Chocolate in Asia: A Very Sweet Megatrend

I don't know if you all got the memo, but it turns out that people like chocolate. They really like chocolate. This revelation will hardly come as a shock, but the investment opportunities in the chocolate confectionary market may give you a serious jolt. Chocolate is becoming a global megatrend, and investors would do well to take heed.

The chocolate market: Europe and the U.S.
In 2006, the global chocolate confectionary market had annual sales of roughly $75 billion. Europe accounted for around $35 billion of that, while the United States contributed roughly $16 billion to the global market. When combined, Europe and the United States account for the majority of the global market and provide a good indication of sustainable chocolate sales in developed markets. Let's take a look at how much, on average, European and American consumers spend on chocolate per year:

Country/Region	Chocolate Sales per Year	Population	Chocolate Sales per Capita
United States	$16 billion	301 million	$53.16
Europe	$35 billion	728 million	$48.08

Europe population numbers as of 2005, according to Wikipedia. U.S. population numbers as of 2007, according to Google.

So on average, consumers in Europe and the U.S. spend about $50 per year on chocolate. These are interesting numbers, certainly, but not incredibly informative. At least, not until you compare them to China and India; two of the largest countries in the world. That, my fellow Fools, is where it gets interesting.

The chocolate market: China and India
Even though China and India each boast populations of more than 1 billion, their chocolate confectionary sales pale in comparison to Europe and the U.S. Let's take a look at the numbers:

Country/Region	Chocolate Sales per Year	Population	Chocolate Sales per Capita
China	$813 million	1.3 billion	$0.63
India	$394 million	1.1 billion	$0.36

Chocolate sales according to Euromonitor International. Population numbers as of 2007, according to Google.

Taken as a group, China and India consume, on a per-capita basis, roughly 1% the amount of chocolate that Europe and the U.S. consume.

Apples to oranges
I know you're thinking that it is not necessarily correct to assume Chinese and Indian consumers will buy chocolate on the same level as the Europeans and Americans. I agree. It's incredibly difficult to gauge how popular chocolate goods will be once these two countries are more fully developed.

A compelling argument can be made, however, that growth in the chocolate confectionary market in China and India will likely be significant. In fact, there is evidence that this growth is already occurring.

Chocolate confectionary market growth in Asia
According to market researcher Euromonitor International, chocolate confectionary sales in China have doubled to their current $813 million over the last five years. India has seen similar numbers, growing sales by 64% over the same time frame. By 2012, chocolate confectionary retail sales in China are expected to reach $1.23 billion; a 50% increase. This has certainly caught the attention of top-tier chocolatiers.

Early last year, Hershey (NYSE: HSY) reached a deal with South Korea's Lotte Confectionary to have its candy produced in China. This was a significant step for Hershey, the third-largest publicly traded Western confectioner, as it gave the company access to the 1.3 billion Chinese consumers. In addition, Nestle has more than doubled its sales in China since 2001, while Mars and Cadbury (NYSE: CBY) have increased 40% and 26%, respectively.

So, what should I do?
If you are looking for a good play that captures the growth of China and India, Cadbury is the third-largest in China, and dominates the Indian chocolate market with 60% market share. Hershey is also a great play to capture the market in China, though it hasn't penetrated India quite yet. I also anticipate that Tootsie Roll Industries (NYSE: TR) will begin pursuing heavy international expansion as growth outside of the U.S. begins to ramp up.

Further delicious Foolery:

• I Will Never Buy Berkshire Hathaway
• Hershey + Cadbury = Chocolate Bliss?
• 3 Sell Signs