Over the past five years, the global chocolate manufacturing market and candy industry has been resilient to the wave of health-consciousness that has swept through developed nations, causing consumers to be wary of sugar-rich foods, including candy and chocolate. Industry firms have been successful in innovating products that appeal to health-conscious consumers, keeping demand buoyant.
The industry even stayed strong amid low consumer spending in a distressed global economy. Although candy and chocolate are considered discretionary goods, consumers saw these products as a small, inexpensive treat to provide temporary escape from financial difficulties and other struggles that paralleled the challenging economic period. As the economy rebounds, consumers will gain more disposable income and increase spending on industry goods, especially premium chocolates, which are anticipated to facilitate a 1.3% revenue boost in 2013. Due to these factors, revenue is expected to rise at an annualized rate of 2.6% to $120.3 billion over the five years to 2013.
While revenue grew steadily over the past five years, profit was volatile due to fluctuating commodity costs. Sugar and cocoa, the industry's most basic inputs, saw double-digit spikes each year for most of the period. Major companies, for the most part, were able to pass on cost increases more effectively than smaller firms due to higher brand loyalty. However, even for these firms, the recession made it difficult to fully pass on these costs to customers, and profit was squeezed through 2009. In response, manufacturers have invested in more technology to improve operational efficiencies, reducing dependence on labor; consequently, wages fell from 10.6% of revenue in 2008 to an estimated 9.6% in 2013. As a result, profit is estimated to expand to 8.6% of revenue.
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