Filling the chocolate market
November 23, 2010
by Allison Gibeson
Consumers likely are seeing chocolate products that contain more fillings and inclusions arriving on the market. While they may find the varieties interesting, what consumers don’t know is high cocoa prices are prompting manufacturers to make products with more inclusions and fillers and less actual chocolate.
To get a better sense of how higher cocoa, as well as sugar, prices are affecting product development, it is helpful to review this magazine’s ingredient index for a milk chocolate bar. Compared to its five-year average, ingredient costs to manufacture a standard milk chocolate bar are up 75% (for the most recent data, see Page 60 of this issue).
“(Manufacturers) are looking to change their products to use more fillings, to use more compounds, to use more inclusions of all sorts and types, but also using ingredients that normally you wouldn’t find in chocolate — bulk fillers and different fats and the likes,” said Hans Vriens, chief innovation officer with Barry Callebaut, Zurich, Switzerland. “So what we will see in the coming year is a lot of introductions of compounds, or filled products. That is a marked change versus last year steered by higher cocoa prices and the need to offer competitive shelf pricing and still offer indulgent products.”
But Mr. Vriens said consumers do like the variety that results from more inclusions and fillings and overall moving out of straight chocolate. He said consumers will see a broader assortment, more taste variants and more combinations with fruit fillings and yogurt coatings.
The trend toward premium products, healthier alternatives to standard chocolate and sustainability are all driving the market as well. In 2008 and 2009, much of the development in dark chocolate was reduced due to the recession, but most of the production has picked up again because dark chocolate is a relatively easy way to market a product as premium.
Mr. Vriens said Barry Callebaut has a range of “free-from” products, including lactose-free chocolate and products that use sugar replacements such as stevia. He said the company also has seen strong growth in certified sustainable chocolates. Barry Callebaut produces more than 100 stock-keeping units (s.k.u.s) in certified sustainable chocolates, and Mr. Vriens said it is hard to keep up with demand.
In terms of specific health and wellness products, Mr. Vriens said companies ought to market the benefit of flavanols. Currently, few consumers fully understand the benefits of flavanols, he said, and through marketing efforts a company likely will be able to attract more consumers to the benefits once they are understood.
Barry Callebaut has been developing and introducing chocolate with probiotics. Currently, European regulatory issues are making product introductions featuring health claims about probiotics difficult, but there has been a lot of activity in North America. Additionally, Barry Callebaut has an agreement with Mars that teams the companies up on research and introduction of flavanols in chocolate. Mars has developed a process called Cocoapro that retains the flavanols that often are destroyed in processing and helps preserve flavanols at consistently high levels.
Lauren Nodzak, spokesperson for Mars Chocolate North America, said consumers desire portability and portion control with their candy. To this end, Mars introduced Snickers 2 To Go last year, which includes two pieces in one, wrapped in a re-sealable twist-wrap package.
Some of the newest products from Mars include M&M’s Pretzel Chocolate Candies, Snickers Peanut Butter Squared and Dove Sugar Free Chocolates with Peanut Butter Crème. In January, Mars will introduce Dove Chocolate Swirl, which will provide blends of white and milk chocolate as well as raspberry and dark chocolate. In April the company will introduce Twix Coconut Cookie Bars.
According to Packaged Facts, New York, the market for U.S. chocolate exceeded $17 billion in 2009, up almost 3% from the previous year, but a percentage point smaller than 2007 before the recession began. Some strength in sales may be attributed to manufacturer price increases as the result of higher commodity and transportation costs, but premium products and health claims also contributed to sales. The market is expected to reach $19 billion in 2014.
Overall, consumers found eating chocolate as a comfort during the recession, Packaged Facts said. While most manufacturers reduce their new product development during a recession, the rate of decline of new product introductions in the confectionery segment was half the rate for the entire food and beverage industry, and the rate of new product decline for chocolate was less than half that for the overall confectionery market.