Is Premium Chocolate Slowing Down?
Updated: May 5, 2020
In the midst of the current health crisis, are consumers are spending more money on groceries than ever, but is spending less on gourmet chocolate slowing down?
Late last year, a Mordor Intelligence report projected key trends in the global premium chocolate market for the years 2020-2025. The report outlined a growing consumer demand for organic, natural products that were perceived as having beneficial effects on health and the environment. Health-conscious consumers were expected to continue boosting sales of dark premium chocolate, which is often marketed for its nutritional value and purported health-giving properties.
Similarly, Candy Industry research finds 47 percent of consumers desiring chocolate made with “natural” ingredients: “This is due to consumers seeking healthier alternatives.” Doctors in popular media commonly recommend antioxidant-rich dark chocolate with greater cocoa content for cardiac health – these products often command premium prices. Candy Industry also found that 50 percent of consumers would pay a premium price for zero-sugar chocolate confections. Partly because of this preference for organic, natural, and clean label products, Mordor has estimated a compound annual growth rate of 9.93% through 2024 for the global premium chocolate market.
But after a years-long trend of consuming healthier snack foods, Americans are now turning to sweets and snacks in a bid to stave off the boredom of quarantine. Consumers are turning to comfort foods like chocolate and chocolate makers are moving to keep up with increased demand.
What does this all mean for the market share of premium chocolate?
Even before the coronavirus, the premium chocolate market faced several challenges. A recent article in Confectionery News mentioned the effects of cocoa disease and reduced rain in West Africa on cocoa yield; more than 70 percent of cocoa production comes from this region, which suffers from political as well as environmental instability. These factors exerted upward pressure on cocoa prices in the last quarter of 2019. A shortage sent European premiums to their highest prices in a decade. And a Zion Market Research report projected that while the global chocolate market should reach over $161 billion in revenue by 2024, lower-priced everyday chocolate would gain the most market share.
But the news is not all grim. The Fine Chocolate Industry Association reports that the U.S. food supply is safe and not subject to shortages. At the time of this writing, the association was still planning a presence at the 2020 Fancy Food Show in New York. In the U.K., fair-trade chocolate company Divine Chocolate says it is not experiencing any disruption in operations.
In an era of sheltering-in-place and social distancing, many consumers are turning to online sales. This distribution channel had already been seeing an increase, due to discounts and numerous product options. Some premium chocolate companies are retooling their strategies, entering into e-commerce licensing agreements with other businesses. Rocky Mountain Chocolate Factory, a franchiser of premium chocolate and frozen yogurt, is now partnering with Edible Arrangements to sell online confectionery.
Other chocolate makers are enhancing their online offerings and targeting Internet marketing strategies towards housebound customers. Australia’s oldest premium chocolate retailer, Haigh’s Chocolates, is reporting greater demand for its products. “We’re finding that they’re buying more than last year,” remarked CEO Alistair Haigh. “(Customers) can’t go out to a restaurant and they can’t go to a pub, so they’ve essentially got more disposable income through the restrictions. They’re stocking up to stay home.” During the week preceding Easter, Britain’s largest chocolate maker reported one million visitors to its Website as well as a “significant increase in online orders.” Angus Thirlwell, CEO of upscale chocolatier Hotel Chocolat says that many customers are using online food shopping for the first time, and they’re sending each other premium chocolate gifts together with messages of support. “Chocolate does play an important part in keeping morale up.”
Major outfits like Lindt and Laederach are also reporting an increase in online sales. Cocoa expert Kristy Leissle lauds the adaptability of chocolate makers, cocoa producers, and retailers, saying that their creativity can bring about innovations in the industry. While challenges abound, smart retailers can leverage the coronavirus crisis to build stronger relationships with their clientele.
It’s possible that the current crisis will eventually inspire consumers to purchase products for health instead of comfort, ushering in a new era of premium chocolate with ostensible health benefits. And at least for now, ordering online might be the most health-conscious option of all.