New players have entered the industry and existing enterprises have expanded or franchised, with the unfortunate exception of Darrell Lea Chocolates.
With consumers devouring the industry’s delicacies, revenue is forecast to grow at a compound annual rate of 4.7 per cent over the five years through 2013-14.
Consumers opt for premium chocolates as a little luxury in their day to day lives, and as a symbolic gift for special occasions.
The trend of premiumisation is expected to be a key driver for the specialty chocolate stores industry over the next five years.
As supermarkets and department stores expand their ranges and selection of quality chocolates at affordable prices, competition for specialty chocolate stores will grow.
Differentiation of products is likely to be one of the most important drivers for the industry, as quality and service set apart the luxury experience provided by specialty chocolate stores.
According to IbisWorld industry analyst Emily Witham, “industry revenue is expected to grow by 7.5 per cent over 2013-14, bringing revenue to $279.6 million, with sales of artisan chocolate and seasonal or boxed chocolates driving revenue growth”.
The general trend of health consciousness among consumers is growing, resulting in mixed outcomes for the specialty chocolate stores industry.
The widely accepted fact that consuming large amounts of chocolate is poor for heath has driven down overall chocolate consumption. On the other hand, it has also led many consumers to opt for lower volumes of chocolate, with a focus instead on value and quality.
“Furthermore, at times when discretionary incomes decline, consumers often look to premium chocolates as an affordable luxury,” says Witham.
The viability of the industry, particularly with regard to handcrafted chocolates, depends on the availability and price of key quality inputs. The origin and quality of cocoa beans or powder is increasingly becoming a point of differentiation for various varieties of premium chocolates.
Similarly, fluctuations in the price of dairy products and sugar affect industry profit margins.
The industry is characterised by a low level of market share concentration, with major players including MB Australia 2000, Chocolateria San Churro, and A.E. Haigh.
For more information, visit IBISWorld’s Specialty Chocolate Stores in Australia industry report.
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