Consumers with increasingly sophisticated palates spell sweet success for specialty chocolate manufacturers and the retailers who recognize their promise. Meeting the basic desire consumers have for chocolate's particular traits is fundamental for some retailers.
"Consumers are emotionally involved in their favorite chocolate. They're passionate about finding one they like and about visiting it frequently," said Philip Nabors, co-owner of Mustard Seed Markets, Akron, Ohio. He sees the attraction to chocolate as an almost primal force, which carries with it a risk of alienating a consumer if the category isn't handled right. Violating a consumer's trust that a retailer will have their brand is tantamount to cheating on them, he added.
National statistics support Nabors' theory that chocolate is a force unlike many other products. Data from Information Resources Inc., Chicago, shows that chocolate sales in the supermarket channel totaled over $2 billion for the year ended April 21, a 1.5% increase over the previous year.
The Chocolate Manufacturers Association, Vienna, Va., and the National Confectioners Association, McLean, Va., report that 3.3 billion wholesale pounds of chocolate were consumed in the United States in 2000. Jim Corcoran, vice president of trade relations for the organizations, estimates that about $1.5 billion is spent annually in the gift-box and high-end chocolate category alone, a grouping that includes not only the familiar Whitman's and Russell Stover brands but also imported and domestic truffles, bars, and other boxed chocolates from smaller and gourmet manufacturers.
Industry experts are in agreement that U.S. consumers have an evolving sweet tooth, and thus far it favors less-sweet items.
"Consumers are always looking for something new, and armed with more information, more travel and better understanding of how products are made, they are looking for more interesting flavors in their chocolates," said Diane Keeler Bruce, owner of DKB Consulting, New York.
This search for something new and interesting has led many consumers to the high-end chocolate category. European-style or premium chocolates are defined as those having a higher percentage of cocoa liquor and cocoa butter, and a lower ratio of sugar. They've been popular as premium items in Europe for years and are now crossing the Atlantic.
Until recently, American consumers favored sweeter chocolate, items with very sweet fillings or a milk chocolate base, according to Ron Tanner, vice president of communication and education for the National Association for the Specialty Food Trade, New York. Tastes change, however, and he sees a trend toward sophistication in the consumption of darker chocolate, a style he associates primarily, although not solely, with European manufacturers.
Dark chocolate products have become so popular that big-name brands have also started to focus their attention on the segment. Hershey's, Hershey, Pa., released a Limited Edition Rich Dark Hershey's Kiss this past spring and rolled out a dark chocolate Kit Kat product for the summer as well.
Purists make comparisons between wine palates and an emerging palate for chocolate, which is perhaps appropriate considering the merchandising approach some retailers take.
"We've positioned these products very near our wine section. Not that the products necessarily go together, but the customer is a similar customer," said Nabors of the 6-foot chocolate section located near the front of his store.
Leslie Coopersmith, president and chief executive officer of Guylian Chocolates, Englewood, N.J., said she finds that her company's products have been merchandised everywhere from retailer's wine and floral sections to gift sections.
Specialty retailers across the board are finding that consumers' newfound exploration of the chocolate category necessitates a separate treatment in many cases, leading to the addition of chocolatier sections in many stores, Tanner said. Many stores still rely on front-end placement to catch impulse buys, but retailers are increasingly recognizing the potential of a destination aisle for chocolate.
Albert Lees 3rd, president, Lees Supermarkets, an independent in Westport, Mass., said his store merchandises its specialty chocolates in a section within a candy section that features high-end, domestic and imported candies, and chocolates. He said he primarily features specialty, domestic chocolates with very few of the major brands, like Hershey's or Nestle. Around holidays the section expands to include imported, prepackaged chocolates brought in from Belgium, Ireland and other countries, he added.
Not all retailers concentrate their efforts around holiday time, however. Nina Gionti, director of specialty foods for West Point Market, Akron, Ohio, said her store's chocolate section is "absolutely a destination aisle," with specialty chocolates merchandised in a section near the checkout area year-round.
According to Gionti, part of what may lead to West Point's success with its chocolate section, in addition to changing consumer tastes, is the retailer's sampling effort.
The store organizes in-store tastings and offers recipes oriented around chocolate products, both baking and regular items. Events rotate around a variety of product flavors and styles, and the samplings are offered often, according to Gionti.
Nabors said his store also regularly samples chocolate products as part of a larger, store-sampling program.
Packaging can also do a lot for the success of brands in-store by drawing attention to the sources and the increased levels of cocoa for products, industry observers noted. "People are actually identifying the amount of chocolate and the origin of the chocolate in their products. You see that a lot at the specialty end of the business, but it's starting to creep into the supermarket business as well," Corcoran said.
For Nabors' customers, packages with social justice messages are becoming increasingly important. Mustard Seed sells primarily organic chocolates, a product trait often proudly displayed on packaging.
Nabors said he has seen some new niche products entering the marketplace that are made from a cocoa-like plant that grows in the rain forest. The product is sustainably harvested by indigenous people in the region, and offers people an alternative in their chocolate purchase. The socially responsible sourcing of the products is proclaimed on the packaging addressing issues of free trade and child labor that have garnered national attention in recent years.
Nabors predicts that this socially responsible category of chocolate will get bigger for specialty stores like his.
"In the specialty niche, that's another way to be more special. You have to deliver your daily dose of chocolate to men and women. Some people are upgrading how that is delivered in terms of quality, more like the European style. And there is an opportunity to upgrade from the social justice perspective as well. You can have your chocolate every day and feel good about it because you're not exploiting people's freedoms," he said of the new products.
Gionti also finds that "people love to compare percentages [of cocoa amounts]."
West Point Market carries dark chocolate bars with a cocoa content as high as 82%, ranging down to milk chocolate with a cocoa content of 56%.
While the summer months might mark a slow time in sales for temperature-sensitive chocolate product regardless of the cocoa content, retailers and industry observers agree that, overall, the tight economy hasn't impacted on chocolate sales at all. In fact, over the past two years, Corcoran said, there's been fairly consistent growth in the candy category, and boxed and specialty chocolates have kept pace with that general trend.
Conjectures on what has insulated the chocolate category vary. Tanner said he thinks that chocolate's connection to holiday purchases has allowed sales to remain steady; people are more apt to alter their everyday buying.
Gionti's customers are still buying as well, although she sees chocolate as an affordable luxury category, meaning consumers are less likely to abandon it.
Nabors goes even further than Gionti or Tanner. For his customers, he said, chocolate isn't a holiday item or a luxury; it's a basic need and economic hardships have absolutely no effect the category.
"This is an emotional necessity, not a luxury item. In fact, if you're feeling uneasy, you're going to eat more chocolate. Our economy is not so bad that people are really tightening their belts much in my store; they're not trading down on food. They may not buy their third vacation home or take a European trip, but they still deserve the dignity of eating well. And chocolate is a must-have."
