The Deepest Affair

What’s not to adore — the best-loved candy category moves up and upscale.
As in years past, the total chocolate candy category saw slight single-digit dollar sales gains for 2003, according to both ACNielsen and Information Resources Inc. data. Americans especially loved their chocolate breaks with chocolate candy bars less than 3.5 ounces, as well as with chocolate candy boxes/bags/bars greater than 3.5 ounces. Both sub-groups saw decent dollar sales gains around the 7-8 percent mark — actually their highest growth by far of the past four years, according to IRI.
While snack-size chocolate candy remained fairly flat, gift box chocolate candy saw a slight loss of around 5 percent — although less of a loss than the previous year, according to IRI.
Chocolate is the driver of growth, especially at the front end, in the candy/gum/mint universe. Not only is it outpacing overall category growth — it is growing faster than non-chocolate, gum and mints.
The Imperatives
The most important thing for retailers of chocolate candy to know may seem fairly obvious to those who indulge in the sweet brown stuff themselves: Americans want their chocolate and most want to indulge in at least a little piece of it every day.
While the category’s sales gains may not be earth shattering, they are nonetheless very impressive when the down economy and consumer pessimism of the past year are taken into account. The trend to indulge in chocolate is not only unaffected negatively by the downturn in the economy, it might actually be lifted up by it — because it equates to one of life’s few affordable “luxuries.”  The bottom line: This is a very stable category right now and retailers will be rewarded if they give it the shelf space, as well as outpost attention it deserves.
On-the-go snacking is a way of consumer life now — and it has affected the way some people eat their chocolate. As a result, non-traditional product shapes and on-the-go packaging has expanded beyond the trend’s convenience-store heritage and is now making its way into all retail channels that sell candy — especially at the front end. Traditional candy bars will always lead the category in terms of sales, but retailers would be wise to stay tuned to add-on opportunities in “more mobile” chocolate, that may soon be pushed or popped out of its single-handed packaging. 
No retailer can ignore the Latin market and its influence on chocolate of late.  “Hot” chocolate has taken on a whole new meaning — as chocolate gets mixed with spicier flavors for a sweet and salty, or hot (as in chili) and sweet mix. While this has truly hit the more premium side of the chocolate market, it is expected to trickle down to the masses very soon. There’s a real growth right now in the complexity of the ethnic flavors in chocolate, not just for the expanding ethnic market, but for the non-ethnic market as well, a more mature market that has been flavor-experimenting and desiring more premium tastes.
The health benefits of chocolate are here to stay — and so is the marketing support that goes along with them. It is the darker chocolate, with higher cacao content, that has received most of the independent research news of health benefits, so darker chocolate is gaining in popularity. Evidence of this is seen particularly in the premium side of the business where chocolate makers now are marketing chocolate identified by its country of origin. For the more mainstream set, limited edition darker chocolate has been unveiled, while others are starting to let cacao content find its way to their packaging. While health benefits may have been the initial reason for venturing out this way, fuller flavor becomes an obvious taste surprise, and so the trend is expected to get even deeper and darker as time goes by.
Cross Merchandising
Stores with coffee bars such as Starbucks are a now-obvious place for cross-merchandising single-serve chocolate items that are of a more upscale variety. With so many more upscale candy makers producing lines especially for the mass market, this should be an easy call.
Leveraging the chocolate world in other areas of the store is never offensive to American consumers, who take their chocolate breaks much more seriously now. While non-chocolate items are perhaps best left to the cereal and toy aisles, chocolate lends itself more to the aisles where adults roam. Supermarkets should try merchandising chocolate near upscale deli items, near card and gift aisles and definitely close to the pharmacy. Diabetics waiting for prescriptions and supplies would probably respond very well to a display of no-sugar chocolate. Then again, they just might want a little bite of the real thing. So both ends of the chocolate spectrum would be a good fit there.
For the near future, chocolate candy is expected to play especially well at its two extremes — from indulgent bites to low-calorie/low-carb varieties. Even now, the same consumer will buy both — and this is expected to continue — chocolate for when they want to be “good” and chocolate for when they want to be “bad.” All you have to know is — they’re going to buy chocolate no matter what mood they’re in.
Consumer moods for chocolate will also translate to more channels melting into the pot, so expect competition to come from everywhere — not just the specialty home stores, world market shops and clothing stores — but also the hardware stores, electronics shops and even the local car wash. Anywhere people go on their lunch hour or before dinner can all be purveyors of chocolate.

Merchandising Must
Multiple single-serve drivers belong at the front end.
Retailers that have coolers filled with cold drinks, and display bins filled with single-serve cookies and salty snacks at the checkout would be remiss not to carry more single-serve chocolate options. Chocolate is not typically an either/or purchase decision — it is often a complement to other on-the-go goodies. But consumers in this candy category are often brand-loyal, so they have to see their favorite chocolate candy if they’re going to impulsively grab it and go.
More upscale items belong in the total mix.
Chocolate makers that used to be quite discriminating in terms of distribution are offering products to a broader assortment of channels. And they’re often quite willing to tailor the offering to specific retailers in terms of pack types and sizes. Doesn’t that tell you something?