Innovation Sweetens Premium Chocolate Sales

Whether it’s dark or milk, gourmet or conventional, it’s pretty fair to say chocolate is an indulgent favorite that appeals people of all ages, ethnic, and social-economic backgrounds. In fact, sales of chocolate candy in the United States were estimated to exceed $26 billion in 2015.

As a result of this widespread appeal, the chocolate market as dynamic and growing. The U.S. chocolate market benefits from a strong pace of innovation, an influx of creative new players and a steady flow of new products that engage consumers, according to a new report from Packaged Facts that projects sales to increase through the year 2020 and beyond.

Chocolate is in essence an accessible luxury that creates many opportunities to trade the consumer up to premium products. However, as special as premium chocolate is to consumers, it’s just as important to food and beverage marketers.

According to the “Chocolate Candy Market in the U.S., 11th Edition" report, the premium chocolate segment has an important influence on innovation in the overall candy market, specifically, premium chocolate has spurred innovation around product ingredients, especially in clean-label products. What’s more, the premium segment also leads in charting the path toward new flavor trends.

“The premium segment thrives on dark chocolate, single origins and inclusions of healthy ingredients, such as lavender and blueberry. These play to the perception of luxury and authenticity," said David Sprinkle, research director, Packaged Facts. “Product claims usually also note natural ingredients and, to an increasing degree, ethical certification. Premium chocolate manufacturers aim for higher quality presentations, which are goals spilling over into other segments of the food and beverage market."

Over the past two years, the major players in the premium tier, including Godiva, Lindt and Ghirardelli, have been operating within a well-established structure of product forms and flavors, with periodic additions of new flavors. Now, the premium brands seem to be looking for ways to become more accessible to wider audiences.

In Lindt's case this is certainly evident in the Russell Stover acquisition, as well as in its launch of the moderately priced Hello bridge line. Godiva is now offering mass-oriented products such as soft serve ice cream and frozen drinks at its retail boutiques. The premium brands have also adopted some changes that originated with mass market brands, such as bite-size and standup pouches.

However, innovation in premium chocolate isn’t just for the big boys. There has been a steady flow of new product activity from smaller craft and artisanal chocolatiers, according to Packaged Facts. For smaller companies, ingredient quality and purity are important touchstones. Ingredient origins are stressed, either through the inclusion of rare and exotic ingredients, or conversely, defining the products as having familiar ingredients from local sources.

Looking ahead, premium chocolate is expected to spur growth in the overall U.S. chocolate market. Everyday chocolate dominates the overall market for chocolate candy sold at retail, accounting for a whopping 82 percent of industry dollar sales, compared to premium chocolate’s much smaller 18-percent share. But dollar sales growth of everyday chocolate was negligible compared to previous years. Conversely, premium chocolate experienced a stronger growth rate of roughly 5 percent compared to last year. This upward growth for premium chocolate sales is expected to endure in coming years.

In light of increasing consumer demand for less caloric, healthier and “natural" products featuring lower sugar content and non-GMO ingredients, formulators are seeking out versatile ingredients that not only are easy to integrate into food and beverages, but also deliver specific and reliable health benefits. Thankfully, there is a burgeoning palette of ingredients from which candy makers can paint a new picture of sweetness. Join us for the Selecting Appropriate Sweeteners for Chocolates, Gummies and Chewables panel discussion on Friday, Oct. 7, at SupplySide West 2016.