Chocolate goes dark, gourmet and organic

Drug Store News,  Jan 15, 2007  by Barbara White-Sax

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First it was coffee, then it was bread. Now Americans are becoming more discriminating when it comes to chocolate-and they are willing to pay more for products that deliver on quality.

Chocolate's antioxidant properties have gotten plenty of good press lately-enough to convince consumers to indulge more often. At the same time consumers' tastes are becoming more sophisticated, quality mass gourmet chocolate products are becoming more affordable. It's the perfect scenario for a chocoholic to indulge as frequently as possible.

"Three segments within chocolate are providing big growth--gourmet, dark and organic," said Jenn Ellek, a spokeswoman for the National Confectioners Association. Ellek said that from 2003 to 2005, chocolate has seen 28 percent growth. Numbers from 2006 are not yet available.

"The whole chocolate thing continues to be strong, and dark chocolate is a big driver," said Lisbeth Echeandia, editor and publisher of Colfectioner Magazine. "Hershey's, Ghirardelli and Mars have an done well with new dark chocolate introductions." Even Altoids is adding a chocolate-covered version to its lineup of curiously strong mints.

Among the significant introductions last year was Ghirardelli's Intense Dark Gourmet Chocolate Bars line of premium chocolate products. The line's 3.5-ounce bars, available in Twilight Delight, Citrus Sunset, Toffee Interlude and Espresso Escape flavors, have been formulated to deliver a more intense chocolate experience and have a high cacao content.

Hershey launched its own Cacao Reserve premium line in September. Featuring "slowly roasted cacao beans blended with the finest all-natural ingredients," the line debuted with four SKUs: Premium Milk, Premium Milk with Hazelnuts, Extra Dark and Extra Dark with Nibs. Hershey also introduced premium drinking cocoa in Classic Mayan and Mildly Spiced Aztec, and added four additional drinkable chocolate SKUs in December.

Both Ghirardelli's and Hershey's new brands post the cacao content for each product on their labels--a trend that experts believe will continue. "Expect to see more of a higher cocoa content and single-origin chocolates from South America and Africa," Ellek said.

Retailers also can expect growth from the small, but developing, organic category. "Organic products as a whole are growing over 20 percent annually," Ellek said. "Organic chocolates are like the hit single that wasn't on the Billboard last week, but is suddenly everywhere. It has a lot of growth potential." When combined with chocolate's health benefits, organic claims can become a powerful draw in the segment.

With so many new gourmet, dark and organic products on the market, the category is becoming more complex. "It's a lot more difficult for retailers to manage, but there's a big opportunity for them to create premium sections within their chocolate category," Ellek said. Supermarkets already have been carving out premium chocolate sections in their aisles.

Private-label premium products ate another area of opportunity. Target's Choxie line of premium chocolates has made a big impact on the category. "Choxie was extremely well accepted, and we've seen similar introductions at other retail chains, such as Ahold Supermarkets," said Jim Corcoran, vice president of trade development at the National Confectioners Association.

Expect more retailers to create upscale private-label brands that help differentiate their chains from the competition. "I think there's room for drug retailers to do more gift-type products," Echeandia said. "Private label gives them a point of difference, as well as profit." With Choxie gift baskets for the holidays retailing for $49.99 to $69.99, the potential is huge. "I don't think we've seen the ceiling on what consumers will pay for gourmet chocolate," said NCA's Corcoran.

Echeandia said another way for retailers to become the chocolate destination in their markets is to carry local confections. "Drug retailers have the flexibility to offer variety on a local level," she said. "They should have the local stuff and hype it."

BY THE NUMBERS 28% Sales of chocolate are up from 2003 to 2005

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