Dark Chocolate Sales Soar 40%

Top Hershey Exec Calls It 'Real Consumer Behavior Change'

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NEW YORK (AdAge.com) -- Dark chocolate has been last-picked from the candy dish -- until now.

Reports that it can actually be heart-healthful have sent milk chocolate's once-poor second cousin
dark chocolate
Dark chocolate's popularity has exploded in the wake of widespread publicity about the healthful effects of its antioxidant-rich cocoa flavanols.
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on a tear, with sales up 40% this year. Dark chocolate hit $1.62 billion last year in the U.S., leaping 29% between 2003 and 2005, according to Mintel International.

25% of households
Some 25% of households have dark chocolate on hand, up from only 8% in the last two years, Hershey Co. said. And one in three chocolate launches so far this year has been of the dark variety.

"This is a real consumer behavior change," said Chris Baldwin, senior VP-president of Hershey's U.S. commercial group, whose sales of Special Dark chocolate have climbed 37% this year. "There are underlying benefits with the consumption of cocoa that give consumers the permission to enjoy chocolate."

New product introductions
Dark-chocolate candy introductions this year hit 278 compared to last year's 12-month total of 217, according to Datamonitor's Productscan Online. Dark chocolate has gone from 15.5% of total chocolate launches to 33.4% in 2006, a figure Tom Vierhile, director of the database, finds "astonishing for such a niche-type flavor."

It's either "great news for the category because [marketers] have a health angle they can sell against or it's a bubble," he said.

Either way, Hershey, Mars and others are rushing in with dozens of entries to offer consumers no longer afraid of the dark.

Mars research
Mars lays claim to nearly 80% of the research fueling the fervor over the cardiovascular benefits of antioxidant-rich cocoa flavanols. It is marketing Dove Dark, a nutrition-aisle product dubbed CocoaVia, M&M's Dark and limited-time Snickers Dark (along with an almond version).

Hershey offers Special Dark and Extra Dark, a mass-premium Cacao Reserve by Hershey's line to be introduced next month, and newly acquired superpremium brands from Scharffen Berger and Joseph Schmidt.

"There is an enormous opportunity for consumers to trade up in the world of chocolate," Mr. Baldwin said.

Flavanol antioxidants
Special Dark has received new packaging that proclaims it a "natural source of flavanol antioxidants," as well as increased distribution and advertising. Although Hershey spent only $5 million in TV on Special Dark in the first three months of this year, according to TNS Media Intelligence, sales shot up 37.4% to $36 million for the 52 weeks ended July 16 in food, drug and mass merchandisers. That's still a shadow of the more than $300 million generated for the Hershey bar, but it's growing.

The new Cacao Reserve by Hershey will be priced at 99 cents to $1.19 a bar (vs. 79 cents) for Special Dark). Hershey plans to play off the success of premium coffee brands by touting the pedigree of the cacao beans in its products with ads from Havas' Arnold, New York, that tempt consumers to "Explore the world of chocolate."

Smaller chocolatiers, such as Seattle-based Dagoba, have for years touted their "single-source" chocolates, featuring cacao beans from Peru, Costa Rica and Ecuador, according to Marcia Mogelonsky, senior analyst at Mintel International. "People will pay $3 or more for good-quality coffee," she said. "Consumers today will not shy away from spending a lot of money on single-origin chocolate." She said some people might not perceive Hershey's chocolate as premium, adding that more "underground" marketing would help.

Cacao Truffle Tins
Hershey's launches of Cacao Reserve bars and premium drinking cocoa in September will be followed in December by Cacao Truffle Tins and Country of Origin bars, all of which will feature labels with the history of the cacao bean, where the product came from and its flavor profile. It will "look and read much like a wine bottle," Mr. Baldwin said, and Cacao Reserve will indeed be merchandised in-store on wine racks. The launch will be heralded with "high-influencer event marketing," such as an Aug. 31 bash at the Metropolitan Museum of Art for food-and-wine-magazine editors.

But now that consumers have seen the light when it comes to dark chocolate, can candy marketers sustain the paradigm shift? "While 'antioxidants' and '70% cacao' are the hot buttons right now," Mr. Vierhile said, "I don't know how long it will last."
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