The German market potential for cocoa

Germany is a massive cocoa and chocolate market with many opportunities for producing countries, both in the bulk and speciality segment. However, as the bulk market is reaching saturation point, there are new opportunities for exporters and producers, especially on the speciality market. This is mainly fuelled by the growing demand for darker chocolate, and the large organic and sustainable cocoa market. Germany is a major chocolate consuming country as well, registering the largest per capita chocolate consumption in Europe.

1. Product description

The focus of this document is cocoa beans (whole or broken, raw or roasted). These fall under HS code 1801. Harmonised System (HS) codes are used to classify products and to calculate international trade statistics, such as imports and exports.

The cocoa tree (Theobroma cacao) grows in tropical areas between 15 and 20 degrees latitude north and south of the equator in Africa, Asia and Latin America. Cocoa pods grow directly from the trunk and thicker branches of the tree. After extraction from the pod, cocoa seeds (beans) are fermented and (sun) dried. A cocoa producing tree can deliver on average 7-9 kg of dry beans per year.

The three main varieties of the cocoa tree as distinguished by the international cocoa market are the following.

1. Forastero is the predominant cocoa variety. It is mainly cultivated in Africa, but also in Central and South America. It accounts for around 80% of global cocoa production. Forastero grows faster and gives a higher yield than other cocoa varieties. The beans have a strong, earthy flavour. Generally, bulk cocoa beans come from Forastero trees. Well-known Forastero subspecies are Amelonado and Nacional. Nacional trees in Ecuador produce fine-flavour cocoa.
2. Criollo (original cocoa tree) is mainly grown in Central America, northern South America, the Caribbean and Sri Lanka. Criollo makes up around 5% of global cocoa production. The beans have a delicate and sweet flavour. Criollo is often mixed with other varieties when making chocolate, given that it is scarce and expensive. Fine-flavour cocoa beans are produced from Criollo cocoa trees. Well-known varieties are Chuao, Porcelana and Ocumare.
3. Trinitario is mainly cultivated in Central and South America, the Caribbean and Asia. The beans are a hybrid of the Criollo and Forastero trees. This variety represents around 10-15% of global cocoa production. The beans have a floral, fruity flavour. The cocoa beans from Trinitario trees are classified as fine-flavour cocoa. There are exceptions, however, as Cameroonian cocoa beans produced from Trinitario trees are classified as bulk cocoa beans. Well-known varieties are Carenero, Rio Caribe and Sur del Lago.

Cocoa-bean derivatives (cocoa paste, cocoa butter and cocoa powder) are covered in our study on semi-finished cocoa products in Europe.

2. What makes Germany an interesting market for cocoa?

Germany is the world’s fourth-largest importer of cocoa beans, and Europe’s second-largest. It is the leading chocolate producer in Europe and is home to a large cocoa grinding industry.

Germany is the second-largest European importer of cocoa beans

With a market share of 20%, Germany is the second-largest importer of cocoa beans in Europe, preceded only by the Netherlands, which holds a share of 35% of total European imports. Total German cocoa-bean imports amounted to over 445,000 tonnes in 2021, at a value of €1,048 million. Between 2017 and 2021, the total volume of cocoa beans imported by Germany decreased slightly, at an average annual rate of 0.2%, but increased by 0.2% in value.

Germany imported about 23% of its cocoa beans through its neighbouring countries, mainly the Netherlands (78,000 tonnes) and Belgium (42,000 tonnes). About 73% of total German imports were sourced directly from producing countries. Ivory Coast (192,000 tonnes), Nigeria (47,000 tonnes) and Ghana (39,000 tonnes) were the main direct suppliers. Germany’s imports sourced directly from producing countries decreased between 2017 and 2021, at an average annual rate of 1.9% in volume, but increased in value by 1.1%. Most direct cocoa-bean imports enter Germany via the port of Hamburg.

Germany houses the second-largest cocoa grinding industry of Europe

Most cocoa beans imported into Germany are used domestically for further processing. Germany is the second largest grinder in Europe, after the Netherlands and the world’s fourth largest with an estimated 9.0% of global grinding.

It is estimated that the German industry processed 445,000 tonnes of cocoa beans in 2020/21. In 2019/20, that figure was 430,000 tonnes. Numerous cocoa grinders and processors are active in the German market, ranging from major multinational firms (such as Cargill and Barry Callebaut) to national companies like August Storck, Weinrich and Schokinag.

Grinding is not expected to increase significantly in the future, as multinational companies are increasing their bean grinding activities in the countries of origin allowing these companies to have more direct control of the chain, lower production costs as well as to target regional markets.

Germany is Europe’s leading chocolate producer

Germany houses Europe’s largest chocolate manufacturing industry, predominantly using bulk beans. According to Prodcom data, Germany manufactured about 1,182,000 tonnes of chocolate products in 2020. Between 2016 and 2020, chocolate manufacturing in the country increased at an average annual rate of 0.6%.

Large multinational chocolate manufacturers such as Ferrero, Mars and Mondelez all have their manufacturing facilities in Germany and dominate the market. In total, there are over 230 German chocolate producers; examples of larger German chocolate manufacturers are Hachez, Ludwig Schokolade and Ritter Sport.

A large share of the produced chocolate is exported, which makes Germany the world’s largest exporter of chocolate products. In 2021, Germany exported more than 950,000 tonnes of chocolate and other food preparations containing cocoa. The estimated export value of Germany’s chocolate products and other cocoa preparations was €4.5 billion (16% of global chocolate exports). Between 2017 and 2021, export volume increased at an average annual rate of 2.5%, while its value increased by 2.3%.

3. Which trends offer opportunities or pose threats on the German cocoa market?

Germany is a massive cocoa market, and also a major chocolate consuming country, registering the second-largest per capita chocolate consumption in Europe. There is a growing demand for darker chocolate. The large organic and sustainable cocoa and chocolate market provides interesting opportunities for cocoa exporters.

Germany is Europe’s largest organic market

Germany is an interesting market for organic cocoa, as it is the largest market for organic foods in Europe. German retail sales of organic food represented more than a third of the EU total in 2020, amounting to almost €15 billion. In 2020, the share of organic food in the overall German food market was 6.4%.

Germany is also the fastest growing organic market in Europe, with a growth rate of more than 22% in 2020. One of the drivers of this has been the growing health awareness intensified by the COVID-19 pandemic. The German organic market is expected to grow at an average annual rate of 2.7% between 2021 and 2026. Confectionery products, like sweets and chocolate, are expected to be the fastest-growing categories in organic food sales.

Organic products are widely available in Germany and competition is strong. In fact, organic products are now becoming mainstream in most categories, indicating the maturity of the market. Although the organic market has moved from niche to mainstream in Germany, the market for organic chocolate is still considered niche. About 2.5% of chocolate sales in Germany are organic.

Organic chocolate is available across all price ranges, from low-end and private label to premium. For instance, retailer Aldi Süd offers organic chocolate under its private label One World. Examples of German premium organic chocolate brands are Vivani and Belyzium. Attempts by larger chocolate manufacturers in Germany, like Ritter, to convert their entire chocolate line to organic have failed due to a lack of consumer demand. Still, all larger manufacturers will have an organic chocolate in their assortment. In the case of Ritter, the product line ‘Ritter Sport Bio’ caters for the growing interest in organic products.

Producers and exporters of organic cocoa beans are likely to find the widest opportunities in Germany, where the market is large and diverse, and which still has room for growth.

For an example of an exporter dealing with organic cocoa, check out CONACADO, a union of cocoa co-operatives in the Dominican Republic. Apart from its organic, fair trade and other certifications that follow market demand, CONACADO’s competitive edge lies in its business model: a union of small and medium-sized cocoa producers. This model was formed in the 1980s with support from German Technical Co-operation (GTZ), now GIZ.

Growing demand for sustainably produced cocoa and chocolate in Germany

Up to 79% of all chocolate confectionery sold in Germany in 2021 was made using sustainably produced cocoa. This marks an increase of 76% since 2011, when that share was only around 3%. This is partly explained by the German Initiative on Sustainable Cocoa (GISCO), which since 2012 aims to promote sustainable cocoa production and sourcing. About 70 parties have joined this initiative, ranging from government agencies to retailers and key players in the German cocoa grinding and chocolate manufacturing industry.

The most popular sustainability certifications on the German chocolate market are Rainforest Alliance (which merged with UTZ in 2018) and Fairtrade. Large German retailers such as Lidl, Aldi and REWE have committed themselves to only sell 100% sustainable cocoa. Consequently, most German mainstream brands are now certified by one of these certification bodies.

Sales of fair-trade cocoa and chocolate products in Germany have risen sharply since 2016. In 2021, Germany imported over 81,000 tonnes of fair trade-certified cocoa beans. That has brought their market share close to 16%. Most of this fair-trade cocoa is sourced from Ghana, Ivory Coast and the Dominican Republic.

Given the widespread availability of certified chocolate in Germany, certification can be a key entry requirement for cocoa exporters in most market segments.

German consumers choose healthier chocolates

Germany registered annual chocolate consumption of around 9 kg per capita in 2021. In comparison, in Europe only Switzerland’s per capita consumption is higher, at 11.3 kg. Bars and tablets are the most commonly consumed chocolate products in Germany. Although most Germans (55%) still prefer milk chocolate, consumers are increasingly demanding high-quality dark chocolate.

Consumption of dark chocolate is driven by consumer preferences for healthy products. Chocolate with a high cocoa content is considered healthier than chocolate with a higher sugar and milk content. Similarly, there is also a growing demand for sugar-free, sugar-reduced and vegan chocolate. Chocolate products with perceived healthy ingredients such as hemp seeds, matcha or acai fruit are also becoming more popular in Germany.

Although such higher quality and healthier chocolate remains a niche, the market is already quite competitive with a wide range of brands already available in German shops. New product launches continue, however, with one example being the vegan milk chocolate bar from Ritter Sport which entered the market in early 2022.

Growing demand for certifications on dietary laws

The dietary laws followed by consumers based on their religious background are increasingly taken into account by chocolate manufacturers in Germany. Halal and kosher chocolate products are becoming more popular among the younger chocolate consumers in Germany. An example is the German brand Iftarlade from manufacturer Honeyletter, which offers halal and kosher chocolate bars.

Cultural diversity has also changed seasonal products. In addition to the traditional Advent chocolate calendar in Germany, there is now also a special Ramadan chocolate calendar.

Premiumisation of seasonal chocolate products

Germany is a traditional market, where seasonal chocolate products (for instance during Easter and Christmas) remain very popular. In 2021, an estimated 239 million chocolate Easter bunnies and 103 million chocolate Santa Clauses were produced in Germany for domestic consumption.

These products are usually made of bulk cocoa, and mainly sold by discounters and supermarkets. However, there is a trend towards premiumisation as more niche products are being offered. This offer ranges from organic to vegan, fair-trade and gluten-free seasonal chocolate varieties.

This study was carried out on behalf of CBI by Gustavo Ferro and Lisanne Groothuis of ProFound – Advisers In Development.

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