Introduction
Many people who love Japanese sweets are familiar with popular items like "amanatto" (sweetened beans) and "chocolate pie." However, haven't you been hearing a lot of news lately about rising chocolate prices? The reason for this price increase is actually related to a global shortage of cocoa beans, the main ingredient in sweets.
This article will provide a detailed explanation of the challenges facing Lotte Group, a major Japanese confectionery manufacturer, and their potential solutions. It will also touch upon trends in the domestic confectionery industry as a whole, as well as overseas business development, addressing questions you may have.
The reality of soaring cocoa bean prices and the challenge faced by the Lotte Group.
It is true that the cost of chocolate has been soaring in recent years. According to research, approximately 70% of the cocoa beans used in Japan are imported from Ghana in Africa. However, international prices are projected to rise sharply from 2024 onwards, posing a major challenge for the entire confectionery industry.
The Lotte Group is taking specific measures to address this issue. The main approaches are:
Restructuring of the product lineup
A balanced selection of products with high and low cocoa content is provided.
Price adjustment
In July this year,"Ghana Milk Chocolate"Price increases on products such as
Production planning based on demand forecasts
Flexible manufacturing system to adapt to market changes
These measures are intended to allow us to provide consumers with products while maintaining quality. However, this is a challenge faced by many in the confectionery industry, and it is a problem that Rakuten alone cannot solve.
Specific business development and localization strategies
Lotte Group's overseas business is characterized by the following points:
| region | Share status | Main Products |
| Ghana | Major cocoa bean supply regions | Chocolate ingredients |
| Indonesia | Market share No. 1 | Chocolate pie, soft cake |
| Poland | After the acquisition of Wedell | European chocolate market |
Business expansion in Indonesia
Indonesia is one of Southeast Asia's largest small markets, with a population of nearly 300 million. Lotte's sales in Indonesia account for approximately 20% of the group's total sales.
Characteristic localization measures:
- Product development tailored to local tastes
- Marshmallows are used instead of soft serve ice cream.
- Halal certified (for Muslims)
- Addressing differences in sales channels
- Unlike large retail stores in Japan, there is a high proportion of small-scale retailers.
- Ensuring quality that can withstand environments where temperature control is difficult.
- Expansion of production area and research and development
Lotte currently uses approximately 80% of its cocoa beans from Ghana, but in response to risks such as adverse weather conditions, they are taking the following measures:
- Development of research farms
- We are considering cocoa-producing regions around the world, including Papua New Guinea.
- Although production volume is smaller than in 2015, we are currently cultivating 18 varieties.
Industry-wide problems and future prospects
The Lotte Group aims to increase its overseas sales ratio to 30% by fiscal year 2030. Currently, about 60% of sales are in Europe and the Americas, but we want to further increase our share in Southeast Asian markets, including Indonesia.
Future challenges
As long as cocoa bean prices continue to rise, we are forced to consider the following options.
- Reducing usage: Moving towards lowering the proportion of cocoa used.
- Development of alternative products: Expanding the product line beyond chocolate.
- Maintaining quality and balancing price: Maintaining delicious taste while setting appropriate prices.
data point
Choco Pie, which has been sold in Indonesia since 2014, has achieved the number one market share in the country's soft cake market, according to Nielsen, a US research firm. Following this success, a second factory has been opened, and demand has increased to the point where the existing production system can no longer keep up.
Summary
The surge in cocoa bean prices is not merely a temporary phenomenon, but a challenge that will have long-term effects on the confectionery industry worldwide. Lotte Group's efforts offer the following important lessons:
Adaptability and flexibility are important.
It is necessary to continue to respond quickly to market changes.
Thorough localization
In overseas markets, we adjust our products and operations to meet local needs.
Quality and balance
Amid rising prices, we will proceed while maintaining the delicious taste that consumers demand.
Thus, for companies conducting global business, adapting to change while protecting their core values is key to success. While cocoa bean prices may remain uncertain, it is important to watch how the entire industry adapts to the challenges faced by large corporations like the Lotte Group.
For consumers, how to perceive price increases is a real issue. Companies continue their efforts to protect their familiar products by balancing quality maintenance with fair pricing. This effort will likely lead to the development of the confectionery industry as a whole.
