Chocoholics' cravings curbed by European slump

Thu Jul 12, 2012 1:48pm EDT
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By Sarah McFarlane

LONDON (Reuters) - An assumption that chocolate is a recession-proof treat that consumers continue to buy despite the grim economic outlook was proven wrong on Thursday by the sharpest fall on record in Europe's quarterly cocoa grind - an indicator of demand.

Analysts said worsening economic conditions in the euro zone had prompted a sharp slowdown in European demand for chocolate, and the outlook could deteriorate further if the crisis deepens.

The Brussels-based European Cocoa Association (ECA) reported that Europe's second-quarter cocoa grind tumbled 17.8 percent from the same period last year to 292,551 metric tons, far worse than even the most pessimistic predictions of a fall of up to 12 percent.

"We think the current slowdown in grindings reflects worsening economic conditions in the euro area. If contagion spreads to Spain and Italy, this would have undoubtedly an impact on demand for indulgence products like chocolate," said Francisco Redruello, senior food analyst at Euromonitor International.

In Switzerland, the world's top chocolate consumer, domestic chocolate consumption dropped about 8 percent by volume in the first four months of the year, said Franz Schmid, managing director of the association of Swiss chocolate manufacturers Chocosuisse.

Swiss chocolate exports - of which around two thirds are destined for Europe - also fell about 12 percent in the January to April period. Schmid said the strong Swiss franc also had hurt exports.

In Germany, one of the world's largest chocolate consumers, retail sales of chocolate bars by tons fell 7.3 percent on the year in the first four months of 2012, according to the association of German confectionery producers BDSI.

Following the grindings data, benchmark ICE September cocoa futures fell 5 percent to $2,177 per ton 1516 GMT (11.16 a.m EDT).   Continued...

A shop assistant adjusts pralines in a counter at a Leonidas chocolate boutique in Brussels September 28, 2011. REUTERS/Yves Herman