Company Trend Analysis - Australia Premiumisation: Luxury Chocolate In Demand - JAN 2018

BMI View: Australia's increasingly affluent consumer base is driving up the demand for premium food products. Luxury chocolatier, Godiva is one of the company's seeking to cater to this demand, opening stand-alone stores in the country.

Belgian luxury chocolatier, Godiva, is set to open stand-alone stores in Australia. The chocolatier will open its first store and cafe in Melbourne in the Emporium shopping district by the end of the 2017. Over the medium term, another 10 stores are planned. Currently, Godiva chocolates are sold in Australia via luxury department store, David Jones, in its premium food courts. Godiva previously launched a stand-alone store in Sydney in 2009 but it closed soon after.

Large and Rising Affluent Class To Drive Luxury Chocolate Demand
Household Disposable Income USD75,000+, % of total households
e/f= BMI estimate/ forecast. Source: National Sources/BMI

We have previously highlighted that the Australian consumer will continue to spend more on high quality and premium food offerings (see ' Australian Dietary Shift: Premium Meat And Healthy Items In Favour', October 2, 2017). Premium chocolate makers like other luxury food manufacturers are expanding their presence in Australia on the back of a large and growing affluent consumer base. Australia upper-income segment (disposable income of USD75,000 and above), the income bracket most associated with spending on premium and luxury food, is projected to account for 51% of total households in 2021, up from 44% in 2017. The strong growth in the percentage of households forecasted to be in the upper-income segment will therefore expand the consumer base, which luxury chocolatiers, like Godiva will be targeting.

Spending More On Chocolate
Chocolate Sales (USDmn, % change y-o-y)
e/f= BMI estimate/ forecast. Source: BMI/National Statistics

We project strong growth for Australia's chocolate and sweets sales, with growth averaging 4.2% per annum between 2017 and 2021. We forecast this confectionary segment to be worth AUD12.1bn (USD9.1bn) in 2021, up from AUD10.2bn (USD7.9bn) in 2017. On a per capita basis, sales of Chocolates, sweets and similar is projected by BMI to rise from AUD417 to AUD469 between 2017 and 2021.

Owing to the country's affluent consumer base, numerous international luxury chocolatiers are already operating in Australia. The table below lists the competition that Godiva will face by opening its stand-alone stores in the country. Domestic luxury chocolate retailers are also growing in popularity. This include Kakawa Chocolate that distributes chocolates to luxury hotels like Hyatt and Westin Hotels and Resorts. In addition, Canberra chocolatier, Jasper and Myrtle, has won international awards for their chocolate.

International Luxury Chocolatiers Operating In Australia
Company Store Count
Source: BMI Research
Max Brenner 36
Guylian Belgian Chocolate 6
Haigh's Chocolate 16
Lindt Chocolate 20