-By Bridget Goldschmidt

There's no doubt about it: Gourmet chocolate is all the rage. A recent report from The Nielsen Company on dark and premium chocolate showed that the premium segment experienced a 28.5 percent jump in sales for the 52 weeks ended Jan. 26, 2008 in total U.S. food, drug, and mass merchandiser stores, on top of a 26 percent leap the year before. By comparison, nonpremium chocolate sales slipped 0.3 percent in 2007, after edging up just 0.5 percent in 2006.

Even major mainstream players have gotten into the act, spurred by heightened consumer interest in health claims for dark chocolate varieties and the growing conception of all types of gourmet products as indulgent treats to be enjoyed regularly. Hershey, for instance, now owns such artisan chocolate makers as Dagoba, Joseph Schmidt, and Scharffen Berger. The company has also introduced high-end items under its own iconic brand, including, most recently, Hershey's Bliss chocolates in March.

"It's no longer just an elite, upscale luxury, since over 95 percent of the mass market now purchases goods in the premium category," confirms Jenn Ellek, director of trade communications and marketing with the Vienna, Va.-based National Confectioners Association. "Consumers' perception of gourmet has evolved into an emotional purchase that is a reward or an indulgence. Therefore, gourmet is becoming more and more referred to as 'everyday gourmet.'"

Naturally, such enthusiastic consumer attitudes are working their way down to the retail level, especially at stores positioned at the upper end of the market. "Our fine chocolate assortment consistently generates positive sales revenues," says Hans Heer, s.v.p. and general manager at The Food Emporium, the gourmet-leaning retail banner of The Great Atlantic & Pacific Tea Co., based in Montvale, N.J. "This category is among our highest performers."

Carl Smith, specialty food and confection buyer for Carson, Calif.-based Bristol Farms, agrees. "In the last seven years the gourmet chocolate market has exploded," he notes, adding that he's typically approached by five to 10 new chocolate brands monthly, asking to be included among the banner’s ultra-upscale offerings.

The category so far is even showing signs of being recession-proof.

"Despite a slowing economy here in the U.S., we continue to see incredible growth in the premium chocolate segment, which has more than doubled in the last five years and is expected to almost double again over the next five years," notes Kelly Fahey, brand manager of San Francisco-based Ghirardelli Chocolate Co., citing Mintel Report data. "Over time, price seems to have become less of a variable when it comes to chocolate-purchasing behavior, while the quality of chocolate has become a more important factor. Consumers see spending a little extra money on a great-tasting piece of chocolate as a relatively inexpensive way to treat oneself on a regular basis -- an affordable luxury."

Trading up

Ghirardelli, which has been in business for over 150 years, has been busy expanding its own range of affordable luxury with two new launches for 2008, Milk Chocolate & Peanut Butter Squares and filled Prestige Bars, as well as adding two new flavors to its Intense Dark line: Midnight Reverie (86 percent cacao) and Evening Dream (60 percent cacao).

Says Fahey: "Peanut butter is the second-biggest flavor segment in the chocolate category, representing over 10 percent of category volume. Moreover, not only does the peanut butter segment overall offer huge potential, we see tremendous opportunity for premium peanut butter."

Meanwhile, the introduction of the Prestige Bars allows the company to "[encourage] consumers to trade up by offering gourmet versions of the most popular and familiar chocolate flavors among consumers -- including caramel, peanut butter, mint, and raspberry -- and delivering these high-quality products at an affordable price point -- less than $2.50 per bar in most retail locations," points out Fahey.

She emphasizes the importance of enabling shoppers to experiment with premium chocolate in flavors they already know and love. "While some consumers will occasionally try exotic-flavored chocolate, the majority of consumers favor familiar recipes in chocolate," observes Fahey, noting similar trends in such premium food categories as ice cream, wine, and beer. "By 'gourmetizing' consumers' favorite chocolate recipes…Ghirardelli offers chocolate lovers the perfect motivation to trade up to gourmet chocolate."

Besides the major players in the chocolate category, Oakland, Calif.-based Sconza Candy, a savvy smaller company, has capitalized on the premium chocolate trend by bringing out products pairing chocolate blends with a fruit or nut. "All of our packaging and merchandising communicate the special link between Sconza chocolate and premium-grade fruits and nuts," says Sconza spokeswoman Connie Franceschi. "Visually, we focus on a botanical theme, which is inherent in all our products."

Since deciding to focus on this niche of premium chocolate fruit/nut confections, Sconza has seen sales in the segment soar. "Sales of our premium brand of chocolate fruits and nuts have doubled every year as we move into more channels of trade," notes Franceschi. "Our products fit easily into a number of trade channels, from produce departments, because of our fruit-and-nut emphasis, to general candy sections, which feature premium sections."

Another effect of the popularity of premium chocolate is international coffee vendor Starbucks' decisive move into the arena with the March introduction of a line of artisan-style chocolate infused with Starbucks coffee, Tazo tea, and other coffeehouse flavors. The line, created and marketed in partnership with Hershey, and available nationwide at grocery, mass retailers, wholesale clubs, and drug stores, consists of tasting squares, signature bars, truffles, and chocolate-covered coffee beans.

"Chocolate is a great partner of coffee and tea flavors," observes Wendy Piñero, v.p., consumer products at Seattle-based Starbucks. "When we looked at different products we could enter the arena of, this was at the top of our list." The Starbucks chocolate products have already been greeted with “a lot of strong interest," she adds.

The retail difference

As well as full-fledged chocolate boutiques at two of its locations, The Food Emporium offers its gourmet chocolates "artfully displayed on beautifully crafted shelves with specially designed signage," among them exclusive confections from France's Olivier and Switzerland's Läderach, according to Heer.

The banner scored a particular coup about a year ago, however, by engaging the services of Norwalk, Conn.-based master chocolatier Fritz Knipschildt to produce items especially for The Food Emporium.

"On a seasonal basis, Knipschildt creates custom-made assortments which feature delicious fillings and a range of chocolate types," explains Heer. "For Easter he designed a collection exclusively for us…. In the coming months, The Food Emporium is again partnering with Knipschildt to deliver an array of seasonal products which will be launched at private label events."

As for other upcoming promotions, this month the banner will feature a "Fine Chocolate of the Week" program, which will showcase "some of the best chocolates from Austria," notes Heer, adding that The Food Emporium is "continuing to develop an unparalleled program of seasonal and holiday chocolates."

At Bristol Farms -- which Smith says carries a "mix of imported and domestic" items, including items from Moonstruck Chocolate Co., Seeds of Change, and Valrhona, and where chocolate bars can run the gamut in price from $1.79 to a hefty $14 -- artisan brands, not surprisingly, perform better than national brands.

The grocer keeps things fresh with regular in-aisle displays, but Smith notes that "one of the best ways to increase sales [in the category] is to sample out," with a concomitant reduction in price for that month.

To get its customers nibbling away at new or little-known high-end chocolate brands, Bristol Farms invites vendors to visit and hawk their wares, or to hold cooking classes at such strategic times as Valentine's Day and Mother's Day, thereby "[putting] a face to the products," as Smith describes it.

This type of education, which Smith considers essential even for his chocolate-savvy, upscale shoppers, is even more crucial for mainstream operators, he insists. Many larger grocers "don't understand the segment," he notes. "They need to take time to educate the customer," since there’s so much chocolate out there that shoppers are bound to become overwhelmed and confused by the sheer overabundance.

And that education shouldn't stop with shoppers. "Big stores need to educate themselves" on such topics as cacao content, and then teach their employees, so that they "don't mislead the customer," notes Smith. He likens the learning process to what clerks at a cosmetic counter must undertake to sell such items effectively.

Additional insight on the subject comes from Ghirardelli's Fahey: "Those retailers who are most successful with premium chocolate are those who have embraced the growth potential of premium earlier on, and have a broad assortment shelved in a way that facilitates how a consumer shops. It's also important for retailers to quickly weed out me-too products that are not truly perceived as premium by consumers."

Bristol Farm’s Smith speculates that the premium chocolate category has "almost reached its saturation point," and predicts consolidation among the business' successful and not-so-successful players, with the aim of getting placement in bigger retailers, rather than specialty shops and boutiques.
 
Fahey, however, suggests consumption will continue to rise: "Proud to be labeled 'gourmet,' consumers actively seek information [and] knowledge on chocolate, and demonstrate a higher level of sophistication and appreciation of premium ingredients and the production process."

EXCLUSIVE WEB CONTENT

Hershey celebrates national Bliss

Over the weekend of April 25, Hershey’s new Bliss Chocolate hosted 10,000 chocolate parties in homes across the United States, to mark the recent rollout of the line, which consists of three decadent varieties: Milk Chocolate, Dark Chocolate, and Milk Chocolate Meltaway.

The indulgent bite-sized treats were the guests of honor at the gatherings, at which Hershey's target Bliss consumers -- female chocolate lovers -- met with friends and relatives to share their personal tales of everyday happiness while sampling the product. To sign up to host the parties, consumers visited www.houseparty.com/hersheysbliss.com.

"The chocolate masters at Hershey created Hershey's Bliss for consumers who appreciate the everyday joys in life," explains Hershey s.v.p., global chief marketing officer Michele Buck. "Hershey's Bliss Chocolate is meant to celebrate that joy, and the Hershey's Bliss Chocolate parties bring this experience to life by encouraging partygoers to experience and share everyday bliss with their own friends and family."


Buyers Alert: Premium chocolate

As premium chocolate grows more popular among consumers and retailers, the category takes on a more approachable character, with manufacturers offering lower-cost packaging, exciting coffee- and tea-infused varieties, and more choices in the burgeoning dark chocolate segment.

Ghirardelli Chocolate Co.

Intense Dark product line extensions: Midnight Reverie and Evening Dream are the two latest products to join San Francisco-based Ghirardelli’s popular Intense Dark line of dark chocolate varieties  Midnight Reverie features hints of dark cherries, dried plums, and a roasted flavor from the 86 percent cacao content. Evening Dream blends a 60 percent cacao chocolate with Madagascar vanilla.

Suggested retail price: $2.99 per 90-gram bar

Available: Evening Dream, November 2007; Midnight Reverie, January 2008

For more information: www.ghirardelli.com


Sconza Candy Co.

Single-serve gable box: The Oakland, Calif.-based manufacturer now offers the packaging for its 70% Cacao Dark Chocolate Espresso Beans, 70% Cacao Dark Chocolate Toffee Almonds, Chocolate Cherries, and Chocolate Toffee Pistachios. "This packaging format allows us to achieve two objectives: provide a lower price point for single-serve demand and provide rigid packaging to meet the requirements of niche markets such as gift baskets," notes v.p. of sales Greg Cater.

Suggested retail price: $3.49 per 2.25-ounce box

Available: March 2008

For more information: www.sconzacandy.com


Starbucks Coffee Co.

Starbucks Chocolate: The world-renowned Seattle-based coffee company, in partnership with Hershey, has now rolled out what it sees as a perfect complement to its popular brews: a portfolio of artisan-style chocolate infused with the flavors of Starbucks coffee, Tazo tea, and other authentic coffeehouse flavors. The collection includes signature dark, mocha, and milk chocolate bars and tasting squares; Tazo Chai, Passion, and Citron tea-infused chocolate tasting squares; Caffe Mocha, Chai, Espresso, Caramel Macchiato, and Madagascar Vanilla Bean Truffles; and Milk Chocolate Covered Caffe Verona Coffee Beans.

Suggested retail price: $2.99 to $5.49

Available: March 2008

For more information: www.starbucks.com/cocoa