Chocolate producers look elsewhere for profit as those with a sweet tooth think twice
Food companies are trying to make chocolate more appealing, and tactics include gimmicks such as Ritter Sport’s hemp-infused chocolate bars
London — From cannabis to quinoa, ruby to low-sugar: this is not your grandmother’s chocolate.
With the market for traditional sweets in developed countries flagging as consumers shun sugary items for healthier treats, food companies are trying to make chocolate more appealing. Their tactics include gimmicks like Ritter Sport’s hemp-infused Chocolate and Grass bars (they don’t get you high), new flavours and colours as well as formulas that cut down on sugar.
Some chocolatiers are even diversifying away from chocolate. Hershey, which began selling its classic bar 120 years ago, is moving into popcorn and potato chips, while Mars said in November that it would buy a stake in health snack firm Kind. Just two months later, Nestle agreed to sell its US confectionery unit amid falling revenue and a focus on products such as coffee and water.
"Sugar is portrayed as the new tobacco," said Eric Bergman, a commodities broker at Jenkins Sugar. "Consumers are now shifting away from the iconic, sugar-filled chocolate brands that we know and into healthier foods. The largest chocolate companies have followed suit and they are transitioning from chocolate companies into snack companies."
While lower cocoa prices helped improve demand more recently, there’s a growing push to discourage consumption of sugar, which makes up almost half of an average chocolate bar. Advocacy groups are urging people to cut back and governments are taxing sugary drinks.
To counter health concerns, Nestle is selling slimmed-down Milkybars in the UK and Ireland as part of a programme to use 30% less sugar. The bars include a type of sugar that dissolves quicker in the mouth, but produces a similar taste to before.
Hershey’s almost $1bn purchase of Amplify Snack Brands, which also sells protein bars, shows how the industry is branching out as it contends with falling demand for sugary products. The moves come as Euromonitor International sees 2018 chocolate sales growth in Western Europe and North America below levels of several years ago.
There are some bright spots for chocolate consumption. Sales of premium brands such as Lindt & Spruengli are on the rise, demand in developing countries is growing and consumers are increasingly willing to pay more for dark chocolate, which contains more cocoa and less sugar, Bergman said. Millennials are also keen to try new varieties, prompting more flavours and artisan brands.
Ruby chocolate is one example. Nestle has been quick to adopt the first new colour in eight decades, which was introduced by number one cocoa processor Barry Callebaut in 2017 and is shaded pink using only natural ingredients.
Germany’s Ritter Sport, which sold out of its limited cannabis bars in just two days, has also offered quinoa bars in the country. Cargill markets caramel-flavoured white chocolate and also makes lactose-free dark chocolate.
"People are beginning to look at different tastes, different flavours," Gerry Manley, head of cocoa at Olam International, said in an interview in Berlin. "They are beginning to want ingredients to mix together themselves. You are getting a lot more artisan type of chocolate."
Consumers also want to understand how the cocoa in their products was produced and if it meets ethical standards, said John George, an analyst at Euromonitor. Mars this month said it will spend $1bn on sustainability, including making operations more energy and water efficient as well as making an effort to buy directly from farmers.
Some customers even want more say over what they buy, according to Andreas Ronken, CEO of Ritter Sport, which lets consumers vote on future limited editions.
"Consumers are increasingly asking themselves ‘where does my food come from?’," Wyatt Elder, director of research and development at Cargill Cocoa & Chocolate, and Ilco Kwast, marketing director at the company, said by e-mail. "There is a change going on in the market place, not just among millennials but across age groups and geographies, which will impact on us and other manufacturers. Standing still is not an option."