Chocolate goes dark and premium

by Allison Sebolt
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Two words — dark and premium — perhaps best sum up some of the most popular trends in today’s chocolate market.

"The American palate is growing increasingly sophisticated, and our consumers are constantly showing their appreciation for premium chocolate connoisseurship," said Thomas Linemayr, president and chief executive officer of Lindt U.S.A. "Premium chocolate combines the world’s finest ingredients with artisan-like craftsmanship and innovation to create the ultimate chocolate tasting experience."

Percieved as a more pure form of chocolate, sales of dark chocolate have risen significantly in recent years, up 39% to $665,373,090 in channels excluding Wal-Mart for the year ended Jan. 26, according to The Nielsen Co., New York.

Even more significant is the increase in sales of dark premium chocolate, which rose 74% to $246,576,726 for the year ended Jan. 26. In addition, during the previous year sales of dark premium chocolate were up 124% to $141,348,401.

What is attracting consumers to dark chocolate?

"Consumers have caught on to the fact that high quality equals high cocoa content, and they will no longer put up with pallid slabs of fat and sugar when they want to treat themselves," said Euromonitor International, Chicago.

Dark chocolate also has gained a reputation for being high in antioxidants. Euromonitor said consumers often are not aware that a high percentage of cocoa does not necessarily translate into high levels of antioxidants because standard cocoa processing kills about 70% of the cocoa bean’s polyphenols. To counteract this, Barry Callebaut, Zurich, Switzerland, developed a process to reduce the loss of polyphenols in this process to just 20%. In fact, the Acticoa brand, which is distributed by a United Kingdom company, boasts of having "higher levels even than the equivalent weight of blueberries."

Euromonitor said high polyphenol levels will be the next point of product differentiation in the chocolate market and manufacturers will need to adjust processing techniques and marketing.

With consumers desiring a more pure chocolate there also is a growing demand for organic chocolate.

"Organic is the new premium, casting its irresistible halo of health onto what was previously a pure indulgence category," Euromonitor said. "Consumers believe if it is organic, it cannot possibly be bad for you."

Neil Turpin, U.S. general manager for Green & Black’s U.S.A., Plano, Texas, shared at the All Candy Expo in Chicago last month three trends occurring in the U.S. marketplace causing the rise in more sophisticated chocolate tastes. The trends include a desire for balanced indulgence; the "quest for the best," a desire for superior products regardless of income or background; and "do no harm," or consumption based on what is right for the consumer and the world around them.

Mr. Turpin said consumers are driving into the mainstream what used to be niche organic products and there is an increased demand for natural ingredients and products. Yet as the U.S. population shifts to a more "green" way of thinking in their purchases, Mr. Turpin said for an organic chocolate to succeed, taste and quality must still be superior and these products must be sold in the main aisles of stores with conventional items. If this is done, organic may be an important differentiation among products that supports the evolution of the premium sector, he said.

Mr. Turpin also noted consumers are trying to make better choices for their bodies, recognizing the value of staying in good shape and consuming products they perceive to be better for them. He described the type of consumer buying organic chocolate as the "feel-good, mindful consumer," or someone who is well-informed, enjoys travel and culture, is health-conscious, eats organic foods regularly and tries alternative medicines.

In response, Green & Black’s offers an organic dark chocolate with 70% cocoa content, as well as an 85% variety and a 60% variety with cherries. All of Green & Black’s products are also organic.

Also along these lines Brown & Haley, Tacoma, Wash., recently introduced Roca Buttercrunch Thins with ultra-premium chocolates and 60% cacao dark option. The product line includes two Toffee Thins — milk toffee and dark toffee — and two Truffle Thins — caramel truffle and dark truffle.

"The smaller size and slender shape are designed to meet the expectations of today’s premium chocolate consumer," said Mark Greenhall, chief sales and marketing officer for Brown & Haley. "Roca Thins provide a rich reward that our customers can enjoy every day."

Endangered Species has Extreme Dark Chocolate with 88% cocoa and is ethically traded and vegan certified. In addition, the Madagascar Manjaria Chocolate Bar from Valrhona has 64% cocoa and is a blend of criollo and trinitario beans from Madagascar.

Another notable product line is the Excellence Collection from Lindt & Sprungli, Zurich, Switzerland, with cocoa bars in 70%, 85% and 99% cocoa concentration. Also in the line are intense orange, chili, intense mint, intense pear and origins Ecuador 75% and origins Madagascar 70% varieties.

With all the focus on dark chocolate, what’s in store for the future of milk chocolate?

"As popular as dark chocolate is becoming, milk chocolate continues to be a staple for our consumers," Mr. Linemayr said. "Our Lindor Milk Truffle has always been, and still is, our best selling product. Although consumers are slowly discovering dark chocolate for new and innovative flavors, I think milk chocolate will remain the biggest chocolate category. The milk segment has been sort of neglected from a premium quality point of view. We feel that premium milk chocolate products will be the new ‘dark.’"

Mr. Linemayr said Lindt offers flavors such as double milk and double milk cereal crisp under the Lindt Classic Recipe brand to bring premium innovation to the milk category.

Even the traditional M&M from Mars Snackfood U.S., Hackettstown, N.J., is going premium with the introduction of M&M’s Premiums Chocolate Candies later this month. The line will come in the flavors of triple chocolate, chocolate almond, mint chocolate, mocha and raspberry almond. Mars also is introducing the Dove Promises Collection with rich dark chocolate, dark chocolate with almonds and dark chocolate caramels.

"The American consumer has realized the value of what premium chocolate can deliver, and therefore is choosing a more refined tasting experience," Mr. Linemayr said. "Once a consumer has savored the rich quality of premium chocolate, they are less likely to revert back to eating ordinary chocolate."

Stress-relieving and energy boosting chocolate also has potential in the market. In January, Mars launched Snickers Charged with added caffeine, taurine and B vitamins to boost energy. There is also a Snickers Dark brand with dark chocolate, peanuts, nougat and caramel.

According to Euromonitor, Mars’ launch of Cocavia, a dark chocolate line of tablets and bars enriched with flavanols is an example of the trend of introducing flavanol-enriched lines. Euromonitor also noted Hershey’s introduction of Cocoa Reserve Single Origin in the U.S. market in December 2006 as an example of how companies are focusing on creating "super-premium" dark chocolate through line extensions featuring fruit, cocoa and marzipan fillings as well as products that are sourced according to cocoa-bean origin. The line has dark chocolate tablet varieties each sourced from a different cocoa bean and targeting chocolate connoisseurs.

So while consumers want better choices, they still clearly want to indulge. Mintel, Chicago, said it believes experimentation with texture may be next and healthy chocolate may expand to include sugar and fructose-free options as well as calcium fortified formulations.

To appeal to a different side of health and wellness, Barry Callebaut introduced a probiotic chocolate in the fall of 2007, but Euromonitor said it is skeptical if consumers will accept bacteria in a chocolate bar.

"The bottom line is that health and wellness-positioned chocolate does indeed have global appeal, but what kind of ‘healthy’ matters a great deal," Euromonitor noted. "Capitalizing on the cocoa bean’s inherently healthy properties seems to be universally attractive to consumers while on the other hand, consumer acceptance of functional ingredients in chocolate is highly dependent on the individual market and its prevailing consumer culture."

Mr. Linemayr said evolving consumer taste preferences and robust premium chocolate category growth is driving exotic flavor pairings in the market and there will continue to be more innovative and creative flavors developed in chocolate products in the future.

Mintel expects sales of the entire chocolate confectionery category in the United States to increase to $18.3 billion by 2012. Mintel said the chocolate market as a whole has been affected by a declining number of consumers who eat sweets frequently. In addition, there is significant competition with other products, including brownies and cakes and other categories with chocolate flavored-foods. Mintel also noted the growth of self-checkout lines may adversely affect chocolate sales as sales of impulse items decrease when a customer goes through the self-checkout line.

According to Mintel, there were 818 new chocolate products introduced in 2007, up from 657 in 2006 and 719 in 2005. From January to May 29, 2008, there were 533 new chocolate products introduced.

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