World Chocolate Day: Sweeten your portfolio July 22, 2024

World Chocolate Day, also sometimes called International Chocolate Day, is an annual celebration dedicated entirely to chocolate! Held every year, this day allows chocolate enthusiasts worldwide to revel in their favourite treat without a hint of guilt.

The exact origins of World Chocolate Day aren’t entirely clear, but some believe it commemorates the introduction of chocolate to Europe in 1550. Since 2009, the day has been globally recognised, celebrating chocolate not only as a delightful indulgence but also as a cultural and economic powerhouse.

Here’s what World Chocolate Day signifies:

• Celebrating Chocolate: It’s a day to appreciate chocolate’s rich history, delicious taste, and versatility. From creamy milk chocolate to dark chocolate with a high cocoa content, there’s a type of chocolate for everyone.
• Indulgence: World Chocolate Day is a guilt-free excuse to enjoy your favorite chocolate treats, whether it’s a decadent cake, a box of chocolates, or a simple bar.
• Sharing and Connection: Chocolate is often associated with happiness and sharing. World Chocolate Day is a great opportunity to share your love of chocolate with friends, family, and colleagues.

Investment Opportunities

World Chocolate Day also highlights significant investment opportunities within the global confectionery market. The chocolate industry has shown robust growth, driven by rising demand for premium and artisanal chocolates. Investors might consider the following avenues:

• Investing in stocks of leading chocolate manufacturers can be a lucrative way to tap into the industry’s growth. Companies that focus on sustainable and ethical chocolate production are particularly appealing, given the increasing consumer interest in socially responsible brands.
• Cocoa, the essential ingredient for chocolate, is a key commodity on the global market. Investors can engage in commodity trading focusing on cocoa futures to leverage the fluctuations in its price, which are influenced by factors such as weather conditions in cocoa-producing countries and global demand trends.
• For those looking to diversify their exposure, there are ETFs and mutual funds that include shares from a range of companies within the food and beverage sector, including chocolate manufacturers.

The global chocolate market is quite large, with estimates varying depending on the research source. Here’s a quick breakdown:

• Market Size: Estimates range from US$109.13 billion to US$421 billion in 2023.
• Growth Rate: The market is expected to grow at a Compound Annual Growth Rate (CAGR) of around 4% to 4.87% over the next few years.

There seems to be a difference in the reported market size. This could be due to factors like the scope of the research (cocoa vs just chocolate) or the methodology used. Regardless, all sources indicate a significant and growing market for chocolate.

There isn’t a direct chocolate ETF, but you can invest in the chocolate market in a few ways:

1. Individual Chocolate Companies

• Hershey Company (HSY): A leading North American chocolate manufacturer with popular brands like Hershey’s Kisses, Reese’s, and Snickers.
• Mondelez International (MDLZ): This multinational company owns popular chocolate brands like Cadbury, Milka, and Toblerone.
• Nestle (NSRGY): A Swiss multinational food and beverage company with a large chocolate confectionery business, including KitKat and Aero bars.
• Lindt & Sprungli (LISN.SW): A Swiss premium chocolate company known for its Lindt truffles and chocolate bars. Note: This stock trades on the Swiss Stock Exchange.

2. Cocoa ETFs

There are no longer any ETFs that directly track cocoa prices, but some general commodity ETFs may have some exposure to cocoa futures contracts. However, this would be a small portion of the overall holdings and not a pure play on chocolate.

3. Broad Consumer Staples ETF

ETFs that cover a basket of consumer staple stocks will include some chocolate companies as holdings, but also many other types of food and beverage companies. Here are a couple of examples:

• Consumer Staples Select Sector SPDR Fund (XLP): This is a large and popular ETF that tracks the S&P Consumer Staples Select Sector Index.
• Vanguard Consumer Staples Fund (VDC): This ETF tracks a similar index to the XLP but with a slightly different methodology.

Before investing in any stock or ETF, it’s important to do your own research and understand the risks involved.

Singapore doesn’t have any publicly traded companies that solely focus on chocolate production. However, there is one company on the Singapore Exchange (SGX) that might be of interest:

• Delfi Limited (SGX: DFI): While not a pure chocolate play, Delfi is a Singaporean company that manufactures and distributes chocolate confectionery products across Southeast Asia. It also has its own chocolate brands.

Here’s why Delfi might be interesting for investors looking for some exposure to the Singapore chocolate market:

• Market Leader: Delfi is a market leader in the chocolate confectionery market in Singapore and several other Southeast Asian countries.
• Brand Portfolio: They have a strong brand portfolio that includes both their own brands and popular international brands that they distribute.
• Growth Potential: The chocolate market in Southeast Asia is expected to continue growing in the coming years, which could benefit Delfi.

Delfi’s business is not limited to chocolate, and its stock price may be affected by factors unrelated to the chocolate market. As always, do your own research before making any investment decisions.

1. We can offer you access to:

• stocks of the major chocolate companies mentioned earlier, like Hershey’s (HSY), Mondelez International (MDLZ), or Nestle (NSRGY).
• ETFs: Though direct chocolate ETFs aren’t available, we offer access to broader Consumer Staples ETFs like the Consumer Staples Select Sector SPDR Fund (XLP) and Vanguard Consumer Staples Fund (VDC), which include chocolate companies among other food and beverage businesses.

2. Research and Analysis

• We provide research reports and market analysis on the chocolate industry and the consumer staples sector, helping you understand potential opportunities and risks.

3. Investment Advice

• Our financial advisors can assist you in building a portfolio that aligns with your investment goals and risk tolerance, potentially incorporating some of the chocolate-related stocks or ETFs into a diversified investment strategy.

Key Considerations:

• Do Your Own Research: While we provide tools and advice, it’s crucial to conduct your own research to make informed investment decisions.
• Understand the Risks: All investments carry risks. It’s important to understand these as stock prices can fluctuate.
• Diversification: To mitigate risk, ensure your investment portfolio is well-diversified across different sectors and asset classes.

By leveraging our resources and supplementing them with your own due diligence, you can effectively explore opportunities to invest in the growing chocolate market.