From The Summer 2005 Issue of Natural Grocery Buyer

High-end chocolate takes off

Mitchell Clute

Retailers looking to add cachet to the candy aisle should consider natural chocolates. Growth in high-end chocolates has soared recently and shows no signs of slowing down.

Though the natural foods channel is still where the highest percentage of natural chocolates are sold, the growth of natural chocolates in conventional supermarkets has been phenomenal. In the past year, natural chocolate sales in supermarkets increased by 65 percent, from just over $4 million to almost $7 million, according to data from SPINS, a natural products consulting firm based in San Francisco. And these numbers don’t include other high-end imported chocolates from companies such as Lindt and Droste, which are already common on store shelves.

What’s driving the growth of natural and organic chocolate brands, such as Newman’s Own Organics, Green & Black’s, Chocolove, Endangered Species and Dagoba?

“We’re seeing a lot of buyers from mass-market stores taking an interest in the products we offer,” says Jennifer Stander, marketing director for Endangered Species Chocolate Co. in Talent, Ore. The company features endangered animals on its packaging and donates 10 percent of net profits to environmental causes. “As a company, we work toward being sustainable, not just environmentally but also in an economic and social sense,” Stander says. But, she says, none of these benefits matter if the product doesn’t taste good. “A lot of people first pull the bar off the shelf because of the wrapper, but they come back because of the taste.”

Taste may be the most critical component in consumer decisions about whether to purchase natural chocolates. “To me, if the chocolate doesn’t taste great, it doesn’t matter whether it’s organic or not,” says Timothy Moley, president of Boulder, Colo.-based Chocolove, which offers both organic and nonorganic high-end chocolate bars. “If we’re going to offer an organic chocolate, it has to taste better—more intense flavor, smoother texture—so it’s worth the money even without the organic certification.”

One reason for the increase in high-end chocolates—especially dark chocolates—is simply greater sophistication on the part of consumers. “Chocolate is following the trend of so many parts of the grocery market,” says Chris Samuel, U.S. marketing director for Green & Black’s, based in Greenwich, Conn. “People are interested in better quality food and in knowing where their food comes from, and they’re beginning to have more sophisticated palates.”

“People are becoming more aware of dark chocolate in particular, and I think that’s because of the information on health benefits that has been published in the last few years,” says Frederick Schilling, founder of Dagoba Organic Chocolate in Ashland, Ore. Recent studies have touted the antioxidant effects of dark chocolate, as well as its heart-healthy vasodilation effect.

Schilling says that consumers are also becoming aware that high-end chocolate is not just another form of candy. Whereas low-cost chocolates are often 50 percent to 70 percent sugar, dark chocolates contain as much as 80 percent cocoa solids.

“Chocolate comes from a vegetable,” Schilling says. “It’s a food, not just spun sugar. Consumers are realizing that, the more sugar it has, the less expensive it will be because commodity prices for quality cocoa are a lot higher than for sugar.”

The key to increasing high-end chocolate sales is getting the products out in the public eye. “Kudos to retailers for staying on the trend and bringing these products in,” says Schilling. “If you present an array of fine chocolate, consumers will probably try it. Instead of stocking just one or two brands, it’s better to have multiple brands and lower amounts of SKUs to expose consumers to the variety out there.”

86.9% Dagoba 3.5 ounce chocolate bar growth in the 52 weeks ending Feb. 20, 2005 Source: Information Resources Inc.

“I think the key to selling anything is timing,” Moley says. “Ten years ago, it might not have worked, but if you put your energy into it today, it’s going to take off.” Moley suggests that retailers taste as many products as possible in order to understand what quality chocolate tastes like and offer in-store tastings for consumers. “People go to the store for entertainment. They want new things” he says. “And when a mainstream store puts premium products on the shelf, it helps stamp the store in consumers’ minds as a premium store.”

This is a category with huge room for growth. For example, Green & Black’s is currently carried by about 70 percent of naturals stores, but only 10 percent of conventional stores. Who wouldn’t want to jump on this bandwagon—especially when the product in question is not only delicious, but healthy as well?

Mitchell Clute is a writer in Crestone, Colo.