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Despite the gloom of the recession that enveloped the nation last year, with its impact still being felt, U.S. consumers haven’t given up on chocolate, even as they cut back on other frills and took steps to curtail spending in virtually every way possible.
“Chocolate kept selling through the recession; people kept buying chocolate and eating chocolate,” says Marcia Mogelonsky, senior food and drink analyst at Chicago-based market research company Mintel. “Chocolate is an affordable little indulgence for many people to enjoy, even while they are having to give up other things. For many people, it’s a nice trade-off. Skip dessert and have a nice piece of chocolate when you get home.”
The “affordable indulgence” factor apparently was an important driver of chocolate sales in 2009, which generally were up in convenience stores, supermarkets and specialty food stores, although unit sales generally declined.
According to The Nielsen Company, chocolate bar dollar sales of almost $4.6 billion in the convenience channel represented a 5 percent jump over 2008, but unit sales were off by the same amount.
“The major factor in convenience stores has been that in-store sales have lost ground because people stopping for gas are simply not going inside the store to buy snacks or lunch,” Mogelonsky points out. “People are trying to save money. Many people are not stopping on the way to work because they are not going to work, or if they are, they bring food from home.”
But, for many people, depriving themselves of that convenience store candy bar or extra cup of coffee generates a sudden urge to spend money on something little, but extra-good, like a fancy chocolate when they buy groceries or pass by a gourmet chocolate shop at the mall, she says.
In the food, drug and mass-merchandising channels, including Walmart, Nielsen reported 2009 chocolate candy sales of $4.3 billion, a 3.6 percent increase, on top of a 4.7 percent jump the previous year. However, unit sales were off by 7 percent. Chocolate miniature sales of about $1.1 billion were up 8.7 percent, following a 1.2 percent boost in 2008, while unit sales dropped 3 percent. Dietetic chocolate sales of $172 million climbed 3.6 percent compared with a slight 0.4 percent increase in the prior year. Unit sales were up, but only by 0.2 percent.
Those higher sales numbers compared with lower unit numbers represent price increases taken by some major manufacturers over the year, but they may also indicate increased interest by consumers in higher-priced premium brands — the “affordable indulgence” factor.
Last December, Mintel reported that chocolate sales worldwide rose dramatically — by 18 percent and 12 percent, respectively, in China and the Ukraine, for example. Each country has seen steady sales growth since 2005, and Mintel predicts continued growth through 2013. In Britain, the chocolate market produced 5.9 percent growth, with 3.2 percent in Belgium, a country that claims to produce some of the world’s best chocolates, showing a sales increase of 3.2 percent. Overall U.S. chocolate sales increased 2.6 percent over 2008, Mintel reported.
“It’s clear that despite economic trouble this year, the world’s chocolate lovers didn’t deviate from their favorite treat,” says Mogelonsky. “Even in countries not known for chocolate consumption, sales are on the rise.”
The desire by many consumers for an affordable special treat is also evident in the sales results of gourmet retailers. In a presentation at the National Association for the Specialty Food Trade’s (NASFT) Winter Fancy Food Show in January, Mogelonsky and NASFT VP Ron Tanner said that half of specialty food consumers purchase four categories of food: coffee, cheese, chocolate and olive oil. In all, 46 percent of all consumers purchase specialty foods, they reported, with taste and quality listed as primary motivators.
The NASFT report said 57 percent of specialty food consumers, led by females, have altered spending due to the economy, and fully 82 percent are now cooking more at home, while 70 percent are eating less at casual restaurants.
Tapping Into the Trends
The French chocolate company Valrhona is capitalizing on that trend, according to marketing manager Carolina Gavet, who says the company’s baking lines of milk, dark and white chocolates are “selling very well right now” to consumers who want to make at home special desserts they might see on a television cooking show.
“The brand Valrhona is very well known among the world’s top pastry chefs,” she says, “so we are trying to share that little secret with consumers.”
The company offers recipes, techniques and advice on its Web site for both consumers and retailers, where demonstrations can be presented.
In addition, Valrhona’s recent launch of its Grand Cru chocolate line, including a tasting wheel, has been successful at such retailers as Whole Foods, Williams Sonoma and Fresh Markets, where the baking bars are often demonstrated.
“You can see how the baking concept is going because they buy the bars in bulk, break them, and repackage and sell them to consumers,” she explains.
“What we saw in 2008 was a change in the market similar to what happened previously with wine, cheese and coffee, when consumers started to get more information and educate themselves,” Gavet says. “Now we are seeing that with chocolate.”
Many consumers are interested in the company’s organic and Fair Trade products, especially on the West Coast, where consumers frequently ask questions during in-store demonstrations about those items as well as about the health benefits of chocolate. That trend is expected to grow in other areas of the country as well, Gavet predicts. Chocolate, particularly the dark varieties, is loaded with flavanols, which help to lower blood pressure, promote healthy blood flow and balance certain hormones in the body.
Meanwhile, for many consumers, purchasing gourmet chocolate during these difficult economic times is one way to give a nice gift without spending a great deal of money, points out John L. Stanton, professor of food marketing at St. Joseph’s University in Philadelphia.
“The recession has just put everybody in a little more price-conscious position,” he says. “They may decide to buy a high-end chocolate, but they may look to find it a little bit cheaper, or they buy a nice brand that is a little bit cheaper. It’s like when they go out to buy a Mercedes, they go to the dealer with the cheapest price.”
For example, Stanton points out that club stores such as Costco are doing particularly well during the current economic climate, among upscale consumers. “You can get those really fine Ferrero Rocher chocolates cheaper there than in the local stores.”
For retailers, the strategy for success, according to Stanton, is to watch carefully for signs that the economy is rebounding and that consumers are prepared to spend more.
“It will happen,” he says. “People are going to spend more, indulge themselves more. Everybody is waiting for the breakout. The company that is able to see when people are going to be more confident and get their products into the market first, re-establish their products on the shelves, re-establish with retailers that are selling high-end chocolates, will be the one to win in the future. The person who wins is the one who can take off just as it’s happening.
“With high-end chocolates,” Stanton continues, “they are all good. What’s going to [make] the difference is who gets the product in front of the consumer, whether it’s product placement, advertising, retail sell-in — whatever it is to get the product out there first.”
The National Confectioners Association’s (NCA) “2009 Confectionery Industry Trend Report” predicts chocolate will emerge as one of the largest growth drivers for the confections industry “in new, delicious and exciting ways.” According to the report:
—Chocolate and cocoa will pop up more frequently as a key ingredient in main courses alongside salmon, chicken and steak, according to 73 percent of experts surveyed
—Flavor infusions that combine chocolate and spices, salts, herbs and floral flavors will become increasingly popular as consumers embrace pairings, according to 43 percent of insiders
—Sweet and savory chocolate duos, like chocolate and bacon, and even chocolate and cheese combos, will be popular in stores and on menus. In fact, 78 percent of experts said chocolate and these sweet and savory duos would provide the most surprising flavor combinations
—Chocolate will drive the organic market, according to 70 percent of experts surveyed
—More than one-third of experts said consumers would become more knowledgeable about the global origin of the chocolate they enjoy
Experts also forecast that the potential health benefits of chocolate will continue to be evidenced. Nearly half of those surveyed said consumers can expect to see more research into the potential health benefits of milk and dark chocolate, including exploration of naturally occurring cocoa compounds and positive effects on mood and blood pressure levels.
In addition, one in three industry experts said U.S. trends would have the greatest impact on the dark chocolate market globally.
The report predicted limited-edition candies would prevail. Thirty-five percent of experts said experimentation with new flavors of classic favorites would be a leading trend within limited-edition candies, such as introducing dark chocolate versions of classic milk chocolate candies and experimenting with flavor fillings.
Some of these trends are evident in new products and line extensions recently introduced in the retail marketplace.
For example, Pocasset, Mass.-based Cape Cod Provisions, LLC has converted six products to an all-natural recipe. In its Harvest Sweets brand, milk and dark chocolate-covered cherries and blueberries are now all natural. In the Cape Cod Cranberry Candy brand, dried cranberries are now coated with all-natural milk and dark chocolates.
Ferndale, Wash.-based Decadent Tastes, LLC announced that its L’Estasi Dolce Sweet Ecstasy brand of Asian fusion confections and gourmet wine truffles recently received top ratings from Tastesgrader.com, an online guide for consumers. Cited by the rating service were the company’s Lemongrass Ginger Truffles, Mint Ginger Truffles and Cabernet Truffles.
Last June, Nestlé USA launched its new Kit Kat, Aero and Coffee Crisp bars, all of which use dark chocolate “to attract a mature, health-conscious new audience.” The products contain 70 percent cocoa content, “successfully elevating Nestlé’s presence as a provider of quality dark chocolate,” according to the Glendale, Calif.-based company’s promotional materials. Since the launch, shipment sales have increased 45 percent, with consumption sales up 14 percent compared with the previous year.