[Asia Economy Reporter Jeong Hyunjin] The novel coronavirus disease (COVID-19) pandemic has also dealt a blow to the global chocolate market. As COVID-19 shook all markets worldwide by spreading fear of the virus, what impact did it have on chocolate sales?
According to Bloomberg on the 27th (local time), the sharp decline in airport passengers due to the COVID-19 crisis has significantly reduced the demand for chocolate. Cocoa futures prices on the U.S. International Commodity Exchange rose to around $2,900 per ton as of February but plunged in March and have remained around $2,270 this month.
The main reason for the significant drop in cocoa prices, the primary ingredient in chocolate, is the closure of duty-free shops inside airports, which led to a decrease in chocolate sales, one of the key products in duty-free stores. Bloomberg pointed out, "The decline in duty-free sales has thrown the $107 billion (approximately 129 trillion KRW) chocolate market into turmoil," adding, "The cocoa market, which was globally in shortage, appears to have shifted to an oversupply state."
Michael Payne, Chairman of the International Association of Airport Duty-Free Shops, said, "Overall, the duty-free industry has suffered a major blow, including chocolate," and predicted, "If international flights do not resume continuously and domestic flights do not return quickly, this pain will continue." According to the U.S. Transportation Security Administration, the number of passengers using flights on the 23rd was 471,421, a sharp decrease compared to 2.51 million a year ago.
With the International Monetary Fund (IMF) recently revising the global economic outlook downward, cocoa consumption, which is affected by the economy, is expected to take further hits. Bloomberg forecasted that concerns over cocoa demand would also impact the West African region, which accounts for two-thirds of the world's cocoa supply. Additionally, Olam International, the world's third-largest cocoa processor, is expected to see a decline in sales for the first time in four years. U.S. confectionery company Mondelez International also anticipated a significant drop in travel-related retail sales in April.
Not only duty-free shops but also the reduction in wedding-related events and cruise travel are affecting the chocolate market. Various channels through which chocolate is sold are being impacted, and there is even analysis suggesting that due to the COVID-19 situation, consumption patterns are changing as more people engage in baking and confectionery at home, increasing related consumption.
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