Pakistan's Chocolate And Cocoa Confectionery Industry And Competitive Landscape 2023

Industry Landscape

Demand Conditions 

• In 2022, Pakistan's imports of chocolate and confectionery containing cocoa (HS code 1806) amounted to USD 21.4 million (up less tha 1% YoY), over five times higher than exports which amouned to USD 3.8 million (up 95% YoY). In volume terms, imports amounted to 7 million kilograms (up 7% YoY), over six times higher than exports which amounted to around 1 million kilograms (up 109% YoY).

• At just around 50 grams per person, Pakistan's chocolate consumption is among the lowest in Asia and lower than the global average of around 900 grams per person reflecting considerable growth potential.

Supply Factors 

• Pakistan is a net importer of key raw materials for chocolate production i.e., cocoa powder (HS code 1805), cocoa butter (HS code 1804), and cocoa paste (HS code 1803). No trade data is available for cocoa beans (HS code 1801). 

Trends And Opportunities 

• Chocolate is among the popular Valentine's Day gift choices among Pakistani couples and search interest typically spikes during the days leading up to Valentine's Day. 

•  Pakistan has the highest rate of diabetes in the world with over 30% of the population living with the condition which may open opportunities in the sugar-free chocolate space. 

Challenges 

• Pakistan's chocolate industry participants are challenged by the country's foreign exchange shortages, as it hinders imports of foreign chocolate brands, and constrains local manufacturers' ability to import raw materials, notably cocoa ingredients such as cocoa powder, cocoa beans and cocoa paste.

• At USD 6,351, Pakistan's per capita GDP on a PPP basis lags neighbors like India (USD 8,400), and Bangladesh (USD 7,397). Income growth has lagged as well with Pakistan's per capita GDP on a PPP basis has growing at a CAGR of 5.4% during the five year period between 2017-2022, lagging India (6.5%), and Bangladesh (8.8%) during the same period. 

Competitive Landscape

Mondelez 

• American snack food giant Mondelez dominates Pakistan's chocolate market with a market share of 65%, driven by Mondelez's Cadbury chocolate brand which accounts for more than 50% of Pakistan's chocolate market (Cadbury Dairy Milk alone accounts for a third of the market, while Cadbury Bubbly and Cadbury Perk command market shares of 14% and 13% respectively). 

• Recent developments:

  • Coinciding with the 2023 Cricket World Cup, Cadbury launched an advertising campaign empowering female cricketers. 

• Future plans: 

  • Mondelez's long term growth strategy continues to focus on penetrating Pakistan's gifting market, particularly for significant occasions like weddings, and Eid which typically feature decadent traditional sweets known as "mithai". 

Lals Chocolates 

• Local chocolate brand Lals Chocolates sells chocolate bars, chocolate barks, individually-wrapped chocolates (offered in a variety of packaging formats including gift boxes, hampers, and platters) as well as desserts and beverages including hot chocolate, macarons, nougat, cupcakes, cakes, and gelato. Channels include their online store, Lals store outlets, and supermarkets.  Their positioning is distinctively premium with a local flair (from localized packaging designs to chocolate flavors inspired by Pakistan's heritage such as flavors inspired by Mughal cuisine). 

• Recent developments:

  • New launches were heavily centered around packaging innovations such as hampers (at least nine rolled out during the year including hampers for Christmas, Eid, Haj, Pakistan's Independence Day, mango season, along with other promotional hampers such as 'Gold Confetti', 'Dusky Rose', Chand Sitara', and 'Hot Chocolate'), gifting collections (at least five rolled out during the year including collections for weddings, birthdays, Pakistan's Independence Day, Ramadhan, and Valentine's Day), platters (at least three new platters including 'Mirror Platter', 'Gold Leaf Platter', and 'Shadi Mubarak') and other gifting options such as a new gift box for Sunnah, a gift basket for Eid, and wedding favor potlis inspired by Pakistani potli bags (little pouches typically adorned with intricate designes given as wedding favors to guests). 

  • At least two new chocolate bars were launched during the year ('Bobby Bar' for cricket season inspired by then Pakistan cricket team captain Babar Azam, and a new Ras Malai chocolate bar inspired by Pakistani confectionery known as 'mithai'). Additionally, true to their Pakistani-inspired brand image, Lals Chocolates rolled out chocolate-coated rewari which is an innovative product that marries a traditional Pakistani sweet with chocoate. 

  • Desserts were rolled out for Christmas, Halloween, and Pakistan's Independence Day.

  • Marketing initiatives heavily focused on social media promotion (over 350 posts were made in 2023 or roughly one per day most of which focused on product promotion), along with giveaways.