With Easter in the wings, a new report on the state of the chocolate industry reveals some interesting changes – coming and already here. And players are being forced to take drastic steps to meet the challenges that a global pandemic and changing consumer habits are posing…
Chocolate more costly this Easter, product innovation dead.
It all started with reports that began surfacing a few years ago that a potentially disastrous fungus disease was about to devastate the Central American chocolate growing industry. Prices for raw cocoa beans would soar, and manufactured and processed chocolate products would follow suit – drastically changing the industry, hammering the retail market and changing the way consumers viewed chocolate forever.
Chocolate confections would cease to be trifles folks would be exhorted to buy as impulse purchases at the checkout counter, and perhaps even become commodities so expensive that retailers would put them behind glass or behind the counter to discourage shoplifting, an remove them from shop windows overnight, like jewellers, to discourage break-ins.
Gradual changes, increasing deceptions
That hasn’t happened – yet – but ‘everyday’ chocolate products such as single-serving bars have increased in price by as much as 10 times what they cost a decade ago. What used to cost $0.50 now costs $5. At the same time, manufacturers are minimizing the amount of chocolate they put into such products, upping the amount of puffed-cereal and other, relatively cheap, non-chocolate fillers they use, and hyping the resulting new products (stuffed with cereals, cookie crumbs and other recycled ingredients), as innovative and glamourous collaborations with other candy and baked goods brands.
In a two-pronged attack on the challenge of reducing costs while chocolate prices rise, manufacturers are employing their full tool-box of marketing ‘dirty tricks’ in packaging and labelling. The bars themselves are getting smaller and the packages are either remaining the same size or changing format to conceal or camouflage the reduction in content.
The COVID Factor
Changes in overall eating habits have also resulted in further-decreased chocolate consumption among people who have become more concerned about their diets and their overall health, and are eating less junk food, processed food and indulgent foods in general.
“Urging consumers to reduce their sugar intake has, for the most part, been met with mixed reactions. While some consumers look to switch away from overly sugary foods, others are reluctant – at least they were until the onset of COVID-19, which has provided a strong impetus to improve eating habits. In the year post-COVID, expect to see a divide among global chocolate consumers – those that take their health and wellness seriously – reducing or eliminating chocolate consumption, and those that prioritize the indulgence and comfort that chocolate can bring,” concludes Marcia Mogelonsky, Director of Insight for Mintel Food and Drink, the market research company that produced the chocolate indusry report.
Innovation is dead
The new report says chocolate product ‘innovation’ – a key tool in competing with other candy makers – has all but stalled. Candy makers in general confirm that their customers are calling, more and more, for old, familiar favourites from the manufacturers’ retro and legacy repertoires, in search of increased comfort from the nostalgia factor. Of course, if that means makers have recreate the old-school favourites using the same chocolate content as they used to have, that costs more – and they’ve been facing push-back from their biggest fans over changes in flavour and texture they’ve tried to slip in under the customers’ radar.
Innovation in holiday-associated chocolate products has also dipped a full 25 percent for Easter this year from the same time last year.
Not just the chocolate sector
And we have to remember it’s not just the chocolate sector of the overall junk food tranche: Salty, Starchy snacks makers have also been under similar pressure in their efforts to remain profitable and preserve their market profiles during the pandemic. They, however, have not made as much use of their ‘desperation’ tool set – reformulations and overhyping their products – as the chocolate guys over the past year or so, because they haven’t had to meet the same raw materials price increases the chocolate guys have, and haven’t yet had to defend so vigourously their routine use of marketing and packaging tricks. And their retail products’ prices have not skyrocketed to the same extent.
A lasting effect
The chocolate industry report suggests that times will remain tough and get even tougher after the pandemic has died down, as consumers’ eating habits fail to revert entirely to what they were pre-pandemic. How the ‘chocolatiers’will deal with this uncertain future remains to be seen…
BTW: I haven’t heard anything more about that fungus disease lately. I might to go digging for ‘news’ on that…
~ Maggie J.