ONE CAN HARDLY WATCH THE NEWS without hearing about the multiple health benefits of chocolate. One day broadcasters are raving about chocolate's antioxidants and the next everyone is learning that chocolate can help lower blood pressure and promote longevity.
This frequent coverage points to consumers' increasing awareness about health issues and their growing interest in education about product ingredients. As the health-conscious trend has gathered more force, interest in chocolate bars has surged.
According to PROFESSIONAL CANDY BUYER sources, the market is also growing in part because of the increasing variety of chocolate products being offered to consumers, including those with nutritious appeal.
An immediate case in point is The Hershey Co.'s new Hershey's Antioxidant Milk Chocolate and Hershey's Whole Bean Chocolate bars (see page 8).
Annabelle Candy Co., Inc. Director of Sales and Marketing Dave Klabunde says: 'Innovative new products are helping to bring health-conscious consumers into the market. Healthy chocolate allows people to indulge a little without feeling guilty.'
Vice-President of Sales and Marketing Brad Maslan from Guylian USA, Inc. adds: 'Consumers are looking for choices. There are times when they want something a little nicer and other times when they're in the mood for traditional chocolate products. They are also looking for different taste profiles and stronger tastes, such as dark chocolate mixed with other unique flavorings.'
The expanding array of chocolate products, sources say, has drawn the attention of consumers new to the market. Product offerings now cover a broader range of consumer needs and demands than ever before. For example, more sugarfree products are now available for people who have to manage their sugar intake, while products with purer ingredients are becoming abundant for those interested in organic offerings. There has also been an increase in the number of chocolate products with a more adult taste.
This upsurge of new items has given consumers who used to avoid chocolate a reason to take a second look. This includes older adults, health-conscious mothers, and those who thought chocolate was mostly designed for children's palates.
While chocolate sales across the board continue to rise, premium bars have seen the most dramatic boost in sales. According to ACNielsen food, drug and mass data, premium chocolate bar sales grew 31.4 percent during the past year. On the other hand, sales of traditional chocolate bars grew only 5.4 percent. This further reinforces the notion that premium chocolate items are answering consumer demand for products that cater to health concerns.
Robert Walsky, president of Valor Chocolates USA, Inc., says: 'Consumers are looking for high quality products with clean ingredients. Many are looking for premium items with higher cocoa content and less sugar and filler.'
Roberta Cappel, president of Dorval Trading Co., Ltd., confirms that organic, Fair Trade, single origin and high-cocoa content products are seeing sales spikes as consumers' tastes evolve.
'Consumers are willing to trade up for higher quality products, and recent news referencing the benefits of high-cacao content chocolate is clearly influencing this,' she adds.
Lindt & Sprungli (USA), Inc. Brand Manager Calder Cruikshank, notes: 'Consumers choose more carefully than ever before in order to 'make the calories count'. This has resulted in a surge of premium dark chocolate bar sales.'
Consumer interest in elements such as single origin cacao beans and antioxidant-rich dark chocolate are also the driving trends in the premium sector, sources report.
Damian Drab, vice-president of Bubble Chocolate Inc., observes: 'Companies are displaying higher cacao contents and ingredients on labels and making them appear healthier in general. Some are expanding to organic products and ingredients, which can be sold at a higher price.'
Dite Van Clief, president of Euro-American Brands, LLC, acknowledges that sales of dark chocolate are up because of press coverage on the healthful benefits of anti-oxidants.
However, while many consumers are straying from the traditional chocolate market and venturing into the premium arena for health reasons, others are attracted to the upscale market because of a peaked interest in gourmet food.
Some experts attribute the growth in premium sales to this blossoming appreciation for high quality ingredients and more cultivated flavors.
Kirk Saville, director of corporate communications at Hershey, agrees that the healthful attributes of premium chocolate items are a factor in the growth of the market, but also states that consumers are interested in gourmet foods in general. He says: 'Consumers are interested in exploring new experiences. This is helping drive growth in the dark and premium segments as consumers experiment with different flavors and forms. A great example of this is the way consumers are interested in exploring dark chocolate with different cacao levels.'
Agreeing, Steve Nadel, director of marketing at Dorval, says: 'Consumers are looking for a 'flavor experience' in bars that contain a higher cacao content and new flavors, such as chocolate infused with fruit and spices.'
In addition, aging baby boomers are finding traditional chocolate products too sweet, while others are attracted to the more intense flavors and unique flavor combinations that a number of premium chocolate companies offer.
However, consumers new to the chocolate sector are trying premium products as well. For example, many adults who stopped eating chocolate after childhood are enticed by the adult flavors found in gourmet items. In addition, people who monitor their sugar intake are finding that they can enjoy some of the newer no added sugar chocolate items.
Health conscious consumers who see the value in high cacao content and less fillers are also finding it worth the extra cost to buy premium chocolate products, which is good news for retailers at the cash register.
Although the health benefits of premium chocolate and the appeal of gourmet food in general has pulled some consumers from the traditional chocolate market, sales have not been hit as hard as some would expect.
What's more, the premium chocolate sector's growth has encouraged traditional chocolate companies to develop premium lines.
According to Walsky: 'There is a distinct shift as traditional chocolate consumers are moving towards premium products. Many traditional chocolate companies are either acquiring premium companies or developing premium items.'
Van Clief says: 'The premium sector is where the major growth is, and traditional chocolate companies regard the premium segment as the fixture.'
Hershey has responded to the surge in premium chocolate sales by adding a number of lines to its offerings. For instance, in September, the company introduced Cacao Reserve, a premium line of all-natural chocolates with various percentages of cacao. Since then, and in response to the appeal of single source beans, the line now identifies beans sourced from Sao Tome, Java, Arriba and Santo Domingo.
The company also earlier acquired upscale companies Scharffen Berger Chocolate Maker, Inc. and Joseph Schmidt Confections Inc., and expanded its gourmet chocolate portfolio again in October 2006 with the acquisition of Dagoba Organic Chocolate.
Hershey has also developed sugarfree versions of its traditional Hershey's, Reese's and York chocolate candies to meet other consumers' needs.
Masterfoods USA's premium Dove Chocolate line has seen a dramatic increase in sales--up 52.6 percent in 2006 over the previous year's sales, according to Information Resources, Inc.
And to help expand sales even farther, the company introduced Dove sugarfree chocolate in a variety of flavors.
All this reinforces Masterfoods' strong move towards more nutritious items, including its ground-breaking CocoaVia Heart Healthy Chocolate Snacks. Dark chocolate CocoaVia products claim to promote a healthy heart with their cholesterol-reducing benefits from cacao beans and plant sterols.
Renee Kopkowski, public relations director at Masterfoods, states: 'There is a strong interest in health-oriented products as evidenced by our own CocoaVia Heart Healthy Chocolate Snacks, and there is a blurring of the lines with the growth of more confectionery-like flavors of energy, snack and health bars.'
As manufacturers try to stay ahead of the game with new and innovative items, they have also attempted to entice consumers with new packaging.
Sources agree, for example, that developing new labels that highlight a product's health benefits and ingredients is a popular move by manufacturers that has also proven effective.
Another growing trend is portion-control packaging, and Klabunde observes that more and more candy companies are joining the successful snack portion-control group.
Maslan affirms that portion-control packaging is a nice selling point, and Cruikshank adds that it has made a niche growth opportunity for older brands.
Cappel notes that portion-control is helping suppliers cater to health-conscious consumers, saying: 'As suppliers come out with more 90-calorie and 100-calorie packs, they enable those consumers concerned about caloric intake to still indulge while on a healthier diet.'
Hershey's Saville says: 'The transition from quantity to quality happens as people realize the importance of portion control. Consumers start to realize that premium quality chocolate is such an indulgent experience that they do not need to eat a large quantity to feel satisfied.'
Some companies have used portion-control packs as a seasonal selling point, with suppliers offering multi-packs as stocking stuffers.
In addition, several companies recently added more limited editions to their lines. Klabunde says that this technique has 'impacted sales in a positive way and has helped increase the demand for more choices.'
On the other hand, some experts do not see this as a lasting trend. Marketing Director Cindy Brooks, of Adams & Brooks, Inc., says consumers become frustrated when they cannot find something they really enjoy, claiming that limited editions conflict with brand building.
Likewise, Drab does not see the trend continuing because limited edition items often do not offset their introduction expenses.
However, Walsky notes that traditional chocolate companies could potentially profit from running limited edition products with an anniversary theme since they are a staple of many consumers' childhoods. But he says that this would not work as well for all premium chocolate companies because many do not have the same history with American consumers as traditional suppliers.
Questioned about the limited edition trend, Masterfoods' Kopkowski reports that although limited editions can be a useful marketing tool, it has been overused in recent years. She says: 'The category had a glut of limited editions during the past two years, some of which did not warrant the distribution they achieved. We believe in a circumscribed limited edition strategy that allows us to test products within the market and then consider bringing them to market in a permanent basis depending on consumer demand.'
Retailers Profit From Trend
Retailers are well positioned to take advantage of soaring chocolate sales as the increasing visibility of popular chocolate products is boosting revenue for many stores, say sources.
Ghiradelli Chocolate Co.'s Danielle Jin, asserts: 'Even more so than mainstream chocolate, premium chocolate is highly impulse driven and visibility is particularly important to build awareness and drive impulse sales.'
Several options for drawing attention to chocolate products are available to retailers and sources agree that off-shelf displays are an excellent way to increase consumer awareness.
Klabunde notes that more and more companies are designing displays that communicate the health benefits of their items.
Cruikshank adds: 'Impulse buying is still a key element in driving sales, so display vehicles are critical to complement everyday in-line sales.'
Placement of products in stores is also cited as important, and Cruikshank says: 'A good plan-o-gram is key to a successful merchandising strategy. Chocolate bars should be clustered together to create a bar story with a strong core selection and a wide range of flavors. Lining up products on one long shelf diminishes the depth and overall impact of your assortment since consumers often purchase a variety of products to taste together--similar to a wine tasting.'
To develop a stronger set, he also suggests that it is more profitable to merchandise premium items alongside dark chocolate. Cruikshank adds that concentrating first on a core selection of premium SKUs is crucial before adding the latest chocolate trends, such as single origins, organic chocolate and eccentric flavors. 'Consumers will always be attracted to reference products in a category, and look to complement that consumption with new and innovative products,' he claims.
Retailers can also take advantage of the interest in premium chocolate by offering top international gourmet chocolate brands in an international themed display, claims Walsky.
Sources also note the successes to be gained by moving a portion of high-end chocolate bars to other areas within the store. Placing chocolate in flower and greeting card departments has proven very successful for many retailers, agree Klabunde and Drab.
According to Maslan, other effective methods include sampling and advertising the differences between various chocolate items. Implementing scan downs is another way to drive sales and build consumer awareness, says Walsky.
Drab reveals that Bubble Chocolate has also found it advantageous to advertise in magazines targeted at female consumers as well as those directed at more sophisticated and high end consumers.
Looking To The Future
One thing is certain, the strong move towards premium, dark and healthful chocolate is not a fad--it is a major trend that will become common-place.
This is especially so because of the considerable weight being thrown behind 'healthful' chocolate bars by Masterfoods and Hershey, not least the most recent launch of good-for-you milk chocolate.
BAR FACT
1900 Milton S. Hershey, of Lancaster, PA, introduced the first Hershey's milk chocolate bar in 1900. The Snickers bar from Masterfoods USA was introduced in 1930.
BAR FACT
400 It takes about 400 cocoa beans to make one pound of chocolate.
BAR FACT
Nuts & Milk
Chocolate manufacturers use about 40 percent of the world's almonds and about 20 percent of the world's peanuts. In the U.S., chocolate manufacturers use about 3.5 million pounds of whole milk every day.
BAR FACT
HEART HEALTHY?
A few squares of dark chocolate daily could reduce the risk of death from a heart attack by almost 50 percent, claims one medical researcher.
