Dark and premium are the two buzzwords in chocolate

It was not that many years ago that dark chocolate was called 'plain'. Then it was only favoured by your elderly aunt, who used to get a box of Black Magic or All Gold given to her on her birthday and at Christmas. But how times have changed. Today it's called 'dark chocolate' and its popularity is quite staggering.

Newspaper articles tell consumers how good it is for them and even diets advocate eating a few squares of it on a regular basis. The reason? The anti-oxidants contained within the chocolate and their health-giving properties. Also the high cocoa content means consumers need less dark chocolate than milk to get their 'chocolate fix'.

Not surprisingly, given that information, most of the chocolate manufacturers have been quick to cash in on the trend - so we've had Bournville Deeply Dark, KitKat Dark and Flake Dark to name just a few.

However, Hancocks' purchasing director Richard Brittle reckons the huge number of launches all at once is extremely confusing for retailers. "If an independent stocked all the new lines they would have more dark products than milk, and while the market is growing rapidly, it does not command the huge value of milk chocolate.

"Consumers tend to love or hate dark chocolate. Many struggle with the bitter taste and retailers need to understand what their local customers are looking for. If 70% cocoa content products are not proving popular, then they should consider some of the 50% or 60% products that taste slightly less bitter but maintain the health benefits. Lindor 60% is a very strong seller for Hancocks."

Cadbury reckons it's got the dark chocolate formulation just right with its aforementioned Bournville Deeply Dark, made from 60% cocoa. It is targeted at 30-somethings "who like the adult and sophisticated nature of dark chocolate but for whom current offers are too bitter".

Kate Harding, acting head of customer relations at Cadbury Trebor Bassett (CTB) says: "Dark chocolate is a prime growth area in the confectionery market with sales growing by 50% since 2004 (AC Nielsen figures) and as a result dark chocolate now accounts for 17% of large block sales. Nearly one in three shoppers now buys dark moulded chocolate every year.

Sarah Petts, channel and communications manager at Kraft Foods adds: "An increasing number of consumers are choosing to buy dark chocolate, although not necessarily over milk or white tablets, as they too are experiencing growth.
"Although the fastest growing tablet, dark chocolate still remains a relatively small sector. Therefore retailers need to stock a specific range of dark chocolate products to suit both mainstream and premium consumers."

She says sticking to top selling lines is a good way to encourage sales, and adds: "If products come with display-ready packaging, position them on the counter to entice impulse sales and arrange tablets in terms of chocolate type to make it easier for consumers to shop."

Premium profits

It's not just dark chocolate that consumers are demanding - they want premium lines of both milk and dark. Hancocks has cottoned on to this and is now creating a premium section within all of its 15 cash and carries, so retailers can clearly see what's on offer.

Kraft's Sarah Petts comments: "One of the main trends driving the chocolate market at the moment is the growth of the premium chocolate sector." Premium branded tablets in particular are up 16% on last year, worth £50m, accounting for 13% of the market (AC Nielsen, total coverage value sales, 52 w/e January 27, 2007).

One premium brand that's selling particularly well is Green & Black's. Assistant brand manager Barnaby Voss thinks it's time more c-stores stocked it. "Premium chocolate is the fastest growing sector of the confectionery market. It's not a fad, it's a trend. At Green & Black's, we've gone from a £5m turnover to £40m in just a few years. Our dark 70% and milk bars are both in the top 10 of large block bars - so we're certainly not a niche brand."

Voss continues: "Normal block chocolate is in decline, it's being heavily traded and it's hard to compete on price. With premium chocolate, consumers are willing to pay more, and therefore price consideration is less important."
He says Green & Black's has a 10% share of the total block market, and the brand is driving growth. "For that reason, retailers who don't stock Green & Black's will be missing out on lost sales - a shopper who eats premium dark chocolate won't switch to something else if it isn't stocked."

He recommends c-stores stock Green & Black's milk, dark 70%, white and Maya Gold, and says: "Premium is not just about dark chocolate, it's about better quality. Don't forget the more interesting flavours too - for example, cherry, butterscotch and ginger. Plus our bars generally take up half the space of a 200g bar, and sell for more, so retailers can use their space more efficiently. If in doubt, take off two of the less well performing large block brands and put in our top four; this will add more to both money in the till and total profit."

A premium brand making its way into the independent trade for the first time is Thorntons. Available exclusively from Palmer & Harvey, it will feature on the wholesaler's order forms from June 11. Prices range from 55p for the impulse bars (Viennese, Alpini, marzipan and fudge) to £9.99 for the Thorntons Premium 410g box.

The retail range has been available through the grocery multiples for some time where, according to Thorntons' national account manager, Steve Evans, it has done very well.

Meanwhile Bendicks is now hoping to make a name for itself in slabs, with its dark and milk chocolate 125g bars. The company reports that they are "proving extremely popular with consumers and are showing a strong rate of sale". The bars will be backed by a £1m support package in 2007.

Of course the major players have been keen to have a crack at the premium market. Mars says the launch of its Galaxy Promises last summer led to the block chocolate segment growing by 4.8% to reach a value of almost £700m. The company says Promises contributed £7m-worth of new sales to this.

Meanwhile, Nestlé Rowntree's premium chocolate offer is Heaven, a 100g block of Swiss chocolate with an indulgent soft centre. There are five centres to choose from: dark truffle, milk truffle, milk orange truffle, café latte and hazelnut crème.

Graham Walker, Nestlé UK's trade communications manager, says Heaven's target consumers are the core buyers of indulgent chocolate - women aged between 25 and 45.

He advises c-stores with limited space to concentrate on the milk truffle and dark truffle blocks, and suggests they be sited on the main fixture next to Green & Blacks and Lindt.

Moving on to mainstream blocks, according to AC Nielsen figures, Cadbury is the number one brand in the £346m large block chocolate category with a 45% market share. The Cadbury Dairy Milk (CDM) range was recently extended with the launch of Double Choc and a new 100g bar range specifically for independents. Double Choc is CDM with a liquid chocolate centre, targeted at 25-39-year-old women looking for an indulgent treat.

The 100g bars are of CDM, Fruit & Nut and Whole Nut and Cadbury reckons they will bring incremental value to the independent sector as impulse purchases.

Bag this!

Mars claims to have shaken up the bag market with its pouch packaging, which the company says has increased sales of its sharing bags by 13% year on year, and in turn grown the value of the total bitesize category.

The big launch from Mars this year is of course Planets - bitesize balls of soft, chewy and crispy centres covered in chocolate. The launch is backed by a £4.2m spend including £3m on TV. The remaining £1.2m will be spent on sampling and a point of sale package for retailers.

Planets certainly has the backing of Hancocks' Brittle: "There's no doubt in my mind that out of all the recent launches, this is the winner. It's got strong Mars branding on it., and the bag doesn't look bad for the money."

Nestlé data reveals that in the past three years sales of sharing bags have increased by 9.5% in value, and now account for 14% of all confectionery sales. The company has 12 sharing bags across chocolate, sugar and kids' brands, to meet the different needs of different consumers. The latest additions to the range are milk chocolate Aero Bubbles and Quality Street. There are also two smaller Milkybar and Smarties sharing bags which are sized for parents seeking special treats for their younger children.

Healthy concern

Media coverage of the government's health crusade grows by the day, however consumers still love their chocolate. To incorporate it within a healthy diet, many have adopted a credit/debit system whereby they eat very healthy foods through the week and then treat themselves to things like chocolate and ice cream at the weekend. Hancocks' Brittle says, "People still perceive chocolate as a treat and it is not one that they will easily give up."

Fiona Dawson, managing director of Mars Confectionery, reports that while her company has seen consumers becoming more aware of health and obesity issues, they've not noticed any adverse effect on sales. "Health has been on our agenda for the past 15 years, but we've focused on energy out, not just energy in," she says, alluding to the old 'work, rest and play' ads for Mars. "It's about getting the consumer active and making sure they know the role of chocolate in an active lifestyle. That also means offering product and portion choice - to meet and match consumers' needs."

The general issue of advertising to children has been a thorny one, but Mars' Dawson says the company has listened to parents for guidance. "We took a stance at the beginning of the year not to advertise to the under-12s. That's because research points to this as being the age at which children begin to form cognitive choice."

Limits on things like TV advertising are one thing, but could restrictions be imposed on advertising at the point of sale too, as with tobacco?
Says Hancocks' Brittle: "At the moment the trade is not looking to restrict any use of point of sale on confectionery. But any decision here is likely to be a political one. I for one would like to see the spotlight taken off the confectionery industry as we have simply proved to be an easy target."

Dawson adds: "We're looking at advertising on POS. We're very respectful of our customers so we will be listening to them."

In these politically-correct times, manufacturers - and retailers - can't be seen to be encouraging consumers to eat more calorie-laden foods, however Hancocks' Brittle reckons there are still things c-stores can do to develop their chocolate sales. "First and foremost they should consider what their local customers are looking for, and seek to provide them with an interesting range of chocolate that is just a little bit different to the norm," he says.

His other recommendations include:
Make the most of new lines as they are usually heavily promoted. Mars Planets is a current example.
Take advantage of growth areas such as dark chocolate. Offer an initial range and adapt it to cater for your customers.
Try chocolate products that are not available in the supermarkets.
Look out for smaller chocolate bars and packs that make great impulse purchases.

retailer view

Kevin Markham, The Trading Post, West Mersea, Essex
"If anything we're selling more chocolate than ever and people are buying the bigger bars of things like CDM. Heaven has also sold very well. We've always sold Lindt chocolate and it continues to do well. It's quite difficult to gauge as our overall shop sales are up 25% on last year so we're selling more of everything; but people are definitely not cutting down on chocolate.

"Mars is still one of our top sellers and sales of Snickers have increased. I think the Duo bar has helped as people can eat one and save it for later. With KitKat there have been too many launches of different variants at the same time; people here tend to stick to the standard bar."

Kate Anderson, Whitminster Stores, Gloucester:
"We sell Bournville and that goes fairly well. We also stock the dark KitKats. Generally on bars, it's CDM and Galaxy that sell best but we also sell a lot of the Fry's chocolate cream and Fry's peppermint cream bars. We had Nestlé's Heaven when it was first launched; it was on promotion and sold well. All the bars - Mars, Twix etc still go well; the health stuff in the media hasn't affected sales at all."

market facts

The size of the chocolate market varies depending on whose figures you look at. However, it's fair to say it's worth more than £3bn.
Sales of chocolate dropped by 1% last year.
Mars was the only manufacturer to buck the trend, increasing its share of the market by 0.5% to achieve a 27% share. The company says this was driven by a 2.5% sales growth in 'everyday chocolate' such as filled bars, bitesize and blocks. For example, sales of Snickers were up 3.8% year on year.
Despite Cadbury's drop in share (by 0.8%), it is still the biggest player in the chocolate market with 34%.
Within independent/convenience, Mars put in an even better performance with sales up 3%.
Filled bars (countlines) account for 29% of chocolate sales; followed by block chocolate and boxed chocs, both with a 22% share; seasonal with 14%; and bitesize with 13%.
In filled bars, the market was down 2.8%, but again Mars was the only major manufacturer in growth, up 1.5%. Driving Mars' growth was the Mars bar's rebranding to Believe last summer, which resulted in a whopping 50% increase in sales year on year. In impulse outlets, single bars and six-pack multipacks grew by 32% and 174% respectively.
The block category was flat but once again Mars was the only major manufacturer to see growth (+1.9%). Galaxy was the star performer last year recording 18% year-on-year growth.
The grocery multiples are taking the impulse sector's share of block sales - they grew their share of sales by 4.5% last year while impulse dropped by 4.3%.
Source: All data IRI value sales to December 30, 2006.

bitesize chunks

Fox's Confectionery is launching a heavyweight sampling campaign to support it new-look Paynes Poppets. The company says that since its relaunch the brand has grown distribution by 20%, which has helped generate growth figures of 22.3% and 46% on mint and toffee cartons (respectively) over the past 12 months. Starting in mid-May, the Paynes Poppets sampling roadshow will hit 10 cities to support its 'racket in a packet' strapline.

One brand to keep an eye on is GoLower with its two chocolate bars - in raspberry crème and chocolate crème varieties. They are low in sugar and carbs and have a low GI (Glycemic Index), so are said to be ideal for anyone looking for a healthy treat.
The bars are coated in dark chocolate containing almost 50% cocoa solids, plus they are fortified with zinc, selenium and omega 3 and 6 essential fatty acids. There are 120 calories in a bar and rrp is from 89p.
The only downside is the fact that so far they are only available in Asda and WH Smith.

The Cote d'Or range has a new look with redesigned packaging, plus the milk variant has been improved to give it a creamier taste. The new packaging has English descriptors instead of French, to make them easier to understand, plus the milk variant is blue to give it better shelf stand out.
Revels is sponsoring the National Student Comedy Awards, which culminate in a final at the Edinburgh Festival Fringe in August.
The Belgian is a new range of premium chocolates available exclusively in the UK via The Foodfinders. Products include 100g bars, which retail at £1.10.
New from Elizabeth Shaw's are Chocolate Clusters with Cranberries and Dark Chocolate Clusters with Orange. These combine chocolate cornflakes with real fruit. They both come in 150g bags and retail at £3.29.