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Chocolate Confectionery in PeruEuromonitor InternationalSeptember 2020C H O C O L A T E C O N F E C T I O N E R Y I N P E R U P a s s p o r t iLIST OF CONTENTS AND TABLESKEY DATA FINDINGS....................................................................................................................

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Chocolate Confectionery in Peru Euromonitor International September 2020

CHOCO LATE CONF ECTIONERY I N PERU

LIST OF CONTENTS AND TABLES KEY DATA FINDINGS.................................................................................................................. 1 2020 IMPACT ............................................................................................................................... 1 Chocolate confectionery sales see increase as COVID-19 encourages home indulgences in 2020 .......................................................................................................................................... 1 Boxed assortments sales plummet as consumers avoid expensive products in 2020 .............. 1 Nestlé Perú continues to dominate in 2020 thanks to its iconic brand Sublime, despite another year of overall declining share value ......................................................................................... 2 RECOVERY AND OPPORTUNITIES .......................................................................................... 2 Overall domestic recovery will stimulate chocolate confectionery growth over the forecast period ........................................................................................................................................ 2 Tablets lead retail value sales as unit prices creep up.............................................................. 2 High cocoa content to become more popular as consumer knowledge continues to develop .. 2 Summary 1

Other Chocolate Confectionery by Product Type: 2020 ............................... 3

CATEGORY DATA ....................................................................................................................... 3 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12

Sales of Chocolate Confectionery by Category: Volume 2015-2020............ 3 Sales of Chocolate Confectionery by Category: Value 2015-2020 ............... 3 Sales of Chocolate Confectionery by Category: % Volume Growth 2015-2020 .................................................................................................... 4 Sales of Chocolate Confectionery by Category: % Value Growth 2015-2020 .................................................................................................... 4 Sales of Chocolate Tablets by Type: % Value 2015-2020 ........................... 4 NBO Company Shares of Chocolate Confectionery: % Value 20162020 ............................................................................................................. 5 LBN Brand Shares of Chocolate Confectionery: % Value 2017-2020.......... 5 Distribution of Chocolate Confectionery by Format: % Value 20152020 ............................................................................................................. 6 Forecast Sales of Chocolate Confectionery by Category: Volume 2020-2025 .................................................................................................... 7 Forecast Sales of Chocolate Confectionery by Category: Value 20202025 ............................................................................................................. 7 Forecast Sales of Chocolate Confectionery by Category: % Volume Growth 2020-2025 ....................................................................................... 8 Forecast Sales of Chocolate Confectionery by Category: % Value Growth 2020-2025 ....................................................................................... 8

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CHOCO LATE CONF ECTIONERY I N PERU

CHOCOLATE CONFECTIONERY IN PERU KEY DATA FINDINGS ▪ Sales boosted by home indulgence trend as consumers stay at home during COVID-19 lockdown in 2020 ▪ Chocolate confectionery records 5% current retail value and 2% retail volume growth to reach PEN757 million and 15,600 tonnes in 2020 ▪ Tablets records highest retail value growth at 10% in current price terms in 2020 ▪ Boxed assortments sees highest unit price increase at 7% in 2020 ▪ Nestlé Perú retains dominant position with 51% current retail value share in 2020 ▪ Chocolate confectionery is expected to record a 4% current retail value CAGR (a 1% constant 2020 retail value CAGR) over the forecast period

2020 IMPACT Chocolate confectionery sales see increase as COVID-19 encourages home indulgences in 2020 General consumption of indulgences was seriously affected by forced social isolation and the decline in expendable income. However, chocolate confectionery overall will remain popular in Peru, and is expected to post better than review period average retail value growth in constant price terms in 2020. More expensive products such as boxed assortments, countlines and seasonal chocolates will struggle as many consumers move towards products with lower unit prices and that can be shared among the whole family, such as tablets and chocolate pouches and bags.

Boxed assortments sales plummet as consumers avoid expensive products in 2020 Mainly, the consumption of chocolate confectionery in Peru is seasonal, increasing during winter months, where it is consumed not only as an indulgence but also to warm the body and obtain energy. Chocolate confectionery is also purchased for special occasions such as birthday parties and for Easter, where there is a custom of giving Eastern Eggs to children. The lack of social occasions to celebrate because of quarantine measures saw retail volume and value sales of boxed assortments and seasonal chocolate decline in constant price terms in 2020, and retailers also avoided purchasing large amounts of these knowing that Peruvians were more focused on purchasing basic food ingredients. Boxed assortments in particular suffered because of its high unit price compared to other products. Per capita chocolate consumption in Peru is lower than in Chile or Argentine, with Peruvians increasingly aware of the risks posed by unhealthy diets. Countlines, the second most popular chocolate confectionery product, sees another fall in retail volume sales in 2020, the fifth consecutive review year of volume sales decline. Consumers associate countlines with high calories content, mainly from sugar and from fat.

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Nestlé Perú continues to dominate in 2020 thanks to its iconic brand Sublime, despite another year of overall declining share value Nestlé Perú will continue to lead chocolate confectionery sales in 2020 thanks to its iconic brand Sublime which has been known and loved by Peruvians for over 90 years. Sublime constitutes over a third of all chocolate confectionery value sales, and is recognised as the childhood flavour of Peru. Over the past five years, Nestlé Perú has developed the brand, updating the packaging of its Clásico milk chocolate tablet with peanuts product, and expanding from just the traditional format to tablets with almonds, bags, as well as to ice cream. In 2019 the company introduced Sublime Galleta, mixing its milk-peanut chocolate tablet with plain biscuit. Nestlé also focussed on marketing with the relaunch of a successful promotion from the 1990s. The modern version engages the public with contemporary entry means: to participate in the promotion, participants send a WhatsApp message with their identification number and the batch code displayed on each participating product, followed by a photo of the open packaging. There are cash prizes as well as Willy Wonka style chances to visit the manufacturing plant and consume as much chocolate confectionery as possible.

RECOVERY AND OPPORTUNITIES Overall domestic recovery will stimulate chocolate confectionery growth over the forecast period Over the medium term the Peruvian economy should expand solidly, driven by strong domestic demand and continued foreign sales of commodities, and chocolate confectionery will see modest growth though perhaps not to the level seen over the review period. Employment growth, relatively low inflationary pressures and rising wages will stimulate private final consumption. Real GDP will bounce back to record growth in 2021 and continue to grow over the forecast period. In particular, tablets, chocolate with toys, and other chocolate confectionery associated with value for money will enjoy success over the forecast period, with a mix of increasing unit prices and increasing public demand spurring the different products on.

Tablets lead retail value sales as unit prices creep up Enduringly popular tablets dominates cholate confectionery value sales in Peru, benefitting from relatively low unit prices at the start of the review period, and continuing to enjoy consumer trust. Over the forecast period, tablets will see its unit price increase more than any other chocolate confectionery, helping it post strong current retail value sale CAGRs in current price terms despite no notable increase in volume sales. With economic uncertainty in Peru, chocolate with toys may see an increase in popularity as consumers opt for small gifts for children, utilising the chocolate plus gift options as a single purchase to replace more expensive alternatives. In fact, only chocolate with toys is expected to outperform tablets’ expected current value CAGR, thanks to its leading volume sales CAGR over the forecast period.

High cocoa content to become more popular as consumer knowledge continues to develop Premium chocolate and chocolate confectionery with high cocoa content is becoming increasingly popular. Some consumers are demonstrating greater knowledge and now

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associate quality with cocoa content. Premium chocolates are also associated with lower sugar content and some health benefits because they are rich in antioxidants, iron, magnesium. These premium products are primarily distributed through modern retailers as supermarkets and hypermarkets, being purchased mainly by consumers from medium and high socioeconomic levels, due to the increased cost. The importance of this trend is reflected in the growing presence of brands, mainly domestic, which offer chocolate confectionery with 55% cocoa content at prices which are lower than those over the previous two years. It is expected that this niche will continue to expand over the forecast period as these products are considered healthier, with lower fat and sugar content. Summary 1

Other Chocolate Confectionery by Product Type: 2020

Product type Tablets Countlines Chocolate Pouches and Bags Boxed Assortments Other Chocolate Confectionery Source:

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

CATEGORY DATA Table 1

Sales of Chocolate Confectionery by Category: Volume 2015-2020

'000 tonnes

Chocolate Pouches and Bags Boxed Assortments Chocolate with Toys Countlines Seasonal Chocolate Tablets Other Chocolate Confectionery Chocolate Confectionery Source:

2015

2016

2017

2018

2019

2020

1.0

1.0

1.0

1.0

1.1

1.1

1.0 0.2 4.5 0.3 7.2 1.1

1.0 0.2 4.3 0.3 7.6 1.1

1.0 0.2 4.2 0.3 7.6 1.2

1.0 0.2 4.2 0.3 7.6 1.2

0.9 0.3 4.0 0.3 7.6 1.2

0.7 0.3 4.0 0.3 8.0 1.2

15.2

15.5

15.4

15.5

15.4

15.6

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 2

Sales of Chocolate Confectionery by Category: Value 2015-2020

PEN million

Chocolate Pouches and Bags Boxed Assortments

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2015

2016

2017

2018

2019

2020

46.9

48.2

48.6

52.9

55.8

60.6

53.0

54.4

55.1

55.9

55.9

44.7

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Chocolate with Toys Countlines Seasonal Chocolate Tablets Other Chocolate Confectionery Chocolate Confectionery Source:

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13.2 174.2 11.4 309.7 20.4

14.2 172.3 11.9 329.8 21.5

16.6 177.2 12.5 340.7 22.8

17.9 183.7 12.9 352.1 24.3

21.9 183.3 12.9 365.1 24.7

23.8 187.0 13.1 400.4 27.1

628.9

652.2

673.6

699.7

719.7

756.5

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 3

Sales of Chocolate Confectionery by Category: % Volume Growth 2015-2020

% volume growth

Chocolate Pouches and Bags Boxed Assortments Chocolate with Toys Countlines Seasonal Chocolate Tablets Other Chocolate Confectionery Chocolate Confectionery Source:

2019/20

2015-20 CAGR

2015/20 Total

6.2 -25.0 5.8 -0.8 -1.6 4.8 6.7 1.6

3.0 -6.1 11.5 -2.4 0.2 1.9 2.4 0.5

16.1 -27.0 72.7 -11.6 0.8 10.1 12.8 2.4

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 4

Sales of Chocolate Confectionery by Category: % Value Growth 2015-2020

% current value growth

Chocolate Pouches and Bags Boxed Assortments Chocolate with Toys Countlines Seasonal Chocolate Tablets Other Chocolate Confectionery Chocolate Confectionery Source:

2019/20

2015-20 CAGR

2015/20 Total

8.7 -20.1 8.3 2.0 0.8 9.7 9.6 5.1

5.3 -3.4 12.4 1.4 2.8 5.3 5.8 3.8

29.3 -15.8 79.5 7.4 14.6 29.3 32.5 20.3

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 5

Sales of Chocolate Tablets by Type: % Value 2015-2020

% retail value rsp

Filled Plain Dark Plain Milk Plain White Total Source:

2015

2016

2017

2018

2019

2020

4.0 16.0 73.3 6.7 100.0

4.0 16.0 73.3 6.7 100.0

4.0 16.3 73.1 6.6 100.0

3.9 16.4 73.1 6.6 100.0

3.8 16.6 73.0 6.5 100.0

3.7 16.8 73.0 6.5 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

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NBO Company Shares of Chocolate Confectionery: % Value 2016-2020

% retail value rsp Company Nestlé Perú SA Cía Nacional de Chocolates de Perú SA Molitalia SA Arcor de Perú SA Mondelez Perú SA Perufarma SA LS Andina SA Copafe SA Fábrica de Chocolates La Ibérica SA GW Yichang & Cía SA Laive SA Celis Bustamante Lily Patricia Di Perugia SAC Labocer SA Masterfoods Perú SA Negociación Ganadera Bazo Velarde SA Kraft Foods Perú SA Others Total

2016

2017

2018

2019

2020

54.0 8.3

53.3 8.7

51.9 9.1

51.1 9.6

50.8 9.9

11.0 5.1 3.6 0.4 1.0 1.0

10.7 6.5 3.9 0.4 1.0 1.0

10.4 6.2 3.8 0.6 1.0 1.0

10.3 6.3 3.8 3.6 1.0 1.4 1.0

9.7 5.6 3.7 3.4 1.9 1.6 1.0

1.6 1.1 0.7

1.4 1.2 0.7

1.3 0.8 0.7

1.3 0.5 0.7

1.0 0.6 0.4

0.4 1.3 -

0.4 0.1 1.6 -

0.4 0.3 3.8 -

0.5 0.2 -

0.4 0.2 -

10.4 100.0

9.0 100.0

8.7 100.0

8.6 100.0

9.9 100.0

Source:

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 7

LBN Brand Shares of Chocolate Confectionery: % Value 2017-2020

% retail value rsp Brand (GBO) Sublime (Nestlé SA) Triangulo D'onofrio (Nestlé SA) Princesa (Nestlé SA) Cua Cua (Mondelez International Inc) Cañonazo (Empresas Carozzi SA) Montblanc (Grupo Nutresa SA) Vizzio (Empresas Carozzi SA) Fino's (Grupo Nutresa SA) Mecano (Empresas Carozzi SA) Chin Chin (Grupo Nutresa SA) Snickers (Mars Inc) M&M's (Mars Inc) Hershey's (Hershey

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Company (NBO)

2017

2018

2019

2020

Nestlé Perú SA Nestlé Perú SA

36.2 7.3

36.0 7.3

36.1 7.3

36.1 7.6

Nestlé Perú SA Mondelez Perú SA

5.9 3.1

5.2 2.9

4.7 2.9

4.5 2.9

Molitalia SA

3.1

3.0

2.9

2.8

Cía Nacional de Chocolates de Perú SA Molitalia SA

1.8

2.1

2.5

2.6

1.9

2.0

2.0

2.0

Cía Nacional de Chocolates de Perú SA Molitalia SA

1.9

1.8

1.8

1.9

2.2

2.0

1.9

1.8

1.6

1.6

1.5

1.5

0.2

0.5

1.6 1.6 0.9

1.5 1.5 1.5

Cía Nacional de Chocolates de Perú SA Perufarma SA Perufarma SA LS Andina SA

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Co, The) Kinder Sorpresa (Ferrero & related parties) Sapito (Arcor SAIC) Costa (Empresas Carozzi SA) Tuyo (Empresas Carozzi SA) Beso de Mosa (Nestlé SA) La Ibérica Ferrero Rocher (Ferrero & related parties) Golpe (Arcor SAIC) Lentejitas (Nestlé SA) Nikolo (Arcor SAIC) Mostro (Mondelez International Inc) Bon o Bon (Arcor SAIC) Winter's Chocopunch (Grupo Nutresa SA) Winter's (Grupo Nutresa SA) Privilegio (Arcor SAIC) Chocotrueno (Grupo Nutresa SA) Bombones Corazón (Carozzi SA) M&M's (Mars Inc) Others Total Source:

Table 8

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Copafe SA

0.9

0.8

1.2

1.4

Arcor de Perú SA Molitalia SA

1.4 1.7

1.4 1.5

1.5 1.5

1.4 1.1

Molitalia SA

1.2

1.1

1.1

1.1

Nestlé Perú SA

1.5

1.5

1.4

1.1

Fábrica de Chocolates La Ibérica SA GW Yichang & Cía SA

1.0

1.0

1.0

1.0

1.4

1.3

1.3

1.0

Arcor de Perú SA Nestlé Perú SA

1.3 1.0

1.0 1.0

0.9 0.9

1.0 1.0

Arcor de Perú SA Mondelez Perú SA

0.9 0.8

0.9 0.9

1.0 0.9

0.9 0.8

Arcor de Perú SA

1.1

1.1

1.1

0.8

Cía Nacional de Chocolates de Perú SA Cía Nacional de Chocolates de Perú SA Arcor...