Stressed snackers shun chocolate as Europe's crisis bites

Sarah McFarlane

* Mintel sees West Europe 2012 market value down 5 pct

* Europe Q3 cocoa grind seen falling by up to 20 pct

* Emerging markets in Asia are growth bright spot

LONDON, Oct 5 (Reuters) - Europe's economic crisis is

nibbling away at demand for chocolate, the affordable treat once

thought of as recession proof.

Times are tough enough now that even the market for this

modest luxury is struggling in Europe, analysts say.

"For the first part of the recession we thought chocolate

would be recession proof, and then we said recession resistant,

and now I think people are just getting ground down," said

Marcia Mogelonsky, global food and drink analyst at Mintel.

"I have not seen this much of a slowing in the market in the

time I've been watching it."

Market researchers Mintel said that while the global

chocolate market value will be little changed on the year at

$84.5 billion in 2012, Western Europe's chocolate market value

is set to fall by around 5 percent.

"Chocolate usually does better than average fast moving

consumer goods because chocolate is the archetype of cheap

indulgence so it's the last thing people will drop," said

Jean-Jacques Vandenheede, European director for retail insights

at research firm Nielsen.

The firm recorded its first ever fall in volumes for the

fast moving consumer goods sector - made up of low value items

which sell quickly - in the second quarter of 2012 since it

began monitoring it in 2007.

"If the economic outlook continues to be as sombre as it is

now people are not going to rally, they are going to hunker down

even more, and spend even less on food, even on chocolate,"

Mogelonsky said.

The firm estimates Western Europe's chocolate market value

in 2012 will fall to around $30 billion, from $31.7 billion the

previous year.

Europe and North America are the largest and most mature

chocolate markets, which prohibits growth to an extent.

"You have to bear in mind the market is pretty mature so

there's not much room for volume growth - regardless of the

economic environment - in most Western European countries," said

Lee Linthicum, global head of food research at Euromonitor


Portugal and Italy will see some of the sharpest falls in

market value in Western Europe for 2012. Mintel forecast, at

minus 11 percent and minus 7 percent respectively.

The world's largest chocolate products maker Barry Callebaut

has said that during the first nine months of its

fiscal year 2011/12, double-digit sales in the Americas, Asia

and eastern Europe helped offset still sluggish demand in

southern Europe.

Mintel data showed the bright spots for growth were in

emerging markets in Asia including China, Indonesia and Vietnam,

but these countries were starting from a low base.

China's market value was expected to increase by 16 percent

in 2012 to $4.6 billion, while Vietnam was up 11 percent at $170

million and Indonesia was up 9 percent to $1.2 billion,

according to Mintel figures.

The slowdown in chocolate demand has filtered through to the

cocoa market, with cocoa futures on Liffe this week

falling to their lowest level since July 25.

European cocoa traders said slowing chocolate demand and

poor cocoa processing margins triggered the resale of cocoa

beans by major processors last month.

Europe's second-quarter cocoa grind, an indicator of cocoa

demand, recorded its sharpest quarterly fall of 17.8 percent

from the same period last year, Brussels-based European Cocoa

Association (ECA) data showed in July.

Third-quarter grinding data is due to be published by the ECA

on October 11 with expectations for further slippage as some

traders predicted a fall of up to 20 percent versus the same

period last year.

(Reporting by Sarah McFarlane; Editing by Veronica Brown and

William Hardy)

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