Economies around the world have been hit hard by the combined impact of COVID-19, supply chain issues, increased costs, political instability, and other factors.
Using the British and American economies as examples, we’re going to look at how the chocolate manufacturing industry has been impacted by turbulent times and how liquid product recovery (pigging) can be used by manufacturers of chocolate (and other liquid products) as a way of recouping money and product.
Case Study #1: The UK
Between 2019 and 2022, the UK experienced a negative economic growth of -0.4%. Trade to the European Union decreased and general demand for non-essential products declined with the onset of the COVID-19 pandemic.
With the relative remission of COVID-19 in 2022 and the establishment of new trade deals, the British economy has partially recovered, however it hasn’t returned to or exceeded pre-COVID levels.
New trade deals, the soaring costs of raw ingredients and increased energy prices have contributed to a poor economic climate for industrial manufacturing.
The British Economy
The total British trade as a share of GDP (indexed at 100 = Q4 2018) was 103 in 2019. By 2022, total trade as a share of GDP had declined to 96.
In those three years, the UK exited the EU and, in many industries, suffered economically from COVID-19 and related policies.
The Chocolate Industry in the New Economic Climate
In 2019, British chocolate exports were worth £41.4m. By 2022 chocolate exports had fallen by 68% (down to £13m).
There are several reasons that may have contributed to this steep and rapid decline.
When COVID-19 was announced to be a pandemic, 91% of the world’s countries closed their borders, either partially or completely. Imports and exports of non-essential goods decreased as countries tried to find a way to limit the spread.
The closure of the hospitality industry because of COVID-19 policy also impacted the demand for chocolate, resulting in decreased manufacture. It has been suggested that the decline in chocolate manufacture in the UK may cause a decline in imports, as demand is not as strong as it once was.
The second reason that may have contributed to the decline in chocolate exports is that the consumer base has become more health conscious. It has been reported by the Centre for the Promotion of Imports that a) consumers are looking to shift from chocolate to healthier snacks, and b) that consumers are more interested in chocolate with a higher cocoa content that is organic, fair trade certified, or single origin.
The decreasing lack of demand across the world is not helped by a lack of trade deals between the UK and potential export markets.
Since leaving the EU in 2020, exports to Ireland, Germany and Italy have decreased, and coveted deals with the USA and China have not been secured. The limited trade deals in place mean that British chocolate manufacturers are likely to experience difficulties within the supply chain.
Consequently, the limited (and expensive) market options available to chocolate manufacturers in the UK, as well as the rising costs of manufacturing, are impacting the British chocolate industry.
Case Study #2: USA
Since 2020, the USA has recovered well. Trade has been growing at a steady rate and overtaking their pre-COVID figures to reach 99.65.
The USA’s trade as a share of GDP (indexed at 100 = Q4 2018) was 98.75 in 2019. As with other G7 countries, the USA experienced a decline in economic growth in 2020, with their trade as a share of GDP dropping to 90.3.
The American chocolate industry, however, has decreased in market size in 2019, from $21,369,000,000 to $20,035,400,000. This is a decrease of 6.24% and the trend is expected to continue.
Factors Impacting the American Chocolate Industry
The USA, as with most other countries, is affected by the lasting effects of COVID-19, the Russo-Ukrainian war, and the increased prices of raw materials, such as the cocoa bean.
COVID-19 has also had an impact on the American economy. Although recovery following the lifting of restrictions was quick, it has led to speculation that the USA will suffer from a recession as a result of recovering too quickly.
The Russo-Ukrainian war that escalated in 2022 has contributed to a rise in the cost of living, the same as in other regions of the world. The rising cost of gas and oil is hitting manufacturers who use large quantities of energy in their processes with increasing bills.
The cost of raw materials is also affecting chocolate manufacturers in the US. The cocoa bean is a high-value ingredient. In September 2022 the cost of a tonne of cocoa bean was $2220.12. By January 2023 the cost had increased to $2540.08 per tonne.
The price of the cocoa bean is impacted by the political instability that exporting countries such as Cote d’Ivoire and Ghana experience. Cocoa producing companies are also reliant on optimal weather conditions for good harvests – if a harvest is poor then the price of the cocoa bean increases.
How HPS Pigging Systems Will Help You
Liquid product recovery (pigging) is an effective and efficient way of recovering liquid product from pipelines.
There are many benefits of product recovery systems and many manufacturers use pigging for efficient product recovery. By sending a specialist projectile, called the ‘pig’, through the pipeline, an HPS pigging system can recover up to 99.5% of product left in full pipelines.
Additionally, HPS pigs are made of FDA-approved material and are ISO 9001 and ISO 14001 certified, meaning that they are hygienic (sanitary) and suitable for use in the chocolate industry.
All the recovered product can be sent on for further processing or packaging, which is highly beneficial to manufacturers who use expensive raw materials.
Pigging will also help manufacturers as a global recession approaches – by saving product, companies will save money and ingredients.
HPS will help you chose the right pigging system for your processes, and we’ll design the pigging system to your requirements. From conception to commissioning to after sales care, HPS will be there to make sure that your project is completed to the highest standards.
Benefits of Pigging
HPS pigging systems have a positive impact on manufacturers that use them in many ways other than product recovery.
Pigging systems have a high return on investment (ROI) and a rapid payback period, meaning that many HPS clients have paid off their system within 6-12 months. Pigging systems also have a low cost of ownership, making them a financially stable long-term investment – HPS have systems from over 20 years ago still running perfectly!
As well as recovering significant amounts of product and being a great way to increase profits, pigging systems are great for increasing sustainability.
In 2022, we had a report done by Carbon-Zero that showed that an HPS pigging system could help reduce carbon output by up to 99.3% per changeover.
Find Out More
HPS have over 28 years of experience in designing bespoke pigging systems for chocolate manufacturers. We’ve worked with companies such as Mondelez, Ghirardelli, and Log House Foods to design, implement, and maintain effective and efficient pigging systems.
To talk with our product recovery experts about how we can help you increase yields and profit, contact us today.