Dark Chocolate Introductions Put Pressure On Premiums

As consumers continue to sift through data about possible health benefits from dark chocolate and see the premium chocolate as an affordable luxury, chocolate marketers are counting on the segment to continue to fuel growth.

"If you look at the long-term trend, [premium chocolate] has been driving category growth," says Fabrizio Parini, senior vice president/marketing and retail for Ghirardelli. "Consumers were waiting for high-quality chocolate."

The San Francisco company is expanding its portfolio over the next year with three new products--including Midnight Reverie, a bar with 86% cacao, one of the highest ratings in the industry.

According to research firm Mintel, the dark chocolate/premium category has grown nearly 50% from 2003 to 2006, reaching $1.2 billion in sales last year.

Despite the increases, Parini says premium chocolate accounts for only about 5-10% of overall chocolate sales in the U.S. By comparison, premium chocolate in Canada accounts for 15% of overall sales, and in Europe it accounts for as much as 30%, Parini says.



"There's still a huge potential for premium chocolate," he notes. "Ultimately, I think there may be a massive trade-up in quality."

Ghirardelli is not the only company increasing its premium offerings. Mars Snackfoods has grown its dark chocolate portfolio to include a line across nearly every one of its brands. This year, the company introduced M&Ms Dark Chocolate Peanut as a regular line available for sale as well as a Snickers Dark and 3 Musketeers Mint, which includes dark chocolate. "It's definitely a staple of our distribution now," says Mars representative Ryan Bowling. "From our perspective, we're going to put a lot of marketing muscle [behind the segment] to see it grow."

Those introductions--along with offerings from Hershey's--have increased the pressure on the premium chocolate companies such as Ghirardelli, Lindt and Ferraro Pan, Parini says. "We have been facing an incredible amount of competition in the past year. Fortunately, I believe [that in order] to be a premium brand, it's not just about having a premium price."

Mars, in particular, will look beyond focusing on price as it hones it marketing message for its premium products, Bowling says. "You're going to see a lot more communication out of us to educate the consumer on what makes good chocolate."

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