A Higher Chocolate Premium
Mainstream and mass premium chocolate manufacturers
respond to consumers wanting more of “the good stuff” on an
The bar has officially
been raised — the chocolate bar, that is. “Everyday
premium” has become the confectionery catchphrase as mainstream
chocolate players join those on the higher end of the cocoa spectrum with
investments and marketing in more upscale chocolate. Two key examples:
A newly formed unit of Hershey, Artisan
Confections Co., this summer purchased two high-end chocolatiers from
Northern California: Scharffen Berger Chocolate Maker Inc., a company known
for its dark chocolate bars and baking products, and Joseph Schmidt, noted
for its artistic, handcrafted truffles and chocolates.
Mars has unveiled a gourmet chocolate line,
ethel’s, to coincide with an innovative new concept in chocolate
retail — chocolate lounges — which launched in Chicago this
Mars says it’s creating the first-ever
“approachable gourmet chocolate,” which means no “mystery
middles” and flavors encased in chocolate that truly deliver the
tastes chocolate lovers expect.
Each upscale candy grouping — Cocktail, Fruit,
American Pop, Truffle, and Nut and Caramel — has a distinctive look
to make selecting the flavors straightforward and easy. The fun-filled
chocolates include some with whimsical names such as Yum Rum,
Chocolapolitan and PB&J.
Ethel’s is sold only in ethel’s Chocolate
Lounges and online at www.ethelschocolates.com.
In the lounges, pieces run
$1.50; samplers are available for $6.50-$12.50.
Ethel’s (named for the “late matriarch of
Mars”) is the latest gourmet chocolate brand from the Mars
Gourmet Chocolate and Retail Group out of Henderson, N.V.
The Ethel M. brand has been in operation since 1981 and
is a more classic boxed chocolate available through regional, traditional
chocolate retail stores. Ethel’s boasts two first in the industry
— approachable gourmet chocolate served up in a chocolate lounge that
features comfortable chairs and a warm setting perfect to maximize
chocolate enjoyment. Chicago is slated for a total of six
ethel’s Chocolate Lounges to be up and running this fall; Mars
reports “a national rollout” in the future.
“Everyday premium is clearly on-trend,”
says Joan Steuer, president of Los Angeles-based Chocolate Marketing.
“I credit Starbucks to a great degree for promoting everyday premium
in the coffee category; that has definitely crossed into chocolate, where
more consumers are spending two or three dollars every day for a chocolate
She says the trend has really come down to an
experiential one that is being enjoyed “earlier and earlier” in
the day. “Instead of going for dessert after dinner, people are
taking a chocolate break, sometimes instead of a coffee break, after lunch
or mid-morning. It’s a mindful, conscious enjoyment of chocolate
where consumers are sitting instead of gobbling, taking the time out and
having a moment.”
The so-called “mass premium” chocolate
players, previously more exclusive, have recently been making great
distribution strides in the mainstream market (approximately 40 percent of
premium chocolate sales now come from food/drug/mass (FDM) channels,
according to a Mintel Premium Chocolate Report, released in February 2005);
they continue to fuel this “class to mass” chocolate passion
that Steuer and others have identified.
Lindt, for example, is working with mass retailers to
set up Lindt Shop in Shops, according to CEO Thomas Linemayr. Product-wise,
the company is expanding its mainstream truffles line this fall with an
extra dark version, wrapped in a sophisticated black and gold wrapper. In
addition, it is highlighting new Petits Dessert Bars, also launching in the
fall, featuring “the pleasure of gourmet desserts combined with the
finest Lindt Chocolate” — The Lemon Tart, Crème Brulee
and Truffle Cake.
For the last couple of years, Ghirardelli has
“invested in national TV advertising and other marketing support
behind our Ghirardelli Squares business as we’ve expanded our
distribution nationally,” according to Mona Maher, director of
marketing-confections. “Being in the forefront of this trend has led
to incredible growth for our company, but we continue to see lots of
But premium interest is raising the bar in a lot of
consumable categories — contributing to, as well as being influenced
by, what’s happening in chocolate. Beverages, baked goods, pasta and
grains, fresh produce, ready-to-eat meals, condiments and sauces, cheese,
ice cream and frozen desserts and candy, including chocolate — these
were eight product areas profiled in a late-summer report released by
Packaged Facts, which found that just under one-fifth of U.S. adults can be
classified as “gourmet food consumers.” More specifically, it
found that an estimated 18.3 percent of adults try to eat gourmet foods
whenever they can. Based on data from Simmons Market Research, the report,
“The U.S. Market for Gourmet Foods and Beverages,” predicts
that the market for gourmet foods and beverages will exceed $62 billion by
2009; the market currently is reportedly just over $42 billion.
Reported another way, sales of “specialty”
foods increased 16 percent between 2002 and 2004, according to Specialty
Food Magazine and the National Association for the Specialty Food
Trade, Inc. (NASFT) in their “State of the Specialty Food
Industry” report, compiling data through Mintel International Group
and SPINS. Specialty confections saw a 42 percent growth in new products
during this same time period.
“Public tastes are becoming more upscale;
people’s palates are becoming more sophisticated in terms of
chocolate flavors and intensities,” notes Stan Rothstein, president
of Redstone Foods, Inc., a distributor and importer primarily of specialty
confections, based in Carrollton, Texas. “We’re seeing unusual
flavors associated with chocolate, such as Indian spices or Mexican
peppers, becoming bigger and bigger — and this is not in the ethnic
markets, this is mainstream specialty.”
The dark side
Coupled with the premium trend in chocolate, a darker
story is unfolding. For the 52 weeks ending July 16, 2005, dark chocolate
candy increased nearly 11 percent in dollar sales and nearly 9 percent in
unit sales in FDM channels excluding Wal-Mart vs. the same period a year
ago, according to ACNielsen. The ACNielsen dark chocolate definition
includes dark, sweet dark, semisweet, bitter, and bittersweet chocolate.
This is in contrast to milk chocolate, and the total chocolate
category as a whole, which are flat — both of which increased less
than a percent in dollar sales and just over a percent in unit sales for
the same time period.
The ACNielsen Strategic Planner also looked at the
five-year trend, documenting that dark chocolate candy increased nearly 31
percent in dollar sales for the same time period vs. five years ago (milk
chocolate was still flat and the total chocolate category, which includes
“diet” candy, increased 8 percent in dollar sales).
Clearly, America’s taste for “better”
chocolate is also translating to darker chocolate. “As recently as 10
years ago, our sales were 80 percent milk, 20 percent dark; now
that’s completely flip-flopped to 80 percent dark,” says
Rothstein, who mostly supplies specialty stores, including grocers such as
the Texas-based H-E-B unit, Central Market.
Russell Stover’s Dark Chocolate Assorted
Chocolate Box — “which we’ve marketed for more than 50
years is now one of our fastest- growing boxes,” maintains Mark
Sesler, vice president of product development. “We’ve not been
in a recent retailer meeting where dark chocolate was not a topic, which is
a decided change vs. a year ago.”
Guylian USA, which started as a gift chocolate
manufacturer, has noticed “dark chocolate taking off like
crazy,” according to Brad Maslan. “In our 7.05-oz. bar line,
dark gains are outpacing gains in milk; in another line, it’s the
same thing — the dark chocolate version is outpacing sales of the
other two varieties we offer,” he says.
Ghirardelli is introducing a line of gourmet chocolate
bars called “Intense Dark” in the beginning of 2006.
“This line showcases great combinations of luxuriously deep dark
chocolate flavors at different cacao levels complemented by sophisticated
ingredients,” maintains Danielle Jin, brand manager.
Cacao (cocoa) content has seemingly become an
important “measure” for premium (dark) chocolate consumers, as
chocolate manufacturers highlight it. “Cacao terminology is
increasingly more important to our buyers and to the consumer,”
maintains Russell Stover’s Sesler.
While Madelaine Chocolate Novelties Inc. has always
offered many of its products in dark chocolate with a 47-49 percent cocoa
content, the company recently launched a new line of 72 percent cocoa, all
natural, premium dark chocolate, which includes mini-hearts wrapped in
copper and dark brown foil, a 1.8 oz. bar and a variety of panned items
including nuts and dried fruits.
“When we developed our 72 percent cocoa product
line, we wanted to bring out the incredible flavor of dark chocolate as
well as the flavanoids, which are found in pure cocoa and are reputed to
reduce hypertension or high bloods pressure,” says Barbara Berg,
spokesperson for Madelaine.
Thompson Brands, which has responded to the premium
trend with a line of all-natural and organic chocolates, also sees the
percent of cacao content as “useful to the organic and premium
chocolate consumer,” not just as a measure of taste, but a measure of
potential health benefits for consumers, according to Ed Main, marketing
manager. Thompson has seen great evidence in this with a strong interest
and growing sales in our 50 percent and 70 percent dark chocolate blends of
our organic line.”
As with many issues hyped in the press, there has been
some confusion surrounding the buzz, as well. “Cacao terminology has
become a very interesting topic,” begins Tyler Jeffrey, vice
president of sales and marketing for World’s Finest Chocolate, which
has a very strong catalog and E-store business that sells an extensive
array of personalized chocolate gifts. “The struggle with the topic
is that I don’t think most consumers understand what percent cocoa
solids means. Consumers have taken this to be some proxy for quality vs. a
description of ‘darkness,’ which it actually represents. I
think more education on the chocolate-making process is needed to help
consumers make more informed choices.”
But, of course, deep and dark chocolate is not for
everyone despite all the attention it’s getting in the marketplace.
“Yes, dark chocolate is getting more play; however, the vast majority
of chocolate sold will always be milk chocolate,” reminds Jeffrey.
Single bean source?
Single bean or origin chocolate is also stimulating
confusion, as well as interest in the premium end of the chocolate
category. “It can mean a particular plantation or it could mean a
country,” says Steuer of Chocolate Marketing. “So hopefully
there will be more stringent labeling as people become more intrigued by
the culture and socio-economic conditions behind the chocolate.”
But single bean over blended bean chocolate — is
that truly where the premium market is headed, similar to wine labeling?
“Origin chocolate is really part of the experimentation and
exploration that consumers are doing around the chocolate-eating
experience,” adds Jeffrey, although he does not believe it will in
any way take over the market.
“Chocolate making is not a new science and what
people have learned over many years is that the best taste comes from
blends of different beans. Complexity and depth of flavor is enhanced
through blending beans with different attributes,” says Jeffrey.
Companies such as Lindt note that it’s up to the
chocolate manufacturer to pay attention to bean source.
“Lindt’s customers may not be aware, but our selection of cocoa
beans is very specific,” says Linemayr. “Lindt Excellence only
uses premium Criollo cocoa beans, which represent only a small fraction of
the world’s harvest. Even though the consumers are not particularly
aware, they are enjoying the resulting flavor.” n
Sweet Premium Facts
Sales of premium chocolate exceed $1.5 billion
Approximately 40% of premium chocolate sales
now come from food/drug/mass (FDM) channels
Sales are highly seasonal, occurring mostly
between Thanksgiving and Easter
Science suggests premium chocolate has some
Consumers are shifting brand preferences
In FDM channels, premium chocolate purchases are
shifting from drugstores
Premium chocolates are frequently gifts and
The future will bring more mass chocolate
manufacturers into the premium chocolate market
Note: Premium chocolate in this report is defined as
chocolate candies with an upscale positioning and price tags exceeding
$0.50 an ounce. This can be compared to the price of a regular Hershey
chocolate bar which retails for roughly $0.30 an ounce.
Source: Mintel Premium Chocolate Report — U.S.
— February 2005
How Convenient? — Chocolate In the C-Store
With “everyday premium” chocolate moving
forward and better chocolate “value” taking a stronghold with
consumers — where does that leave convenience store chocolate sales?
It is merely speculation at this point, but a majority of convenience
retailers are concerned about a consumer shift away from buying candy and
chocolate in their channel and towards buying it more often in larger
stores, according to a recent report by Deutsche Bank, which surveyed 14 of
the largest U.S. c-stores and gasoline retailers.
But for right now, that contradicts research put out
internally by leading c-store distributor McLane Company. “Nearly 70
percent of confectionery category growth has come from chocolate, and we
expect this to continue,” says the McLane report, prepared for its
convenience-store confectionery category managers looking ahead to the
first quarter of 2006.
"Chocolate and non-chocolate are the most
responsive to any merchandising activities — displays, temporary
price reductions, feature tie-ins with another category — and when
utilized, the stores can expect to see, on average, over a 200 percent
increase in dollar sales," maintains a spokesperson for the Temple,
According to McLane, chocolate bars account for nearly
33 percent of c-store confectionery sales; premium/other candy, which
includes chocolate — more than 8 percent; and seasonal candy, which
includes chocolate — nearly 4 percent.
The top five candy manufacturers in c-stores represent
more than 75 percent of total candy, gum and mint sales in the c-store
channel; the top three chocolate manufacturers fall within the top four
candy manufacturers — Hershey (No. 1 on both counts) with nearly a 29
percent share; Masterfoods (No. 2 on both counts) with nearly a 19 percent
share, and Nestlé (No. 3 in chocolate, No. 4 in confectionery) with
a little more than an 8 percent share.
New item introduction is very important to the
chocolate success in c-stores, McLane outlines. Limited edition offerings
are a big part of the recent excitement, especially since they highlight
popular flavors, including dark versions, caramel ribbons, etc., that
supplement the popularity of the mainstays.
Bittersweet Chocolate - Dark chocolate that contains a
minimum of 35 percent chocolate liquor. Bittersweet and semi-sweet both
fall under this definition; however, bittersweet is often the term used for
chocolate with a minimum of 50 percent chocolate liquor.
Chocolate Liquor - The
ground up center (nib) of the cocoa bean (otherwise known as unsweetened
chocolate) in a smooth, liquid state. It contains no alcohol. Also called
Cocoa Beans - Seeds from the pod of a Theobroma tree. Native to the
tropical Amazon forests. Commercially grown worldwide in tropical
rainforests within 20° latitude of the equator.
Cocoa Butter - The fat of the cocoa bean. It is not a dairy product.
Cocoa Powder - The
cocoa solids resulting from pressing cocoa butter out of chocolate liquor.
May be natural or dutched.
Dark Chocolate - See
sweet chocolate below.
Dutch Process - A
treatment used during the making of cocoa powder in which cocoa solids are
treated with an alkaline solution to neutralize acidity. This process
changes the color of the cocoa and develops a milder chocolate flavor.
Fat Bloom - The result
of inadequate tempering or temperature abuse of a properly tempered
chocolate. Visible as a dull white film on the surface of the chocolate
with the possibility of a soft or crumbling texture on the interior. A
visual and textural defect only. The product is fine to eat.
Milk Chocolate - Chocolate with at least 10 percent chocolate liquor and 12
percent milk solids, combined with sugar, cocoa butter and vanilla.
Nib - The center
(meat) of the cocoa bean. When ground, the nib becomes chocolate liquor.
Semi-Sweet Chocolate - Also
known as bittersweet chocolate. Contains a minimum of 35 percent chocolate
Sugar Bloom - Visible as a dull white film on the surface of the chocolate.
Dry and hard to the touch, sugar bloom is the result of surface moisture
dissolving sugar in the chocolate and subsequent recrystallization of the
sugar on the chocolate surface. Typically caused by cold chocolate being
exposed to a warm, humid environment with resultant condensation forming on
the product. A visual and textural defect only. The product is fine to eat.
Sweet Chocolate (Dark) - Chocolate
that contains a minimum of 15 percent chocolate liquor with varying amounts
of sweeteners and cocoa butter.
White Chocolate - Contains
cocoa butter but no cocoa powder. Also contains sugar, cocoa butter, milk
solids and flavorings.
Source: The Ghirardelli Chocolate Co.
|Top 5 King-Size Bars
||C-Store Sales (in millions of dollars)
||% Change vs. Year Ago
|1 Reese's Peanut Butter Cups (2.8oz)||$9.7||+6.3%|
|2 Snickers (3.7oz)||$9.5||+5.0%|
|3 M&M's Peanut (3.1oz)||$6.2||+7.9%|
|4 Hershey's Milk Chocolate w/ Almonds (2.6oz)||$5.2||+3.3%|
|5 Hershey's Milk Chocolate (2.6oz)||$4.2||-1.1%|
|Top 5 Regular-Size Bars
|1 Snickers (2.07oz)||$11.2||+0.4%|
|2 Reese's Peanut Butter Cups (1.6oz)||$6.6||-9.5%|
|3 M&M's Peanut (1.74oz)||$5.3||-6.7%|
|4 Hershey's Milk Chocolate (2.6oz)||$5.2||+4.5%|
|5 Hershey's Milk Chocolate w/ Almonds (2.6oz)
|Source: McLane Category Management Handbook using IRI and ACNielsen mid-year 2005 data.|