Will Chocolate Grow to Its Potential?

Will Chocolate Grow to Its Potential?

September 11, 2013

Consumers have multiple views of chocolate.

Consumers associate it with romance, fun times and emotional eating—not all of it good. Restaurant chefs, enamored of its flavor profiles, design menus around it. Yet our nation feels conflicted by chocolate: consumers know the dark variety has antioxidants and some ability to lower blood pressure, yet we tend to overeat dark, milk and white chocolate, and expand our battle of the bulge.

The many ways America relates to chocolate, plus other trends F3 identifies (more on these later in the story), could make straight-line growth less certain in one of the world’s leading chocolate markets.

Worldwide, confectionery sales should exceed $208 billion by 2017, predicts Global Research & Data Services. That’s well ahead of 2011’s $185.5 billion, which was up 5% from 2010, GRDS’s latest available figures.

The study notes most confectionery sales occur in chocolate (55%) and in the category’s leading markets of United States, England, Brazil, Germany and Russia.

GRDS expects growth drivers to include new flavors and ingredients, and new products and packaging innovations.

By comparison, in the U.S., while domestic chocolate sales grew 19% between 2007 and 2012, Mintel anticipates slower growth of 15% between 2012 and 2017—due to challenges of obesity and the slow economic recovery. While 89% of consumers buy chocolate as a treat or reward, and 72% to lift their mood or energy levels, they don’t do so with abandon; Mintel says that 83% “look carefully at the size of chocolate candy packages to determine the best value for the money.”  

F3 says other domestic trends could also impact U.S. chocolate sales, such as:

  • Higher sugar prices.  The National Confectioners Association (NCA) is part of the Coalition for Sugar Reform, which is pushing for the Sugar Reform Act of 2013 (S.345 and H.R. 693) to change “production controls and import quotas [that] keep domestic prices artificially higher than world sugar prices,” states CSR.
  • Not enough true innovation.  Candy makers selling minis are doing nothing too different from the Halloween-sized candies they’ve been selling for a long time. Also, F3 feels packaging changes, such as the removal of inner foil wrappers, denigrate brand image and quality perception, and potentially lessen consumer demand.
  • Children and adults eat fewer sugary sweets than they did 15 years ago, show NPD Group data developed for USA Today. “The typical child ate or drank the 20 most common sugary sweets an average 126 times fewer last year than in 1998,” says NPD. “Adults pulled back too, down 49 fewer sweets annually….”
  • Checkstand distractions.  Shoppers on their cellphones while on the checkout line are less tempted by candy displays at the end of their shopping trip.

On the other hand, various research studies show snacking is up (and Mintel says 87% of consumers buy chocolate as a snacking option); men, who are shopping more, may buy more impulsively than women; and University of Warwick scientists infuse fruit juice into chocolate “to replace up to 50% of its fat,” reports Science Daily

This mixed bag of trends has already led to mixed sales results at U.S. retailers, according to multiple-outlet data (including convenience stores) from Chicago-based market research firm IRi, provided by the National Confectioners Association. During the 52 weeks ended June 16, 2013, chocolate candy dollar sales rose 3.1% to $12.47 billion; in the prior 12 months, however, sales were down 0.9%.