GOURMET HOLIDAY

JEFF WELLS

Countering the wisdom of Forrest Gump, retailers know exactly what they'll get with premium boxes of chocolate this holiday season — increased sales.

Swirled in positive health coverage and fortified by savvy marketing, the demand for high-end chocolates continues to climb. And there's no better time to capitalize on this saccharine surge than during the fourth-quarter holiday season, when everyone likes to indulge — for themselves, and for others.

“The biggest trend in the industry right now is the increase in sales of premium, gourmet and dark chocolates,” said Jim Corcoran, vice president of trade relations for the National Confectioners Association, Vienna, Va. “Those items align themselves very well with fourth-quarter holiday sales.”

Christmas in particular holds the highest percentage of seasonal gourmet chocolate sales, at close to 38%, according to Chicago-based Information Resources Inc. And the growth in popularity over the past couple of years has been substantial. Between 2001 and 2005, premium chocolate sales for the holiday increased by nearly 80%, according to IRI.

With hopes of fulfilling gift lists and holiday dessert menus as well as the chance to fuel haggard shoppers, supermarkets are pushing premium chocolate in a variety of positions throughout the store.

Pittsburgh-based Giant Eagle is promoting its private-label line of Market District chocolates by cross-merchandising them with floral arrangements in the floral section of its stores, according to Tim Tackett, candy category manager for the retailer. Company-branded varieties include 8-ounce boxes of dark chocolate, caramel and nut, sugar-free, premium nut and French mint candy collections.

Giant Eagle also offers holiday candy in “special premium sections throughout the store,” Tackett explained. “Wherever possible, we capitalize on displays to increase visibility and sales.”

This year, the retailer is carrying more premium and dark chocolate varieties than ever before. “We've been pleased with the results,” Tackett said.

Retailers have positive health coverage to thank for the premium sector's growth, experts noted.

In 2003, studies began touting the cardiovascular benefits of dark chocolate. According to the American Heart Association, Dallas, dark chocolate is loaded with flavonoids, which are naturally occurring antioxidants that can lower blood pressure and improve circulation.

Although West Des Moines, Iowa-based Hy-Vee recognizes dark chocolate's potential, the retailer places more emphasis on milk chocolate during the holidays, according to Joel Wilson, director of general merchandise procurement.

“We're seeing premium chocolates take a bigger slice of the pie,” he said. “But sales of premium chocolate have by no means taken over milk chocolate.”

The retailer displays highly recognizable candies like Masterfoods' M&Ms and Hershey's Kisses on endcaps in the hopes that they'll draw consumers to higher-end varieties of premium chocolate in the candy aisle.

Gourmet chocolate comprises only 10% of the $13 billion chocolate market, but its growth has been substantial, according to ACNielsen, Schaumburg, Ill. Sales of premium chocolate have grown 31% from 2000 to 2005 as compared to milk chocolate sales, which have grown by a modest 1%.

Maria Brous, spokeswoman for Publix Super Markets, Lakeland, Fla., said the sales growth has spurred an increase in the varieties of chocolate it's merchandising during this year's holiday season.

“Additional dark chocolate offerings were available from the manufacturer this year compared to previous years,” she said.

Melinda Winter, brand manager for Ghirardelli Chocolate, San Leandro, Calif., explained that the explosion in popularity of gourmet chocolate has translated into an increase in company offerings.

“Because we are growing so fast, we continue to expand our portfolio,” she said. The company has released a number of limited-edition flavors for the fourth quarter this year, including peppermint, eggnog and cinnamon spice milk and white chocolate squares, which are being sourced by Target, Schnucks, Stop & Shop and Giant-Landover. The manufacturer also introduced its Intense Dark line of 3.5-ounce chocolate bars in twilight delight, citrus sunset, toffee interlude and espresso escape flavors. These are merchandised by Target, Wal-Mart Stores, Albertsons and Safeway.

Marcia Mogelonsky, senior analyst with Mintel International Group, Chicago, said that in addition to capitalizing on the health benefits of dark chocolate, companies have begun listing the cacao content on packaging. The percentage refers to the amount of pure chocolate contained in the candy. The higher the number, the more cacao — thus, the more flavonoids.

Another popular marketing strategy, Mogelonsky noted, plays up the chocolate's country of origin on the packaging. Rochester, N.Y.-based Wegmans Food Markets has adopted the strategy in its international food aisles, which are segmented.

“Chocolate has a pedigree now, just like wine and olive oil,” Mogelonsky said. “It has become chic to understand where it comes from.”

Customers like to feel in the know, like they're buying something crafted to their specific taste. Many sources said this started with the wine and coffee industries, which have upgraded and expanded their offerings through the years to increase price points and nurture the feeling of expertise in the minds of consumers.

During the holiday season, retailers are also emphasizing the decadence of these sweet treats.

This leverages the “reward” notion, according to Mogelonsky. She noted that shoppers often feel they deserve a little something for themselves at the end of a long shopping spree or a hard day.

“Having small size, one or two bite — but highly flavored, high quality — chocolate at the checkout is part of this self-rewarding theme that has been around for a couple years,” she said. “And the chocolate companies have capitalized on it.”

Giant Eagle merchandises its company-brand Market District chocolate pretzels, two types of Hershey Cacao Reserve chocolates, Toblerone bars and two types of both Seattle and Lindt chocolate bars near its checkouts during the winter holiday season.

Beginning in 2004, Godiva played up the “diva” in its brand name as part of a marketing campaign aimed at women. This, accompanied with the manufacturer's signature gold packaging, promoted the idea of a glamorous, if sinful, treat.

Hitting all the right marketing points should keep premium chocolate sales strong in the coming years. Packaged Facts projects that the sector will grow at a compound annual rate of 6.4%, reaching $1.8 billion in total sales by 2010.

Supermarkets are doing a lot of things right when marketing during the fourth-quarter holiday season, the NCA's Corcoran said. On the whole, grocers are offering large varieties and quantities of gourmet chocolate, he explained. However, there is room for improvement.

Managers tend to bury their premium offerings in the candy aisle, as opposed to displaying them as part of endcaps, he contended. It's also important, he said, to separate the different types of chocolate — to not place the Lindts next to the Snickers.

“You can't hide your seasonal merchandise,” Corcoran said. “You need to bring it out of the aisle and put it in front of the consumers.”

In addition to the growing wave of popularity and proven marketing strategies, the calendar, of all things, will work toward the bottom line.

This year marks the longest period between the Thanksgiving holiday and Christmas in the past five years and with Christmas on a Monday, a shopper-friendly weekend will precede the holiday.

“The stars are aligned for a very good Christmas shopping season,” Corcoran said.