the market, which was leading domestic companies to offer their products for private label at lower prices to stay competitive with the multinationals.

 

middle east chocolate market
Patrick Dorais, Director of Sales, Al Nassma Chocolate LLC

Ebola affecting the prices of cocoa

One of the challenges for the industry is the rising price of raw materials, mainly sugar and cocoa which is one of the fastest rising global commodities traded on the world market. Bloomberg recently reported that cocoa prices reach a 42 months high as Ebola spreads in Liberia and Guinea, which border Ivory Coast, the world’s top producer of cocoa beans. Chocolate confectionery industry is also very seasonal, and producers are trying to reduce the fluctuation in sales in times after big holidays like Ramadan and Christmas. For example, in the UK, 13 percent of confectionery sales are seasonal. Mr. Dorais says they noticed a relatively linear annual seasonality due to the nature of their product; but they are popular not only at Christmas and Easter when expats return home but also for the Eid and Ramadan which shift over the year.

“The tourist season in the UAE, running primarily from October through April, gives us stable sales in the tourist sector but also thanks to the continued expansion of Gulf carriers, we trade month-in, month-out in the region’s hub airports where transit passengers account for up to 80 percent of the traffic and a high proportion of these want a memento of their passing through the Gulf”, stressed Mr, Dorais.

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