02 Dec A microecnomic report according to section 2 and section 3 to write a report conclution (maximum 500 words) and in the syllabus it has the information about the reportsyllabus.docSwissCho

Section 1 – General Introduction (from 500 words up to 1000 words):

Market description, size of the market, main product(s), customers and

producers of the product (name the largest players on the market). Global

Production Chain for this product.

Students can provide the graphs/tables/maps to support the analysis.

Section 2 – Supply and Demand in this Market. Market Equilibrium (from 500

words up to 1500 words):

Critically analyse and discuss these themes:

• What’s happened in this market during last 3-5 years? (Support your

answer with statistics on Demand and Supply, average prices on this

market)

• Which positive and negative shifts in Supply and Demand curves could

be mentioned?

(Here, you can fill in the table)

Supply Shifts

Demand Shifts

Positive Changes

Negative Changes

• What’s happened with the market equilibrium? Did equilibrium price

and quantity change during the last 3-5 years after the changes

mentioned before?

• What are the probable shifts in future?

Section 3 – Market Structure (from 500 up to 1500 words):

Name the type of the market structure this market belongs to.

Conduct the 5 forces analysis of this market. Describe 5 components of 5

forces analysis. The results could be presented in the table.

Component of the analysis

General Level

Detailed

Characteristics

Bargaining power of consumers

Bargaining power of suppliers

Rivalry

Substitutes7

New entrants

(other additional features)

Provide the graphs of the market forces (the whole market) and the profit

maximization for one company. Give the recommendations about the

possibilities to increase profit in such market.

Section 4 – Conclusion (max 500 words)

Provide final comments and recommendations. The outcomes of each section

should be provided as well as the critical analysis of possible shifts in supply and

demand.

Assessment Criteria:

• Accurate use / link of theory and economic concepts

• Analysis, synthesis, evaluation-level thinking has occurred

• Development of a logical and well-ordered argument

• Works needs to conform to the Harvard guidelines

• Organisation: paragraphs, transition of words and phrases are

important in terms of how you present your thoughts

• Clarity or expression is expected throughout the Work. Ensure that you

write in a clear and concise manner

•

,

Swiss Chocolate Market Research

Section 1

Market description, size of the market, main product(s), customers and producers of the product (name the largest players on the market). Global Production Chain for this product.

Students can provide the graphs/tables/maps to support the analysis

Section 2

The chocolate market in Switzerland has seen significant ups and downs over the past three to five years.

First of all, the Swiss love chocolate and the demand for it is high.In Switzerland, the consumption per person per year remains basically at 10.4 kg. However, before the year of 2019, the chocolate market sales in Switzerland are on a downward trend. While in 2019, chocolate sales increased by 2.2% to CHF 1.79 billion, according to the Swiss Chocolate Manufacturers Association (Chocosuisse). After declining in recent years, per capita consumption bottoms out in 2019. On the supply side, Swiss-made chocolate is not only sold domestically, but also exported to various countries. The volume of exports is therefore also an important indicator of Swiss chocolate sales. The increase in export commerce caused Swiss chocolate production to rise by 3.8% to almost 200,000 metric tons. Additionally, revenues increased by 1% to CHF 1.75 billion in the year up to 2018. In 2019, 73.7% of the total production of Swiss chocolate producers was exported, up from 72.5% in 2018. Export-related sales increased by 5% to about 147,600 metric tons. For the first time, export sales exceeded CHF 1 billion after increasing by 3%.

Secondly, this figure falls again in 2020. According to Chocosuisse, Swiss citizens consumed an average of 9.9 kg of chocolate in 2020, a decrease of 6.9% compared to 2019. This decrease hits Swiss chocolate the hardest due to a 1.8% increase in chocolate imports from other countries. Its share increased from 41% to 43%.

The trade association attributed the increase in sales of imported chocolate in Switzerland to domestic protectionist policies. "This trend is driven by the asymmetry of border protection for raw materials and processed products: certain raw materials are twice as expensive in Switzerland as they are abroad because of border protection," according to a statement released Monday by Chocosuisse.

The Covid-19 pandemic has also had an impact on the industry. Supply-wise production fell by more than 10% to 180,000 tons, and consequently exports fell by 11.5% to 126,000 tons. Consumer demand was also affected and fell, with overall chocolate sales down 14.5% to CHF 1.53 billion ($1.68 billion).

Then, in 2021, there was a rise in chocolate sales in Switzerland. statistics provided by chocosuisse point to a 10.8% increase in exports of Swiss chocolate in 2021, while sales increased by 15.5%. Because of this, exports and revenues in 2021 are only slightly lower than they were before the new crown pandemic.

Domestic demand for Swiss chocolate in Switzerland was greater in 2021 compared to the previous year, although domestic sales remained below pre-pandemic levels. Domestic sales rose by 6.6%. The high rise in the semi-finished goods sector and the strong performance in the second half of 2021 were the main contributors. As a result, domestic sales in 2021 were only slightly lower than in pre-crisis 2019. revenues on the domestic market in 2021 were also up on the previous year (+7.7%), but still significantly lower than in 2019 (-8.4%).

The share of imported chocolate supply in the Swiss market has increased significantly in recent years, reaching a high of 42% in 2021. The importers' market share in Switzerland has almost doubled in ten years (2011: 34%).

The decrease in consumption of Swiss-produced chocolate (from 8 kg to 6.6 kg per capita) and the increase in consumption of foreign imports (from 4 kg to 4.7 kg per capita) each account for 50% of this trend.

However, Swiss chocolate production still faces some challenges. While the challenges of Switzerland as a producer have long existed, the political climate in 2021 has exacerbated the situation: Parliament succumbed to pressure from sugar producers and voted to extend the minimum border protection for sugar until 2026. This will further drive up the price of sugar in Switzerland against a backdrop of sharp increases in existing raw material prices. This alone increases production costs in Switzerland by 1 to 2 percent of wages and gives foreign imports a further cost advantage.

Employment in the chocolate industry fell sharply in 2020 due to the New Crown epidemic and this figure continues to decline slightly in 2021. With employment in the sector down by 5% compared to 2019, Swiss chocolate production is facing greater challenges. At the same time, 2021 is also less friendly to Swiss chocolate producers in terms of policy, with Parliament voting to extend the minimum border protection for canteens until 2026 due to pressure on confectionery production, meaning that the price of raw materials for chocolate production will continue to rise significantly, further driving up the price of Swiss sugar. This will increase the cost of producing chocolate in Switzerland by 1 to 2 percent and give foreign imports a greater price advantage.

	Supply shifts	Demand shifts
Positive changes	Covid recovery	Covid recovery
Negative changes	Covid-19 impact Workforce decrease Border protection of sugar	Covid-19 impact Less income

Swiss chocolate consumers increasingly prefer high-quality dark chocolate. This is especially the case in the French-speaking part of Switzerland, where 66% of chocolate consumers prefer dark chocolate (CBI,2022). In German-speaking Switzerland, milk chocolate is still the preferred product by 70% of consumers. The future of chocolate production in Switzerland is expected to move towards high-end lines, and there are already a number of high-end production lines for chocolate products.

The Swiss chocolate market still has great potential and opportunities for growth in the future. Consumer demand for chocolate will remain or rise and tend to favor higher-end or healthier chocolates, and of course, the premise of improving the quality of products produced locally in Switzerland in the face of many challenges will lead to further price increases for Swiss-made chocolate in the future.

Section 3

As we all know, Switzerland is famous for its chocolate, and there are various brands of chocolate in Switzerland. The invention of milk chocolate, combined with centuries of expertise and a reputation for high standards, is the reason that Swiss chocolate is still so popular.

Market structure refers to the way in which different industries are classified and differentiated based on the level and nature of competition for products and services. It is based on characteristics that affect the behavior and performance of companies operating in a given market(CFI Team, 2022).

The Swiss chocolate market is one of the typical and well-known monopolistic competitive markets. Lots of companies and manufactures exist in this industry and different manufacturers produce similar products with differences. Also, it is relatively easy to enter and exit the swiss chocolate market. Here are five forces analysis of the Swiss chocolate market.

First of all, for the Swiss chocolate market, imports and exports account for the bulk of the transactions. According to the report, Germany is the largest buyer of Swiss chocolate exports, which was 21,381,465kg in 2015 by weight or 18.5% of the all export of Swiss chocolate(Jo Fahd, 2016).

Bargaining power of buyers

1- Increase the volume of the buyers.

2-Low switching cost.

3-lack of threat of backward integration

((MODERATE))

1- Increase the number of the suppliers.

2- Supplier does not pose a threat of forward integration

3- Undifferentiated raw materials (coca, nuts and etc).

4-The importance of the supplier products to the industry (( NO Substitute))

(( MODERATE ))

Threat of new entrants

1- High initial capital is required

2- need special requirements and regulation for the food industry.

3- wide range of products needs experience and knowledge.

4- complicated supply channels.

((Low))

Threat of substitute

The threat of substitute products in the chocolate and cocoa industry are high.

Threat of non- chocolate snacks, chips and fruits.

(( HIGH))

The industry's intensity of rivalry among competitors is high

1- Advertising battle

2- price wars.

3- huge range of flavors.

4- required high quality.

5-high fixed costs and storage.

(( HIGH))

Component of the analysis	General level	Detailed characteristics
Bargaining power of consumers	Moderate	1- Increase the volume of the buyers. 2-Low switching cost. 3-lack of threat of backward integration
Bargaining power of suppliers	Moderate	1- Increase the number of the suppliers. 2- Supplier does not pose a threat of forward integration 3- Undifferentiated raw materials (coca, nuts etc). 4-The importance of the supplier products to the industry (( NO Substitute))
Threat of new entrants	Low	1- High initial capital is required 2- need special requirements and regulation for the food industry. 3- A wide range of products needs experience and knowledge. 4- complicated supply channels.
Threat of substitution	High	1.The threat of substitute products in the chocolate and cocoa industry is high. 2.Threat of non- chocolate snacks, chips and fruits.
Rivalry	High	1- Advertising battle 2- price wars. 3- huge range of flavors. 4- required high quality. 5-high fixed costs and storage.

Short-run equilibrium of the company under monopolistic competition. The company maximizes its profits and produces a quantity where the company's marginal revenue (MR) is equal to its marginal cost (MC). The company is able to collect a price based on the average revenue (AR) curve. The difference between the company's average revenue and average cost, multiplied by the quantity sold (Qs), gives the total profit. A short-run monopolistic competition equilibrium graph has the same properties of a monopoly equilibrium graph.

Long-run equilibrium of the firm under monopolistic competition. The company still produces where marginal cost and marginal revenue are equal; however, the demand curve (MR and AR) has shifted as other companies entered the market and increased competition. The company no longer sells its goods above average cost and can no longer claim an economic profit

Section 4

Reference

https://www.swissinfo.ch/eng/business/swiss-chocolate-sales-pick-up-again/47473814

Swissinfo.ch (2021) Swiss chocolate consumption dips to lowest levels in 40 years, SWI swissinfo.ch. swissinfo.ch. Available at: https://www-swissinfo-ch.translate.goog/eng/business/swiss-chocolate-consumption-dips-to-lowest-levels-in-40-years/r_pto=sc (Accessed: November 29, 2022).

https://www.confectioneryproduction.com/news/28997/swiss-chocolate-market-records-key-annual-growth/

Swiss Chocolate Market Records key annual growth (2020) Confectionery Production. Available at: https://www.confectioneryproduction.com/news/28997/swiss-chocolate-market-records-key-annual-growth/ (Accessed: November 29, 2022).

https://www.chocosuisse.ch/en/services/facts-figures

Facts & figures (no date) Chocosuisse. Available at: https://www.chocosuisse.ch/en/services/facts-figures (Accessed: November 29, 2022).

https://www.swissinfo.ch/eng/business/protectionist-measure_swiss–chocolate-law–subsidy-for-exporters-to-end-in-2019/44416694

Swissinfo.ch (2018) Swiss 'chocolate law' subsidy for exporters to end in 2019, SWI swissinfo.ch. swissinfo.ch. Available at: https://www.swissinfo.ch/eng/business/protectionist-measure_swiss–chocolate-law–subsidy-for-exporters-to-end-in-2019/44416694 (Accessed: November 29, 2022).

(Swissinfo.ch, 2018)

https://www.jaggaer.com/blog/swiss-chocolatiers-left-with-bitter-taste-following-ghanaian-announcement/

Zakout, R. (2021) Swiss chocolatiers left with bitter taste following Ghanaian cocoa bean announcement, JAGGAER. Available at: https://www.jaggaer.com/blog/swiss-chocolatiers-left-with-bitter-taste-following-ghanaian-announcement/ (Accessed: November 29, 2022).

(Zakout, 2021)

https://www.cbi.eu/market-information/cocoa-cocoa-products/switzerland/market-potential

The Swiss market potential for Cocoa (no date) CBI. Available at: https://www.cbi.eu/market-information/cocoa-cocoa-products/switzerland/market-potential (Accessed: November 29, 2022).

https://www.chocosuisse.ch/en/beitrag/schweizer-schokolade-2021-auf-erholungskurs-aber-noch-unter-vorkrisen-niveau

Swiss chocolate 2021 on the road to recovery, but still below pre-crisis levels (no date) Chocosuisse. Available at: https://www.chocosuisse.ch/en/beitrag/schweizer-schokolade-2021-auf-erholungskurs-aber-noch-unter-vorkrisen-niveau (Accessed: November 29, 2022).

https://corporatefinanceinstitute.com/resources/economics/market-structure/

CFI Team (2022) Market Structure

How different industries are classified and differentiated based on their degree and nature of competition for services and goods. Available at

https://prezi.com/z-z8ltl86ual/chocolate-industry-porter-5-forces/

https://www.swissinfo.ch/eng/business/chocolate-money_where-is-swiss-chocolate-most-popular/42045736