Chocolate's premium push
The world appears to be on a health kick, with “eat less sugar and more veggies” landing on a growing number of consumers’ to-do lists. But if there’s one indulgence that people just don’t seem to be in any hurry to swear off, it's chocolate.
"We're all supposed to be watching what we eat, and we’re supposed to be more careful, but people are definitely still eating chocolate,” says Marcia Mogelonsky, director of insight, Food and Drink at Mintel. “And they’re eating it because it’s comforting, or because they feel it’s a great reward—you know, all the reasons you can think of to eat chocolate.”
Indeed, chocolate is a $1.75-billion business in Canada, with dollar sales increasing by 2% this year (in the latest 52 weeks ending June 23) and unit sales climbing by 7%, according to Nielsen data. And most analysts, retailers and chocolate manufacturers agree that one of the biggest trends right now is the shift toward premium chocolate. More and more innovative, artisanal-style bars with high-quality ingredients are showing up on grocery store shelves, and discerning consumers seem to be gobbling them up.
In fact, the premium chocolate category “is one of the main contributors to the growth within confectionery,” says Isabel Morales, consumer insights manager at Nielsen. Chocolate, she adds, is “a highly penetrated, very mature category but it continues to grow because of its high-impulse nature, also fuelled by the high level of innovation it offers.”
Erica Gilmour, co-owner of Hummingbird Chocolate Maker in Almonte, Ont. (near Ottawa), says recently customers have been increasingly asking for higher cacao content. “They’re looking for darker chocolate bars in the range of 80% to 100% cacao content,” she says, noting that Hummingbird—an award-winning artisanal “bean-to-bar” chocolate maker—doesn’t offer a 100% cacao bar yet, but they’re working on it. “So that’s 100% cacao, with no sugar or any other kind of sweetener added to it. We are working on that and it’s definitely something that we’ll have on the market in the fall,” she says.
Where’s the demand coming from? Much of it is related to health, says Gilmour. “There are so many people who are trying to avoid sugar completely now, so it’s attractive to them,” she explains. There’s also the widespread notion that dark chocolate is just better for you, with a broad range of benefits being attributed to dark chocolate—from antioxidants, to cholesterol control, to even boosting brain function. “A lot of people do perceive the dark chocolate as the healthier alternative,” says Adam Tully, director of grocery operations at Calgary Co-op. “We’re seeing more and more of the higher cacao content; Lindt even has a 90% bar now.”
Tully notes that although many of the premium bars on the market come at a higher price tag than regular bars, many customers don’t seem to mind. “I’m seeing that people are willing to pay for that indulgence; they’re willing to put the money out there to get the treat they want.” Mintel’s Mogelonsky concurs. “There are still a lot of people who will grab a mass market chocolate bar, but I think a lot of people, especially older people, are being a little more conscious in their chocolate choice. So if they’re going to have chocolate, they’re going to have a small bit of a high-quality chocolate ... and will spend a little more.”
That said, when Hummingbird began working with Ontario retailer Farm Boy to get its chocolate onto the chain’s shelves, they collaborated with the grocer to modify their bars to fit what would work best for the store. “Farm Boy had an idea of what price point would work, and then we developed that sizing and packaging together with them to try to fit what they thought would work with their customers,” says Gilmour.
Hummingbird created a 28-gram bar for Farm Boy that sells for $3.99, which is just less than half the size of their regular 60-gram bars that are sold at other stores and online (which are priced between $7.49 and $8.50). “I think it works in Farm Boy because people are often buying a last-minute indulgence, and it’s the perfect size to just eat by yourself in the car on the way home from the grocery store,” says Gilmour.
As smaller artisanal chocolate companies make their mark, the big chocolate players of the world are definitely taking notice. When asked about what trends are influencing chocolate these days, May Zeibak, confectionery insights lead at Nestlé Canada pointed to (among other things) the artisanal hand-crafted trend. “Bean-to-bar, and its focus on pure but bold flavours is drawing fans the same way craft beer and artisanal coffee already have,” she says.
She also points to the growing “desire for more sensorial experiences that surprise and delight all of our senses.” With these sorts of trends in mind, Nestlé recently introduced Kit Kat Premium Wrapped Pieces, which Zeibak describes as a “range of individually wrapped two-finger Kit Kat bars that deliver a multi-sensorial indulgent experience, with flavours such as Caramel Crisp, Hazelnut Crunch and Cookie Crumble.”
Meanwhile, Hershey is jumping on the higher cacao trend with its premium Brookside brand by launching a 73% cacao lineup of chocolate-covered snacks. “Although chocolate has proven to be less vulnerable to rising consumer concerns around health, we know consumers are continuously look for ways to eat and drink more healthily, while still enjoying what they love,” says Brittany Satey, marketing manager, inno- vation, for Hershey Canada. Hershey is also launching Hershey Gold this fall, a non-chocolate Hershey bar made from “velvety creme with a hint of caramel combined with crunchy, salty favourites like peanuts and pretzels.”
And like every other category in the food world, the “free-from” movement is becoming big in chocolate too. “We sell a lot of Moo Free chocolate bars, for instance, which are dairy-free, vegan, gluten-free products,” says Frank Yunace, operations manager at Pete’s Fine Foods in Halifax. He notes that kids with gluten restrictions get especially excited to see items like these. “You should see the looks in kids’ eyes when they find out it’s a gluten-free chocolate bar.”
A large portion of the confectionery at Pete’s is actually imported directly from Britain—they have an entire British-themed section dedicated to the products, complete with British flags and the classic red British phone booths as part of the merchandising. It’s a popular section of the store, and they like to play it up. “We’ve had some blind taste tests around Christmas time at the store to have fun with our customers, comparing British to North American chocolate ... and the British chocolates always seem to come out on top,” says Yunace.
That said, Pete’s also likes to promote local, and will feature East Coast products—including premium chocolate bars created by Nova Scotia-based Peace by Chocolate, famously started by a family of Syrian refugees who had been chocolatiers in their home country—right up front as much as they can. “We tend to merchandise that by our cashes, because we love to support local,” says Yunace.
When merchandising chocolate in general, Calgary Co-op’s Tully says it’s important to position it out throughout the store at various high-traffic spots, not just at the checkout. “Confectionery can be spread anywhere in the store, at multiple points of interruption; make sure it’s always on the floor in the consumer’s face, and you’ll have additional purchases of it,” says Tully.
Jean Tuteleers, retail and display confectionery lead at Nestlé Canada, adds that merchandising is particularly important for confectionery because it’s so often bought on impulse. “We believe that optimal merchandising is key to drive availability, visibility and accessibility of our products in order to maximize shopper conversion, especially since confectionery is such an impulse category,” he explains.
From Hummingbird’s perspective, Gilmour says her company does a lot of in-store demos to spread awareness of their product. She considers sampling to be a very important outreach tactic. “I find with a product like ours, if people haven’t been exposed to higher-end chocolate, they often don’t see the value in it, because it is such a big variation in price point versus some of the other products available in grocery stores,” she says. “But if you can give them a taste of it, we hear people say all the time, ‘I thought I didn’t like dark chocolate, but I just hadn’t had yours yet!’ And then they become lifelong customers.”
Sampling may become increasingly important as more new chocolate innovations hit the market. Mintel’s Mogelonsky notes that without sampling, many customers might opt to stick to their “tried and true” favourites, not wanting to spend the money on a pricey new chocolate bar that might disappoint them. And as Calgary Co-op’s Tully points out, consumers really do want to discover new innovations. “I think customers are always looking for different treats that they can indulge in—something different that will dazzle their taste buds.”
This article appeared in Canadian Grocer‘s September/October 2018 issue.