Whittaker’s is a chocolate manufacturing company. Whittaker’s was started by J.H Whittaker in 1896. Although he first worked as a jeweller, his love for chocolates began when he started working in the cocoa department in Birmingham. Such was his love for chocolates that he decided to come back to New Zealand and setup his own chocolate manufacturing in 1890 at Christchurch. The chocolates were made and sold directly to customers who had a sweet tooth and appreciation for chocolates. In 1911 the business was moved to Wellington and his sons joined him, hence the iconic name J.H Whittaker and Sons. The company’s present headquarters are based in Porirua at 24 Mohuia Cres, Elsdon, Porirua 5022.
It is one of the most loved brands in New Zealand after Cadbury and constitutes for about 38% of chocolate sales.
The purpose of this assignment is to complete a situational analysis by completing an analysis of the external and internal forces. This assignment would not have been possible without the constant guidance and persuasion of Prof. Alastair Emerson who made us feel confident enough to complete this assignment.
2. External Review:
2.1 Industry Review:
The chocolate industry dates back to 1900BC when the Mesoamericans discovered the chocolate drink. Cocoa bean production is available in Africa, Ghana, South America, Indonesia and the Pacific as per the below pie chart.
As per an article published in The Herald, the world is running out of chocolates. The world is in the midst of the longest streak of consecutive chocolate deficits in more than 50 years. In 2013 the consumption for cocoa was 70,000 metric tons more than the actual production of cocoa. The deficit is expected to rise up to 1 million metric tons by 2020 and 2 million metric tons by 2030. This was one of the reasons for the increase in Cocoa price which have increased by 60% since 2012, because the actual demand was more than the world could supply.The increase was passed on to customers by increasing the chocolate costs.Efforts are still underway to keep the costs down.
New Zealand has a long history with chocolates and is concentrated across 3 eras,
New Zealand is a major manufacturer of chocolates. The countries chocolate exports reached $115 million in 2013. 83% of these chocolate exports went to Australia. Remaining exports to Singapore, Malaysia, Hongkong and South Korea constituting for $5.8million, $1.7million, $815,000 and $793,000 respectively.The chocolate exports increased by 49% since 2004.
Cadbury is a major competitor to Whittaker and exported chocolate crumbs worth $100 million in 2012.
New Zealanders have a variety of chocolates to choose from ranging from Chocolate bars/blocks to artisan chocolates, bars and gift packs. The future of chocolates is good as new chocolate companies/startups are pooping up to satisfy New Zealand’s sweet tooth needs.
This is supported by the graph below which shows a CAGR of 2% over 15 years.
How the Industry works:
The beans are sourced from Ghana and other locations. The cocoa pods are harvested for beans. Each pod has 20-60 beans depending upon the size.
These beans are then fermented and dried and are shipped to the manufacturing location/facility where the real fun begins.
The beans are thene roasted and the nibs are extracted by removing the outer shell using a winnower machine.(Nibs are a combination of cocoa mass and cocoa butter.)
These are ground repeatedly to turn into cocoa liquor.The chocolate is then tempered and the special flavours are added.
Chocolate is poured in moulds where it settles. This is eventually wrapped and shipped for consumption.
Sell the finished product directly to consumers (or) centre the supply through a network of wholesalers and retailers.
2.2 External Factors:
As discussed, the chocolate costs are on a constant increase as the cocoa production is less compared to the cocoa consumption. Manufacturers are searching for new ways to keep costs down. This may interfare with the quality of chocolates.
Fairtrade Chocolate: This agreement by Fairtrade International aims to give the farmers who cultivate cocoa a fairer share of benefits to improve their quality of life. More and more people are becoming aware and opt for these products instead.