These efforts are an attempt to reverse softening sales, as dollar results were down in 2015, according to Information Resources, Inc. data. However, results have improved in recent quarters, with dollars up 1.8 percent during the four weeks ending March 20.
The boxed chocolate market is undergoing a number of changes, including improvements in product availability, according to Kevin Coen, president of Fannie May Confections. “Food, drug and mass have become more important for premium gifts, so the product is more accessible,” he explains, noting merchandising of the sector has been improving.
“Consumers want to know more about the products they purchase, and it is up to retailers to make sure they are effectively telling the story about products they carry,” he explains. “Turns come from great product. If consumers enjoy it, they’ll come back.”
In addition, he notes premium chocolate sales are outpacing the rest of the sector, with dollar sales up 15 percent this past year and units and volume both growing more than 7 percent, according to a NCA Sweet Insights custom aggregate.
“Trends in the sector are changing a lot, therefore our ingredients and the shape of the products have also changed,” he says. “Yet, the core business is the same, but there have been add-on products that have surfaced.”
He gives for example the expanding market for cutting-edge flavor profiles. “Across the board we’re seeing much more variety of flavors being offered to really attract shoppers,” Coen says, noting younger consumers are driving this.
“Consumers want to know more about the products they purchase, and it is up to retailers to make sure they are effectively telling the story about products they carry.” — Kevin Coen | Fannie May Confections
During the past five years, this focus on trending flavors has influenced Chuao Chocolatier’s product development toward novel profiles such as its Firecrackers, dark chocolate truffles with chipotle caramel fudge centers and popping candy, as well as a number of dessert-inspired pieces.
“Our creative flavor combinations have always been the heart of the Chuao experience, so we have kept an emphasis on the experience from the beginning,” says Chef Michael Antonorsi, president and master chocolatier at Chuao. She adds the company has been focusing on producing larger boxes and gifting items.
Consumers’ experience with products is critical in the boxed chocolate market, according to Chris Edwards, co-CEO of Edward Marc Brands. “When consumers receive beautiful boxed chocolates, they take in the outside presentation and start judging it,” he tells Candy & Snack TODAY. “When they open the box, you want them to immediately get the smell of high-quality chocolate.”
Noting all of its offerings, which include the Snappers brand, are inspired from the boxed chocolate line the company was founded on, Edwards explains a keen eye on in-pack presentation is critical. This includes placing emphasis on the “planogram” to ensure “it looks beautiful in the box.”
“Everything is hand done, every piece is hand cupped. That makes it very special,” he says, explaining the company puts thought into every component from chords to the pieces of salt sprinkled atop products.
But what really goes into designing a beautiful pack? According Virgil Rubini, vice-president of Axenta Corp., the first factor is understanding the outlet.
“In everything you do, you have to know the objective. Is it going to be seasonal or everyday, or is it limited edition or themed in a way that isn’t bound by calendars, but rather licensing or sports?” he says. “Next is knowing the range of consumers. Most companies claim their products are for everyone, but that’s rarely the case.”
Rubini says the Chocostyle line is geared toward women 16 to 35. “There are people outside of that range that buy, however, if we don’t segment we will always have an issue on the design as well as understanding the price point.”
Another factor to consider when designing an item, he says, is whether it will be a standalone product or part of a line. “If it’s a line, it needs a theme or a flow, where a single product you might want to have it standout more,” Rubini explains.
While gift giving remains a primary purchase driver, Danielle O’Neil, Lindt & Sprüngli (USA) Inc. vice-president of marketing, says the sector does perform well on an everyday basis.
“Pack formats are evolving to offer more convenience with ready-to-gift adornments, such as the Lindt Gold Gifting collection featuring a ribbon, and smaller format boxed chocolates are trendy for consumers looking to purchase for everyday occasions,” she adds.
Rubini points out that if talking strictly sales numbers, boxed chocolates are seasonal items.
“They are still mainly a gift. That being said, consumers’ taste buds are more refined, so there are people who will have one piece of chocolate per day, similar to those that have one glass of wine per day,” he explains.
“We talk about the big four, but when you look at real demographics, there are Chinese New Year, Ramadan, Orthodox Easter and a lot of other holidays.” — Virgil Rubini | Axenta Corp.
Noting the company has developed a range of some 200 flavors for the Chocostyle line, Rubini says trends leveraging ethnic and regional flair are opening up new avenues to promote and sell boxed chocolates.
“We talk about the big four, but when you look at real demographics, there are Chinese New Year, Ramadan, Orthodox Easter and a lot of other holidays. Those are just a few dates you can put things out around,” he explains, adding that events such as the Oscars and Grammy’s are on the peak of becoming seasonal points along the same lines as the Super Bowl.
“We are definitely marking them on the calendar so we can focus on something for them,” he explains.
This factor was also highlighted as a selling point for Hawaiian Host, Inc. as occasions and events are becoming more important for the company as it expands to the continental U.S.
“When you’re in Hawaii, gift giving is very important, but outside it’s occasion based,” says Casie McKinney, assistant brand manager.
Looking to expand sales both everyday and seasonally, manufacturers are reconsidering their packaging options, in many cases moving into smaller boxes.
“For holidays — Christmas particularly — consumers want to buy more, but our only option before was a $10 box,” McKinney tells Candy & Snack TODAY. This demand for lower priced items pushed Hawaiian Host to develop packs with a SRP of $4.99.
Offering lower priced options can also help tear down barriers of trial, which can be a huge hurdle for brands with lower consumer recognition, according to Nate Barbanel, president of Aero-Cos International Ltd., the exclusive U.S. distributor of Orkla Confectionery & Snacks’ Laima brand chocolates.
For example, he says the candymaker’s chocolate-covered marshmallow items are very popular in native Europe, yet are facing challenges in the U.S. market.
“U.S. consumers look at marshmallow, and what comes to mind is a typical American marshmallow. Once they try it, they realize it is totally different,” Barbanel says. “Our big challenge is making product available for trial.”
The company developed three-piece sampler packs at affordable prices to overcome this purchase barrier, he says, explaining: “The brand isn’t that well known to U.S. consumers, so we want them to try it and then step up to larger packs.”
The three-ct packs have a SRP range of 99 cents to $1.99. The company is also leveraging this strategy for its dessert-inspired chocolates, which include Key lime pie, tiramisu and crème brúlée. Further attempting to tear down barriers to trial, Laima is also developing single-piece packs with a SRP range of 59 to 79 cents.
Barbanel says this tact is working, adding it’s a long-term process to educate consumers.
Another strategy to drive trial is sampling, according to Edwards. “You’re basically doing a tasting, but it’s so important when you’re trying to sell this type of item,” he says. “People are loyal to the chocolate they like. They get excited about boxed chocolates, but they don’t want to blindly purchase something at a higher price point. If they’re going to spend, it better be something they really love.”
Consumers aren’t the only ones concerned with being displeased with their boxed chocolate choices, as retailers face substantial markdowns on season-specific packs that don’t sell through.
Taking a novel approach to this challenge, Laima has developed sleeves for its boxed chocolate items. “Retailers can stock the basic product design, then when the holidays are approaching they can put the sleeves on,” Barbanel says. “It’s very presentable, very visible and it mitigates problems with sell through. Retailers just have to remove the sleeve and it becomes an everyday product.”
Regardless of pricing or packaging strategy, incorporating feedback is key to building a successful line, sources agree.
“Retailers know their consumers very well, we take their feedback and find out what they are looking for,” Rubini says.
Noting Lindt leans on retailers for feedback, O’Neil says the company also turns to consumers through traditional research methods as well as social media.
“Connecting with Lindt fans through social media is an important part of our marketing efforts,” she says. “We want to engage followers in conversation, listen to their input and educate them about premium chocolate.”
“Across the board we’re seeing much more variety of flavors being offered to really attract shoppers.” — Kevin Coen | Fannie May Confections
Chuao also leverages social media, as well as its “chocolate concierge,” customer service, to gauge consumers’ interest and how the products fit into their lifestyles.
“We are also very experience-focused, so we encourage our retailers to cross merchandise with other products, such as wine, to offer consumers a full and thought out experience with our chocolates,” Antonorsi adds.
One benefit Fannie May has, outside of its decades of experience in the sector, are the company stores, Coen says.
“We get daily communications from every store regarding what consumers like,” he tells Candy &?Snack TODAY. “We’re fortunate to have such a strong, loyal consumer base that continues to give us feedback that becomes important to our manufacturing operations. If something doesn’t look or taste right, they are quick to let us know and we are quick to react.” CST