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The Real Chocolate Company

The Real Chocolate Company is a market follower in the gourmet segment of America’s chocolate industry with less than 6 percent market share. The company’s products comprise of over 100 types of chocolate, 15 types of fudge and over 30 varieties of caramel-covered apples. Also on offer are more than 100 seasonal products. Distinctive products associated with the firm include “Paw” which is made of chocolate, caramel and roasted nuts. Other favourites produced by the firm include nut clusters, butter creams, truffles and toffee. The company also dips a variety of fruits, nuts, and cookies in milk, dark, or white chocolate.

Recently introduced is a line of sugar-free and no-sugar-added sweets. Real Chocolate Company also offers on-site products such as fudge and caramel apples. Key stakeholders in the company include the owner, Sarah Smith; employees, customers and suppliers of cocoa beans, sugar and dairy products. The strategic purpose of the company is to become the leading chocolatier in the U. S. The company hopes to attain this goal through the manufacture of high quality products. External analysis The following sections describe the political, economic, socio-cultural, environmental and legal aspects of the U. S chocolate industry.

Economic According to NCA (2004g), the global chocolate industry is worth an estimated $60 billion. Estimates also indicate that 2005 sales in the U. S rose by 2. 6 percent to stand at $15. 7 billion. These rose to $16. 3 billion in 2006 and are estimated to increase to $18 billion by 2011 (Packaged Facts, 2007). In the U. S also, the premium chocolate market is expanding rapidly, underpinned by rising demand in fair trade and organic products. This has more than made up for the fall in demand for sugar free and other innovative products (Packaged Facts, 2007).

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Gourmet chocolate comprises a tenth of the entire U. S chocolate market and was worth $1. 3 billion in 2005. Forecasts show that this segment will expand by 6. 4 percent to reach $1. 8 billion in 2010. However, reduced economic growth occasioned by the global meltdown has led to lower disposable incomes and this may negatively affect the chocolate industry as chocolates are deemed to be luxury items. Political The chocolate industry, like other industries, is affected by political happenings. For example, America’s high sugar tariffs have made its chocolate less competitive.

Chocolate made in Canada, for instance, is less expensive than that made in the U. S since Canada buys sugar from the international market which is 20-30 percent cheaper (South Grow, 2008). Political instability in major producers of cocoa such as Ivory Coast has at many times affected the global supply of cocoa beans. Environmental Global warming has impacted negatively on the quality of cocoa ingredients procured by many firms due to the higher shipping temperatures. If not redressed, this phenomenon may negatively affect chocolate companies in the long run. Diseases such as witches’ broom occasionally affect the global supply of cocoa hence the price of chocolate (Busi 0009, p. 84).

Socio-cultural Socio-cultural factors play a major role in the U. S chocolate industry. For instance, increasing health consciousness is a main driver for innovation and rising demand. Datamonitor (2005) (cited in NCA, 2009; NCA, 2004c) indicates that luxury chocolate products are in great demand from customers who need to meet their lifestyle needs. According to NCA (2004), holidays such as ‘Halloween/back to school, Easter, winter holidays (Christmas, Hanukah, Kwanza) and Valentines Day provide great opportunities for the chocolate companies to rake in huge sales.

Yet anther socio-cultural factor which impacts on this industry is that of ethics. The quest for fair trade has seen a surge in demand for socially responsible chocolate products (Global Exchange, 2005). Besides, the market offered by children is becoming more important because they are increasingly prone to make their own purchase decisions without reference to their parents. Parents are also becoming bolder in their choices (Frost & Sullivan, 2008). Reports indicate that chocolate is mainly consumed by younger unmarried adults and college graduates.

Additionally, consumption of gourmet chocolate is not linked to high income groups. Regarding ethnicity, Asians are the largest consumers of gourmet chocolate (BUSI000, p. 83). Technological Technology is important in the chocolate industry as high tech equipment is needed to provide the required products through stringent processes and controls. The rate of technological change is rapid and R&D is a critical aspect of the manufacturing process (NCA, 2004). Legal The industry is bound by FDA Standards of Identity (Guittard, 2007).

The industry is also subject to various safety, health, hygiene and franchise operation laws. The Food Allergen Labelling and Consumer Protection Act of 2004 together with the Nutrition Labelling and Education Act of 1990 control the way chocolate products are packaged. In a move that could negatively affect the industry, candy taxes and vending restrictions have been introduced in several states. Other states have also introduced lead caps in candy. Positively though, the Central American Free Trade Agreement (CAFTA) was enacted four years ago and permits more sugar imports into the country (BUSI000, p. 83).

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