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The Effects of Consumer Preferences on Bean-To-Bar Chocolate Producers

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The Effects of Consumer Preferences on Bean-To-Bar Chocolate Producers Chocolate industry: The effects of consumer preferences on bean-to-bar chocolate producers B Bachelor Project submitted for the degree of Bachelor of Science HES in International Business Management by Oscar GIBBONS Bachelor Project Mentor: Giuseppe CATENAZZO, Lecturer at HEG Geneva, 21st of August 2020 Haute école de gestion de Genève (HEG-GE) International Business Management Disclaimer This report is submitted as part of the final examination requirements of the Haute école de gestion de Genève, for the Bachelor of Science HES-SO in International Business Management. The use of any conclusions or recommendations made in or based upon this report, with no prejudice to their value, engages the responsibility neither of the author, nor the author’s mentor, nor the jury members nor the HEG or any of its employees. Geneva, 21st of August 2020 Oscar Gibbons Chocolate industry: The effects of consumer preferences on bean-to-bar chocolate producers Oscar GIBBONS i Acknowledgments First, I would like to thank my advisor Dr. Giuseppe Catenazzo who supported me throughout this study at all times. He helped guide me to have the necessary academic thinking and composing. I would also like to thank the professional chocolate manufacturers – who will remain anonymous – for the valuable time and information they provided me. Without their practical insight, this project would have taken another turn. I would like to thank Mr. André Jelicic for his valuable help with the data analysis software, Tableau. Thanking also the 392 people who participated in the survey. Their input was essential to determine consumer preferences for chocolate. Finally, I would like to acknowledge my parents, family, and friends for their care and support. A special acknowledgment is dedicated to my girlfriend Mrs. Pauline Sitbon for her kindness, patience, and creative thinking which led to the idea to analyze the chocolate industry. Chocolate industry: The effects of consumer preferences on bean-to-bar chocolate producers Oscar GIBBONS Executive Summary Switzerland is one of the biggest consumers and producers of chocolate in the world (Chocosuisse, 2019). The country built its reputation for chocolate in the nineteenth century thanks to Daniel Peter, a Swiss chocolate producer that incorporated milk for the first time, thus creating milk chocolate (Squicciarini, 2016). Throughout the years, several brands such as Nestlé SA, Lindt & Sprüngli AG, Mondelez International Inc., Mars Inc, Hershey, and Ferrero have risen to dominate the industry representing 60% of the 140- billion-dollar chocolate industry (Wunsch, 2019). Using industrialized production methods, these companies participate in the mass-market which represents 90 to 95 percent of consumed chocolate products. Industrial production methods are considered as resulting in low-end quality goods because manufacturers value cost-saving over quality, thus uniformizing taste (Squicciarini, 2016). The remaining 5% of the market represents a niche segment that includes many small- scale chocolate manufacturers. Their methods involve direct trade with farmers of fine cacao to ensure quality in taste and ethical production. The production process used by small-scale manufacturers is called bean-to-bar. It aims to increase consumers’ knowledge about the product and expand their taste for qualitative chocolate while offering expertise and guarantee of transparency throughout the supply chain. The main issue raised in this study is that consumers have limited awareness of the vast array of tastes that chocolate can have. In addition, data concerning consumer preferences remain scarce. Therefore, this research paper aims to analyze the Swiss chocolate market theoretically and empirically to determine the drivers that push consumers to purchase chocolate, and supplies actionable recommendations and risk analysis – based on the results of the theoretical and empirical studies – that artisanal manufacturers can use to develop themselves in the chocolate niche market. Chocolate industry: The effects of consumer preferences on bean-to-bar chocolate producers Oscar GIBBONS iii Contents Chocolate industry: The effects of consumer preferences on bean-to-bar chocolate producers ................................................................................................... 1 Disclaimer ..................................................................................................................... i Acknowledgments ....................................................................................................... ii Executive Summary ................................................................................................... iii Contents...................................................................................................................... iv List of Tables .............................................................................................................. vi List of Figures ............................................................................................................ vi 1. Introduction .......................................................................................................... 1 1.1 History of chocolate ................................................................................. 1 1.2 Today’s Chocolate Industry ..................................................................... 2 1.2.1 The niche market of artisanal manufacturing .................................... 3 1.2.2 The changes in behavior towards food-goods .................................. 4 1.3 Research question and objectives .......................................................... 5 2. Literature review ................................................................................................... 6 2.1 PEST of the chocolate industry ............................................................... 6 2.1.1 Politics ............................................................................................. 6 2.1.2 Economics ....................................................................................... 7 2.1.3 Social ............................................................................................... 8 2.1.4 Technology ...................................................................................... 9 2.2 Structure – Conduct – Performance analysis ....................................... 10 2.2.1 Structure ........................................................................................ 11 2.2.2 Conduct ......................................................................................... 13 2.2.3 Performance .................................................................................. 14 2.3 Porter Five Forces framework ............................................................... 15 2.3.1 Competition in the Industry ............................................................ 15 2.3.2 Threat of entry ............................................................................... 16 2.3.3 Threat of substitutes ...................................................................... 16 2.3.4 Bargaining power of buyers ........................................................... 17 2.3.5 Bargaining power of suppliers ........................................................ 17 2.4 Value chain analysis of industrial vs artisanal producers ................... 18 2.4.1 Primary and secondary activities of industrial manufacturers ......... 19 2.4.2 Primary and secondary activities of artisanal manufacturers .......... 20 2.5 Competitive advantage for artisanal manufacturers ............................ 21 2.6 Literature gap .......................................................................................... 22 3. Research methodology ...................................................................................... 23 3.1 Opinion poll ............................................................................................. 23 3.1.1 Methodology .................................................................................. 23 3.1.2 Questionnaire organization ............................................................ 23 3.1.3 Sample Statistics ........................................................................... 24 Chocolate industry: The effects of consumer preferences on bean-to-bar chocolate producers Oscar GIBBONS iv 3.2 Interviews with professionals (qualitative) ........................................... 25 3.2.1 Methodology .................................................................................. 25 3.2.2 Questionnaire organization ............................................................ 26 4. Results and discussion...................................................................................... 27 4.1 Research objective 1: Definition of a consumer profile ....................... 27 4.2 Research objective 2: Industrial versus artisanal ................................ 31 4.3 Research objective 3: Marketing type ................................................... 37 4.4 Research objective 4: Risks analysis .................................................... 40 4.4.1 Key risk identification .................................................................. 41 4.4.2 Risk ranking & matrix .................................................................. 42 5. Recommendation & Risk Action Plan ............................................................... 44 5.1 Recommendation ...................................................................................
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