Market Insights Fact-based insight Chocolates in Mexico September 2011 CM 00181 -005 INSIGHT by DATAMONITOR
Report Structure Illustrates the flow of the report. Executive Summary Key Trends Competitive Landscape Slide 5 Slides 10– 22 Slides 29– 34 An at-a-glance view of key insights and trends in the marketplace. This section examines the key trends impacting consumption and consumer behavior. These include: This section looks at the main competitors in the market. For each major player this report examines: • Changing consumer behavior and its effect on consumption patterns. • Manufacturers’ responses to changes in the market and the resultant changes in new offerings. Market Data • Overall product strategy. • Key brands in the market. • New offerings in the review period. • Government regulations impacting the fair-trade market. Slides 6– 9 The manufacturers profiled in this report include: Key statistics about the size of the market. This section includes all of the metrics the reader needs to understand the shape of the market. Data include: • Macroeconomic drivers of the Mexican chocolate category. • Global overview. • Category analysis. • Category outlook. New Product Launches Slides 23– 28 A summary of what is new on the shelves in this market. Data in this section include: • Changes in new product launches in the review period. • Top flavors. • Top claims. • Top packaging materials. • Price points for new launches. 2 INSIGHT by DATAMONITOR Chocolate in Mexico §Nestlé. §Kraft Foods. §Mars. §Hershey’s.
Report Definition A brief description of the report. • Datamonitor’s Market Insights: Chocolate in Mexico report is a detailed information resource covering all of the key aspects of the market trends prevalent in the French chocolate category. • It provides insights using and analyzing information from the following Datamonitor products: – Product Launch Analytics – Market Data Analytics – Country Statistics Database – New Consumer Insight. • It is a snapshot of information at a point in time. Information sources other than the above are explicitly mentioned in the respective slides. • All the images used in the report are sourced from Datamonitor’s Product Launch Analytics unless specified. • Across the report, the products launched in the chocolate category either globally or in Mexico are referred to in terms of the total number of stock-keeping units. • For specific analysis of flavors, packaging material, price points, and claims, “number of products launched” refers to the number of products launched within each parameter. • Flavors are considered for this analysis only if they change the taste of a product; for example, “chocolate” is not considered a flavor within the chocolate category. 3 INSIGHT by DATAMONITOR Chocolate in Mexico
Category Definition A brief description of the category. Boxed chocolate Assortments of different, individual bite-sized chocolates packaged in a box or carton and often used as gifts (e. g. Cadbury's Roses). Nestlé Larin – Chocolate con Leche y Nueces – Edicion Especial Tulipan (milk chocolate and nuts – special edition) Chocolate countlines Chocolate-covered bars designed to be eaten in one go. Includes bitesize countlines sold in multipacks. Products marketed as biscuits/cookies are not included (e. g. Kit Kat, Twix). Hershey's Kissables – Chocolate Confitado (chocolate confit) 4 INSIGHT by DATAMONITOR Chocolate straightlines Other chocolate Molded bars Novelties Solid chocolate bars, blocks, or tablets shaped by pouring melted chocolate into molds, with or without added ingredients such as fruit and/or nuts (e. g. Cadbury's Fruit and Nut, Hershey's Cookies N Crème). Novelties are mainly seasonal products that are produced for Easter, Valentines Day, and Christmas. They include products such as eggs, soldiers, animals, and coins. Identical products packed in bags or boxes (also known as selflines). Straightlines compete on store shelves with countlines and small molded bars if bagged, and with assortments if boxed. (e. g. Maltesers, Hershey's Kisses). Disney – Huevo de Chocolate con Leche con Sorpresa (milk chocolate egg with surprise) Hershey's Kisses – 7 Cerezo – Choco Mazapan (chocolate marzipan) Regalitos – Chocolate con Leche (milk chocolate) Hershey's Symphony – chocolate bar Chocolate in Mexico All other chocolate, including local specialties such as Alfajores in Latin America.
Executive Summary A snapshot of key insights and trends in the marketplace. Market Data § Chocolate in Mexico was valued at nearly $560 m in 2010. § The category recorded a sluggish compound annual growth rate (CAGR) of 1. 3% in sales value over 2005– 10. § The country ranks 27 th globally, and Key Trends New Product Launches § Three segments – novelties, boxed § The Mexican chocolate category is Mexican middle class is leading to chocolates, and other chocolate – highly concentrated, with nearly increased demand for premium accounted for nearly two thirds of 80% of sales being accounted for by chocolates. new product launches, reflecting the top five players. § The rising spending power of the § A rising interest in promoting the seasonal demand for gifting during § The category is dominated by a few local economy is driving the festive and other special occasions large international players, namely provenance trend, with consumers in the country. Nestlé, Hershey's, Mars, and its growth was weak among its becoming more inclined to seek out emerging economy peers. products made in Mexico. § The growth rate estimated to be 1. 6% during 2010– 15. § Most top flavors among the new launches have global appeal. § Awareness of ethical issues is creating demand for fair-trade § Plastic was the most used packaging material in 2010. § Premiumization and health were the products. § in response to rising obesity levels in the country, Mexicans are two themes that influenced the most claims in the year. becoming more health conscious and demanding healthier products with claims like “sugar free” and “low cholesterol. ” 5 Competitive Landscape INSIGHT by DATAMONITOR Chocolate in Mexico Ferrero.
Market Data Key statistics about the size of the market. Chocolate category sales value in Mexico grew consistently over the past five years, primarily driven by sales of novelty chocolates Mexico, chocolate sales, 2005– 15 Mexico, chocolate sales by segment, 2010 CAGR 2010– 15 1. 6% CAGR 2005– 10 1. 3% § Mexico’s chocolate category experienced steady growth of 1. 3% over the past five years (2005– 10), and recorded sales of nearly $560 m in 2010. § The category’s sales are primarily contributed by the novelties segment, which accounts for more than one fifth of chocolate sales in the country. § Boxed chocolates and novelties, both of which are mainly used for gifting purposes, together account for a large share (about 39% in 2010) of chocolate sales value, reflecting the higher use of chocolate for gifting rather than for personal consumption. § In future, this steady growth in sales is expected to continue, according to Datamonitor’s Market Data Analytics database estimates. Source: Datamonitor’s Market Data Analytics database 6 INSIGHT by DATAMONITOR Chocolate in Mexico
Market Data Key statistics about the size of the market. In 2010, the Mexican chocolate category ranked 27 th globally, in terms of sales value; despite cocoa being native to the country, the country’s chocolate market still remains largely untapped in comparison to other emerging economies Leading nations by chocolate sales, 2010, and growth, 2009 – 10 § In terms of chocolate sales value, the country ranks 27 th globally, while several emerging economies like Brazil, China, Russia, and Turkey are ranked among the top 10 nations in 2010. § While the emerging economies show potential for future growth, both in terms of sales value and per capita consumption, Mexico lags far behind in comparison to these peer nations. § As depicted in the figure above, Mexico had a higher chocolate § Despite cocoa being native to Mexico, the food’s consumption in the country is largely confined to gifting during festivals and special occasions. Consequently, most chocolate sales in Mexico are seasonal. Mexico and BASIC countries, chocolate consumption per capita and growth, 2010– 15 consumption rate in 2010, in comparison to India and China; however, each of the BASIC countries (including India and China) are estimated to have a higher growth over the next five years than that of Mexico. Source: Datamonitor’s Market Data Analytics database 7 INSIGHT by DATAMONITOR Chocolate in Mexico
Market Data Key statistics about the size of the market. One of the growth drivers of chocolate sales in the country is its large base of consumers aged below 35, who are pushing chocolate sales Mexico, demographic distribution by age, and chocolate consuming segments by age, 2010 § With a median age of 25. 7 in 2010, Mexico has one of the youngest populations in the world today. § Nearly 63% of the population is aged below 35. Additionally, the largest proportion of chocolate consumers (77%) are also younger than 35. § The country’s chocolate sales are, therefore, being largely driven by the young consumer segment. § People in the 15– 35 year-old age segment are likely to spend more on food and grocery products because of their financial independence. Source: Datamonitor’s Market Data Analytics database and Country Statistics database 8 INSIGHT by DATAMONITOR Chocolate in Mexico
Market Data Key statistics about the size of the market. The country's quick recovery from the recession has led to a recent spike in consumer confidence, which in turn is driving domestic consumption Mexico, real GDP and growth rate, 2005– 15 R CAG 4% R CAG % 2 § The country’s economy experienced a deep recession in 2009, driven by weaker exports to the US, lower remittances and investment from abroad, a decline in oil revenues, and the impact of H 1 N 1 influenza on tourism. All these have impacted consumer confidence to an extent during the period. § However, Mexico’s resurgence in 2010 to pre-recession levels, aided by a quick recovery in the export-oriented industrial sector, stimulated domestic demand in the country. § In July 2011, the consumer confidence score in the country improved to 94. 5 from 93 in June (source: consumer confidence survey by the Mexican National Statistical Agency and the Bank of Mexico), reflecting a GDP high level of optimism among consumers about the performance of the "The pieces are coming together for consumers. Inflation is low, there are wage gains – modest but positive – and credit is finally coming back. " economy and their general willingness to spend. § A more willing-to-spend consumer segment will be a strong pull factor for many consumer goods markets, including the chocolate category. Luis Arcentales , economist at Morgan Stanley , August 2011 9 INSIGHT by DATAMONITOR Chocolate in Mexico Source: Datamonitor’s Country Statistics database
Key Trends A view of key insights and trends in the marketplace. Increased spending power among Mexican consumers is driving demand for premium chocolates Mexico, income groups, 2009 Mexican elite class Mexican middle class § In terms of annual income, Mexico is considered a largely middle-class country, with more than half of the population belonging to the middleincome group. § The country’s strong economic performance in recent years has led to rising disposable incomes that allow consumers to purchase more premium/luxury products. § In Mexico, chocolate is used more often for gifts at festive occasions than for personal consumption, which allows manufacturers to position their products as being “premium, ” using appropriate pricing strategies. § Being an affordable luxury food even during tighter financial conditions – unlike other luxuries like eating out every day or buying durable consumer goods – chocolate has stood the test of time, and an increased number of consumers are demanding luxury chocolates. § In 2010, “upscale” was a trend that appeared prominently in the top claims of new product launches. § Companies like Nestlé launched limited edition products that year to allow consumers to celebrate special occasions with chocolate gifts. Source: Datamonitor’s Country Statistics database 10 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. To leverage the demand for premium chocolates, the positioning strategies that manufacturers are using include limited-edition goods, exotic preparations, and marketing the origin of ingredients “Limited edition” is a popular positioning in chocolate products in Mexico, as it attracts the upscale crowd. Nestlé Larin Chocolate con Leche y Nueces en Trozos (milk chocolate and chopped nuts), limited edition. The package reads: “The taste of the perfect gift. ” 11 INSIGHT by DATAMONITOR Marketing an exclusive chocolate-making process and “authentic” ingredients is another way to position upscale chocolates in Mexico. These chocolates feature packaging designed for gifting purposes, with a ribbon -tied, plastic-wrapped box. The package copy reads: "Handcrafted in small batches. ” The chocolates are made with “ 100% real chocolate” and are produced in the US. Chocolate in Mexico Indicating the origin of ingredients helps to communicate the exclusivity of a product; this package reads "our finest Swiss chocolate" and claims that the product provides intense eating pleasure. This product is part of Nestlé’s Chocolate Suisse de Degustation line of superpremium chocolates, and is marketed under the Nestlé Gold brand name.
Key Trends A view of key insights and trends in the marketplace. Highlighting certain aspects like “festive” and “sensory pleasure, ” along with the use of attractive packaging, is helping manufacturers push sales during festive times Handmade soft chocolates, tagged as “sensational luxury chocolate” for gifting purposes; the package contains two surprise gifts. Special festive/gift packaging is used to attract consumers who prefer premium chocolates. Trufas de Chocolate con Leche (milk chocolate truffles) were recently introduced in Mexico by Curryer, under the Mc. Kim label. These individually wrapped truffles are presented in a recyclable windowed cardboard box that is tied with yellow ribbons at each end. Enjambre milk chocolates in crunchy cornflakes and cereal flavor are specially packaged for gifting and come with an engraved bow and two surprise gifts. Source: Datamonitor’s product Launch Analytics database 12 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. Increased interest among Mexicans in supporting the local economy is driving demand for chocolates made in Mexico A significant 40% of Nearly 33% of Mexicans prefer to buy goods made by local like supporting their national and producers with local ingredients. local economy when shopping. Image source: Mexicali industrial park (website) Data/ source: American Express report titled “The future of consumer spending: A new era for the pause and purchase” § The findings of a recent research report – The future of consumer spending: A new era for the pause and purchase, conducted by The Future Laboratory for American Express in 2011 – revealed that a rising number of Mexicans are supporting their local economy through their purchasing decisions. § This is reflected in the latest chocolate launches, with more than 44% of the products claimed to be produced in Mexico. Most of the chocolates produced in Mexico also feature local flavors like coconut and nuts, and tropical fruits like melons. 13 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. Sustainable production practices are increasingly being sought by Mexicans Nine out of 10 Mexicans feel it is important for companies to undertake socially oriented action Four out of 10 Mexicans are willing to change brands and even stores to support a social initiative like fair trade "Mexico has the most dynamic fair trade sector in all of Latin America. " Joaquín Muñoz, director of the French chapter of the Max Havelaar Foundation, an international fair-trade certifier Source: The Fourth Study on Consumer Attitudes Towards Social Corporate Responsibility, conducted by private consultancy firm Vivian Blair & Asociados in 2008 A “Fairtrade certified” logo granted by the Fairtrade foundation. A common logo in the US, granted by Trans. Fair, an USbased organization that certifies many products, mainly food. Images Source: fair-trade-hub. com 14 INSIGHT by DATAMONITOR Chocolate in Mexico Comercio Justo México issues this label certifying fairtrade production practices for nine coffee brands produced in the country.
Key Trends A view of key insights and trends in the marketplace. Manufacturers like Mars are responding to consumer demand for fair-trade products by communicating their production and trade commitments • International companies and local players alike are actively involving themselves in achieving sustainable practices to address the growing awareness of ethical consumerism among Mexicans recently. Mars’s sustainability model Seeking to achieve environmentally friendly production • For instance, Mars Foods is helping to bring together the cocoa industry with leaders in related fields to create and fund beneficial research programs, including education and training for farmers, development of pest/disease-resistant cocoa crops, and other avenues for cocoa research. • Additionally, the company also collaborates with several governmental agencies such as the US Department of Agriculture and the US Agency for International Development , scientific research institutions such as the Smithsonian Tropical Research Institute, non-governmental organizations (e. g. World Cocoa Foundation, International Cocoa Initiative, and Conservation International), academia (the University of Harvard, University of California-Davis, and University of Nottingham) and groups of small cocoa farmers to establish a variety of programs that seek to ensure the long-term sustainability of the cocoa economy, the communities that produce cocoa, and their environment. Seeking to benefit cocoagrowing communities with responsible labor practices and skills enhancement as a key focus Seeking to enable a profitable supply chain that fairly compensates farmers’ efforts Source: Mars Foods company website 15 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. Nestlé, a leading player in the Mexican chocolate category, is actively working to achieve sustainable development that benefits not just consumers and suppliers, but also society as a whole • For Nestlé, one of the key players in the Mexican chocolate category, shared Nestlé's sustainability model in Mexico value is translated into benefits for both society and business. • The company says that benefits such as a better quality of life for local people, better quality of raw materials and intermediate products, higher yields and Water Rural development greater productivity in the development of the field, and greater availability of nutritious and healthy products for its consumers are all part of its sustainability commitments. • In line with its commitment to creating shared value, the company is involved in implementing various programs for technology transfer, technical assistance, financing, and direct marketing for initiatives that have a direct impact on the income and business sustainability of primary producers. Nutrition Source: Nestlé company website 16 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. Rising cocoa and other raw material prices in the global market are driving innovation in terms of revised formulations and reduced product sizes in order to sustain chocolate sales World cocoa prices ($/kg), 2007– 11 352. 3 • Like many other agricultural products in the recent past, cocoa has seen a steep increase in prices. 302. 5 • Additionally, sugar – the other key raw material for chocolate-making – has experienced price increases as bad weather has damaged crops in Brazil, which is 252. 7 one of the world’s largest producers of the ingredient. 202. 8 • With increasing raw material prices, chocolate manufacturers have been innovating ways to sustain their profits while retaining the flavor of their products. While some are tweaking their recipes to reduce the cocoa content, others are focusing on 153. 0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Source: World Bank cocoa commodity price statistics reduced product sizes. • The use of innovative formulations to retain, or in some cases enhance, the taste of “If prices stay at this level, then you should expect that it will get passed on to the consumer, either with some level of price rises or package size reductions. ” chocolate is the most interesting trend seen in recent times. Barry Parkin, vice president for chocolate at Mars 17 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. A popular concept that has emerged is aerated chocolate, which uses a reduced quantity of cocoa Some of the aerated chocolates offered by leading category players • One innovative formulation is air-filled chocolates. According to Stephen Beckett, the author of The Science of Chocolate and a former researcher for Nestlé, chocolate density can be cut by as much as half by using carbon dioxide or nitrous oxide to make bubbles. • Furthermore, aerated chocolates are creamier and melt in the mouth very easily due to their low density. Adding bubbles to chocolates also gives them a different texture. • Hershey’s launched Air Delight, an aerated milk chocolate bar, in 2010. The company also launched an aerated version of its popular Kisses brand of chocolates. • Nestlé also offers aerated chocolate brands: Aero in the European and Middle Eastern markets, and Suflair in Brazil. However, in the Mexican market it has no such products as yet. Source: respective company websites 18 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. Mexico’s vast obese population has led to increased consciousness among consumers about health and wellness; in recent times, this has led to product offerings that address these concerns • Rising obesity is a concern across the world, and this is no different in A new sugar-free Mexico, which is currently the country with the second most obese chocolate bar under the population worldwide. Fifty 50 brand name was • However, what is more encouraging is that these statistics have Sugar Free launched in Mexico in alarmed consumers, who are now more demanding when it comes to 2010. The product healthier food choices. literature claims that half of the proceeds from the • In the case of indulgence foods like chocolate, consumers do not wish sale of this chocolate go to compromise on taste, but want fewer calories in their favorite foods. • They are also more demanding of foods with avoidance claims such as “no added sugar” and “low cholesterol. ” towards diabetes ic em Low glyc research. The product is marketed as being suitable for use in a low • More than 9% of the claims used for 2010 product launches in Mexico glycemic diet. were “no sugar, ” “low fat, ” or “low glycemic index. ” Source: Datamonitor’s product Launch Analytics database 19 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. Beyond product offerings, some companies like Nestlé are committing themselves to improving the health of Mexicans through corporate social responsibility activities § Demand for food products with health benefits is rising in the country, prompting companies like Nestlé to implement various programs and actions in order to promote nutrition, health, and wellness in the country. § The company’s new product launches in recent times have been concentrated on delivering healthier food options to its consumers. The following is a summary of the company’s recent launches designed to help achieve this: § 59 reduced fat products in 245 variants. Various health awareness programs being implemented by Nestlé The Nestlé Foundation promotes postgraduate and specialist training in clinical nutrition and obesity. Additionally, it sponsors the International Conference on Nutrition & Growth to educate both the industry and consumers on ways to improve health. § Reduced sugar products in 103 variants. § New products with added fiber. § 61 products with added vitamins. § 76 products with functional ingredients. § The company is especially focused on educating its consumers through the Nestlé Nutrition Fund, which invested MXN 80 m in the last 16 years. § In Mexico, the company has helped to educate 2. 5 million school children from The Nestlé Healthy Kids Global Program operates in 40 countries and, by 2012, aims to promote multi-sectoral partnerships with the community, the health sector, the education system, and nutrition experts across all the countries in which Nestlé operates. both public and private schools about nutrition and the importance of healthy habits for a better quality of life as adults. 20 INSIGHT by DATAMONITOR Source: Nestlé website Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. Low calorie indulgences and low fat, fortified chocolates are positioned as being appropriate for the health conscious consumers in Mexico Tagged as being low in calories (“ 190 calories, 10% of daily value per pack” according to the literature), this is one of the new breed of healthy premium chocolates in Mexico. Claimed to contain 30% less fat than leading chocolate brands, and enriched with fruit antioxidants, this is another of the healthy products available in the country. M&M's new Premiums dark chocolate candies from Mars Foods are positioned as luxury chocolates that are low on calories. Touted as “chocolate covered sunshine, " Nestlé’s dark chocolate Raisinets are presented in a box that features the kosher dairy stamp and is labeled “natural source of fruit antioxidants” and “ 30% less fat than the leading chocolate brands. " Source: Datamonitor’s product Launch Analytics database 21 INSIGHT by DATAMONITOR Chocolate in Mexico
Key Trends A view of key insights and trends in the marketplace. Another segment of consumers are demanding “natural” and organic chocolates that are free from harmful chemicals and fertilizers Marketed under the Green & Black's Organic label, this espresso-flavored chocolate is described in the package text as “smooth dark chocolate with real coffee. ” Certified as organic, this Hershey’s milk chocolate is described in the package text as being created from organically grown ingredients. This chocolate launched under the Chocolate Organiko brand contains an organic certification on the back of the wrapper. § An increasing number of consumers these days believe that “natural” and organic foods are better alternatives to offerings produced with chemical fertilizers. In response, marketers are stepping up efforts to communicate their commitments to addressing such consumer concerns. § One way to target this segment of health conscious consumers is through package labels like organic certification. § In 2010, nearly 6% of the newly launched claims were tagged as ”real, ” “natural, ” or “organic. ” Source: Datamonitor’s product Launch Analytics database 22 INSIGHT by DATAMONITOR Chocolate in Mexico
New Product Launches A summary of what is new on the shelves in this market. While most chocolates used flavors with global appeal like peanuts and caramel in 2010, some of them were more exotic Mexico, top flavors in new product launches in the chocolate category, 2010 Top flavors § Peanut flavor, which accounted for about 6% of all products, was the most popular among newly launched chocolates in 2010. § Other top flavors in 2010 included almonds, caramel, cream, and rice crisps. Most favored § Mexicans mostly prefer their chocolates in its natural flavor. However, fruit and nut blends are also popular in the country. § Several blended flavors – including two or more flavors of fruits, nuts, or other ingredients like rice crisps – were seen among the new launches in 2010. Other flavors § The exotic flavors used in new chocolate launches included alcoholic drinks like amaretto, brandy, champagne, Grand Marnier, and kirsch. Source: Datamonitor’s Product Launch Analytics database 23 INSIGHT by DATAMONITOR Chocolate in Mexico
New Product Launches A summary of what is new on the shelves in this market. Product examples: top flavors Product name Snickers – candy bar Superior Nut & Candy – chocolate-covered Wonka – Carameldelicious – chocolate Flavor almonds caramel crispy bar Peanut Flavor Product Description Almond Caramel The new Snickers milk chocolate bar with Product Description caramel, nougat, and peanuts is presented in This new almond-centered chocolate is This new caramel-flavored chocolate bar is a “week pack” that contains six 17 g bars. This produced in the US and distributed in Mexico produced in the US by Nestlé USA and is offering from Mars Snackfood US is by Waldos Dolar Mart de Mexico. distributed in Mexico by Oscar Noe Gutierrez distributed by Effem in Mexico. Garcia. Source: Datamonitor’s Product Launch Analytics database 24 INSIGHT by DATAMONITOR Chocolate in Mexico
New Product Launches A summary of what is new on the shelves in this market. “Kids” was the top claim among new launches in 2010, while premiumization and health and wellness dictated other top claims Mexico, top claims in new product launches in the chocolate Top claims category, 2010 § “Kids” and “upscale, ” each of which accounted for about 9% of the claims among new launches, were the top claims in 2010. § Other top claims in the year were “single serving, ” “no sugar, ” and “co-branded. ” Trends driving the top claims § While the “upscale” claim is aimed at luxury/premium chocolate buyers, the “no sugar” and “single serving” claims are aimed at health conscious consumers. § “Co-branded” as a claim was mainly observed in products launched for kids. Other claims § In general, most of the new launches had claims centered around health and wellness as a theme. § The other popular health claims around this theme include “organic, ” “natural, ” “high antioxidants, ” and “low glycemic index. ” Source: Datamonitor’s Product Launch Analytics database 25 INSIGHT by DATAMONITOR Chocolate in Mexico
New Product Launches A summary of what is new on the shelves in this market. Product examples: top claims Product name Nestlé – Freskas – Caramelo Esponjado Nestlé Larin – Chocolate con Leche y Nueces Nestlé Larin – Chocolate con Leche y Cubierto de Dulce Sabor A Chocolate – Edicion Especial Tulipan Almendras sin Azucar Claims Kids Upscale No sugar Product Description This newly launched sweet chocolate- These special edition milk chocolates with This new sugar-free milk chocolate with covered sponge candy by Nestlé is presented nuts by Nestlé were launched for the almonds is marketed by Nestlé under its Larin in a round foil wrapper with a snowman occasion of Mother’s Day. They are shaped in brand name. picture and an attached hang card for kids. the form of tulips and are primarily for gifting Source: Datamonitor’s Product Launch Analytics database purposes. 26 INSIGHT by DATAMONITOR Chocolate in Mexico
New Product Launches A summary of what is new on the shelves in this market. Plastic was the most popular packaging material among new launches in 2010, followed by cardboard Mexico, top packaging materials in new product launches in the chocolate category, 2010 Top packaging materials § More than half (53%) of all packaging materials used for new chocolates in 2010 were plastic. § The other top materials used were cardboard, foil, and paper. Packaging type and materials used § While most wrapper-type packaging utilized plastic as the primary material, boxed chocolates were packed in cardboard or tin boxes (primary packaging) with a plastic wrapping as a secondary material to provide extra cover in order to protect the contents from moisture. § Additionally, paper is used as a secondary packaging material. Source: Datamonitor’s Product Launch Analytics database 27 INSIGHT by DATAMONITOR Chocolate in Mexico
New Product Launches A summary of what is new on the shelves in this market. Product examples: top packaging materials Product name Hershey's Skor – candy bar R Picard – Trufas Surtidas – De Chocolate con Lindt Gold Bunny – milk chocolate candy Packaging material Leche y Chocolate Amargo Packaging material Plastic Packaging material Foil Product Description Cardboard Product Description This newly launched milk chocolate candy is Product Description This new milk chocolate marketed under the presented in an over-wrapped plastic wrapper. Marketed under the R Picard brand, these milk and Lindt Gold Bunny label is available in a 100 g dark chocolates are offered in various flavors like rabbit shape wrapped in a foil material. champagne, Grand Marnier, brandy, amaretto, hazelnut, kirsch, and orange, and are presented in a standup cardboard bag. 28 INSIGHT by DATAMONITOR Chocolate in Mexico Source: Datamonitor’s Product Launch Analytics database
Competitive Landscape Highlights of the state of competition in this market Mexico's chocolate category is highly concentrated among the top five players, which together control nearly 80% of the category’s sales by value Mexico, company shares in the chocolate category, 2009 and 2010 Top players § The Mexican chocolate category is dominated by a few large international players, including Nestlé, Hershey's, Mars, and Ferrero. § Grupo Bimbo is the only Mexican chocolate-maker among the leading players in the country. Market concentration § The market is highly concentrated, with the top five players controlling more than 80% of the sales value in 2010. § Others, mostly artisanal and small chocolate-makers, make up about one fifth of the sales value. Source: Datamonitor’s Market Data Analytics database 29 INSIGHT by DATAMONITOR Chocolate in Mexico
Competitive Landscape Highlights of the state of competition in this market The companies with higher sales growth were less active in terms of product launch activity in 2010 Mexico, competitive landscape: company growth (2009– 10) versus new product development activity (2010) § The top two players, Nestlé and Hershey’s, had lowerthan-average sales growth in the Mexican chocolate category in 2010, which grew by 1. 3% over the previous year. § However, in terms of new product launch activity, the two companies had the largest shares, which could possibly mark an attempt to push their sales and gain a greater share of the category. § On the other hand, while Grupo Bimbo saw better sales growth, it is reinvesting in inorganic growth strategies like acquiring other Mexican confectioners to increase its sales share in the country, rather than launching new products. Note: bubble size denotes the sales value (in $m) of the respective companies in 2010 Source: Datamonitor’s Market Data Analytics database 30 INSIGHT by DATAMONITOR Chocolate in Mexico
Competitive Landscape Highlights of the state of competition in this market Nestlé is focused on product innovation through formulations and is investing heavily in sustainable farming in the country Key brands: Carlos V, Granny, Larin, Crunch, Nestlé Gold, Almon Ris, Tin Larin, Kit Kat, Seduction. Product strategies § Promoting its Kit Kat brand to young adults aged between 20 and 25 through digital media. § Launched a special edition chocolate line for Mother’s Day under the Tulip Larin brand in May 2011. § Focuses on product innovation through research investments. § Launched a new version of Nestlé Gold chocolates with a more intense flavor to create a prolonged taste in the mouth in early 2011. Company focus § In January 2010, the company announced that its total investment in Mexico from 2008 to 2012 will reach $1 tn; this has been focused on promoting employment, technological innovation, and the implementation of initiatives to improve nutrition, health, and welfare for Mexicans. § Has invested through a government collaboration to improve sustainable farming techniques for better cocoa yields. Source: company website 31 INSIGHT by DATAMONITOR Chocolate in Mexico
Competitive Landscape Highlights of the state of competition in this market Hershey’s products are aimed at both adults and children, and the firm is involved in various social initiatives in Mexico Key brands: Kisses, Kissables, Hershey’s Bites. Company focus § The company was recognized with an award for social responsibility from the Mexican Center for Philanthropy in 2010. § The award is for Hershey’s policies related to community relations, ethical business practices, environmental stewardship, and high quality workplaces. § The firm is focused on product safety. Source: company website 32 INSIGHT by DATAMONITOR Chocolate in Mexico
Competitive Landscape Highlights of the state of competition in this market Mars offers products for all age segments and is committed to social initiatives like sustainable cocoa farming and recycling packaging wrappers Key brands: Snickers, M&M's Minis, Milky Way, Twix, Celebrations. Product strategies § Owns products distributed throughout Mexico, and caters to all age segments. § Aims to have a brand presence “every day in every Mexican household. ” Company focus § Committed to sustainable cocoa farming practices. § Has plans to produce disposable product wrappers that will be “repurposed” through the company’s recent partnership with Terra. Cycle, which is responsible for making products from recycled Mars packaging and wrappers. Source: company website 33 INSIGHT by DATAMONITOR Chocolate in Mexico
Competitive Landscape Highlights of the state of competition in this market Grupo Bimbo is the only homegrown company that features among the leading chocolate companies in Mexico, and is focused on organic growth strategies Key brands: La Corona, Ricolino. Product strategies § Focus on product reformulations and responsible marketing and advertising. § First company in Mexico to restrict its advertising aimed at children younger than 12. § Rolled out “front-of-package calorie labeling” across Mexico and Latin America in 2010. Company focus § Bimbo is a pan-American company, with roots in Mexico, and in 2010 expanded its business into China. § It also expanded its distribution network across Latin America that year. § In 2010, the firm made strategic acquisitions like that of Dulces Vero, a leading confectionery company in Mexico, to increase its domestic market share. Through this acquisition, the company hopes to boost its sales in the US Hispanic market § Bimbo operates six innovation and nutrition institutes in the Americas. Source: company website 34 INSIGHT by DATAMONITOR Chocolate in Mexico
Methodology Market Data Analytics research process: involves four main phases of data review Rolling annual review program for each market and country ensures that Datamonitor is capturing new insights, and updates forecasts to reflect changes in local and international geopolitical climates. Each phase is designed to ensure that the review targets a specific area of the database. Rolling annual review program for each Retail audits capture brands on the shelves to help to build a virtual shelf map for each product. market and country ensures that Datamonitor is talking to experts in each country and capturing new Clients are proactively engaged for a constant feedback on current data coverage/quality as well as to guide future upgrades and improvements. insights into the market. This is also an opportunity to update forecasts to reflect changes in local and international geopolitical climates. Special review exercises are undertaken to uplift the quality and granularity of the data in a particular market/country or a combination of both. 35 INSIGHT by DATAMONITOR Chocolate in Mexico
Methodology Product Launch Analytics research process: involves both secondary and primary data review Datamonitor’s consumer packaged goods product launch and tracking database, Product Launch Analytics, is the world’s largest online database of new products, with coverage from 1980 to the present. It has global scope and provides a wealth of details on product introductions. 36 INSIGHT by DATAMONITOR Chocolate in Mexico
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