Chocolate Consumption in Indonesia Seen Doubling in Three Years

Chocolate demand in Indonesia, the world’s third-biggest cocoa producer, may double in three years because of an expanding middle class and increased incomes.

“Supermarkets, mini-markets are growing everywhere,” Muhammad Lutfi, the country’s trade minister, said at an industry conference in Bali, Indonesia. “They sell chocolate and people will buy more.” He didn’t give consumption numbers.

Increasing demand for chocolate in Asia has spurred expansion of cocoa-grinding capacity in Indonesia. That may cut the country’s bean exports, deepen a global shortage and extend a 23 percent advance in New York futures in the past 12 months. Rising bean prices would potentially boost costs for confectionery makers such as Nestle SA (NESN) and Lindt & Spruengli AG.

The government may remove the 5 percent tax on bean imports or increase the export duty, which varies between 5 percent and 15 percent, to meet demand from processors, said Lutfi. He estimated last month that domestic grinders will probably face a shortfall of 100,000 metric tons this year as local production won’t be enough. The crop will total 450,000 tons in 2014, little changed from a year earlier, he said today.

“We also have to increase production,” Lutfi said. “We have to consider how we can continue supplying beans to the global market.” The country shipped 188,000 tons of beans to foreign buyers in 2013, the government says. The global shortage may reach 115,000 tons in the 12 months started Oct. 1 after a 174,000-ton deficit a year earlier, according to the International Cocoa Organization.

Double Rate

The value of chocolate confectionery consumption in emerging markets including Asia, Latin America, the Middle East and Africa will grow more than 5 percent annually in the five years through 2018, more than double the rate of the world average, according to Euromonitor International Ltd. Consumers in the Asia Pacific region will eat 1.096 million tons by 2018, a 27 percent increase from 2013, the researcher estimates.

Cocoa processing in Southeast Asia expanded 3.7 percent during the first quarter from a year earlier to 159,617 tons, the Singapore-based Cocoa Association of Asia said in April. The figures are for Malaysia and members in Singapore and Indonesia, according to its website.

Bean imports by Indonesian grinders may reach 120,000 tons from 30,000 tons last year, according to Piter Jasman, chairman of the country’s Cocoa Industry Association. Capacity to process beans into powder and butter may climb 67 percent to 600,000 tons from 360,000 tons on new plants and expansions, he said in an interview last month. Lutfi said today the capacity may reach 1 million tons by 2016.

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net Ovais Subhani

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.