Chocolate. Many of us associate this word with an automated feeling of pleasure. Many consumers define the sweet, tender and indulgent product as their most favorite food. The highly emotional character of chocolate even found its way into everyday language, creating terms like “chocoholic” to describe a person who loves chocolate. And where there is demand, there will be supply. The entities, which have been satisfying our lust for chocolate are described as the chocolate industry. However, since the start of the cacao, the industry has always been pestered with a multitude of problems ranging from human exploitation to the dubious health implications of the product.
When chocolate’s main ingredient, cacao, was first brought to Europe in 16th century it quickly rose in popularity and demand (Coe & Coe, 2013). First consumed as a sweet hot drink, there was almost no attention, let alone public indignation, to the fact that that the production of cacao was only possible by the extensive exploitation of slaves. Today, the production of cacao still involves child labor in many parts of Africa.
Historically, the introduction of cacao mixed with sugar and milk has been blamed for dental issues like caries. And only recently, the high fat and sugar contents of chocolate have also been blamed for favoring obesity.
In the last years the demand for healthier products, sustainable ingredients and responsible advertisement has steadily risen. The industry is reacting mainly positive to it, creating healthier chocolate, and starts to target customer groups, which are highly aware and sensitive to human rights issues in the supply chain. So how do these developments and problems shape the future of the chocolate industry?
Change of Markets and Growth
The chocolate industry is spread around the globe with different preferences from the customer side and growth opportunities on the supply side. The industry will move towards those countries, that promise the biggest growth and invest there. So far the growth numbers for the industry are increasing no matter which country we analyze. The stars for future growth are India (22%), Brazil (13%) and China (11%) (KPMG, 2014). Those shooting stars will most likely have a sustainable long-term growth since the middle class in most of these countries is growing as well. Considering the fact that the per capita consumption of chocolate in China is only a tenth of that in Switzerland, we understand that the industry will move its focus towards China rather than Switzerland. It is most likely that because of the promised growth, the chocolate industry will invest in those countries, hence contributing to the GDP as well as to developing jobs. That is a change in terms of markets, but it is definitely not a negative effect
Change of Marketing
Chocolate marketing has been reacting to many trends, which are presenting opportunities to sell their products. In order to anticipate, monitor and react to all of these trends the marketing department of the chocolate industry is forced to become agile, flexible and responsive (KPMG, 2014).
One of those biggest trends the chocolate marketing will need to react to, is the arising criticism towards the food industry being responsible for causing obesity in all age groups (KPMG, 2014). The health trend, which asks for products that “are good for you”, has caused changes in framing products. One very powerful example is the way, the product belvita from the company Nabisco is marketed. Since the majority of parents will not allow a cookie on the breakfast table, belvita had to work its way around it. The product, which is nothing else but a chocolate cookie is framed as a carrier of “Nutritious Sustainable Energy, All Morning” (Walmart, 2016). At the same time other companies emphasize the health aspects of chocolate. Xocai embraces the term of “the home for healthy chocolate” and produces high end chocolate for premium prices.
. For 128 $ you have the opportunity to buy a peanut Butter cup that has 8 ckal less than the well known Reese’s peanut butter cups (Xocai, 2016). Those examples highlight that in the future companies will continue selling the same product with different legitimation argumentations. Whether selling chocolate cookies as a healthy breakfast choice is what taking responsibility is all about, remains in question.
But health is not the only trend, which impacts the chocolate industry. The demand for premiumization or the need for “moments of happiness” is also an interesting driver within the chocolate industry.
Premium and Portion Another direction is premiumization (demand for “moments of happiness”). Small, little, precious treats allowing the consumer a short moment of luxury. To me, this is one of the more innocent directions of chocolate marketing. A kind of advert that also falls into this advertisement category is the“flirtatious moment advertising”.The cheeky smile in the Indian advertisement advertises chocolate according to the motto “Sex sells”. Whether this represents a responsible handling of stereotypes remains questionable. Another related trend which goes into a comparable direction is portion control. This means that companies like the US company Hershey’s, aim to position dark chocolate as a lifestyle choice (KPMG, 2014). Nestle goes into the same direction and makes a promise on its website to “help consumer make thoughtful food and beverage choices” (Nestle, 2016). Overall, Nestle reacted wisely by establishing a committee to “ensure responsible marketing communication to children“ (Nestle, 2016). That term, at least to me, is the proof that Nestle is aware that consumers get more concerned about the responsibility big companies have towards their customers. On the other hand the term “ensure responsible marketing” (Nestle, 2016) is not promising anything. What Nestle will be advertising will stay in the consideration of Nestle itself.
In conclusion the chocolate marketing will most likely communicate whatever it takes to sell the product. Since the product itself is, if not consumed excessively, not a sin, the opportunity to cause harm is limited.
Change of target customer for marketing
On a normal day, around the world approximately one billion people eat chocolate, which makes it harder and harder to categorize chocolate consumers (ghc, 2016). However, the two biggest customer groups are categorized as Luxury seeker and Hybrid customer (KPMG, 2014).
Is a group of consumers, which seek one moment of pure delight and not just any product. Chocolate is understood as a luxury. Beloved products are small-sized mini-chocolates like the chocolate pearls from Nestle’s premium chocolate range (Cailler, 2016). Those pearls are usually defined as pralines. Other brands follow this trend. In Japan, for example, KitKat tries to target the luxury seekers by opening a ‘Chocolatory’ store in Tokyo which has new luxury flavors and produces 300 bars a day of its hand-made line (Demetriou, 2015).
In addition, the luxury seeker demands products that equate simplicity with quality, naturalness and health. An example of a company targeting that segment of the market is Barry Callebaut. They have employed a wine-tasting expert in order to produce a chocolate tasting box, which should give the customer a box of gourmet experiences comparable to the experience of a wine tasting (KPMG, 2014). Selling chocolate like expensive wine to luxury seekers was also tried by the company Ta’ok, which has the philosophy that chocolate wins in taste over time the same way a good wine does (To’ak, 2016) Advertisements for that customer group can be found in the following two advertisements:
The second main target customer is the Hybrid Consumer. The Hybrid Consumer is a conflicted character who on the one hand seeks to minimize grocery shopping costs but at the same time only wants the best products. This target group are mostly women which are on average in control of 70% of household spending (KPMG, 2014). This attitude can be found largely in Australia, France, Germany, Turkey and the US (KPMG, 2014). This segment of the market is expected to spend $1trn in the US alone by 2020 for chocolate (KPMG, 2014). Another aspect of this customer is that she is not brand loyal. Advertisements for that group are
Another, more specific example of a target customer change for one specific product is exemplified by the new target group for chocolate drinks. Over 200 milk-processing companies in the US found a new target customer in athletes rather than children (Precourt, 2015).
Sadly, that shift didn’t happen because of a new-found sense of responsibility towards US American kids and their struggle with overweight and obesity. In athletes, the industry found a customer group that is interested in the quick high energy boost those drinks provide.
I was very surprised when I experienced that shift myself when I was participating in a run in Boston and was rewarded with a free chocolate drink sample after the finish line
Overall, it is relieving to see that the main target of advertisement all over the world are not children anymore, but rather their mothers.
Change of Product
Chocolate will not stay the product we consider it today. In the future, products with healthy fats and high levels of flavones will be the norm. Even if tastes in chocolate remain diverse across the world, ever more consumers turn to the dark(er) side of chocolate. In the US, dark chocolate has been in more demand than ever (KPMG, 2014). China has the biggest demand for dark chocolate worldwide (KPMG, 2014). Perceived health benefits from the dark chocolate have caused a 93% growth in the demand of dark chocolate worldwide. In the USA dark chocolate now accounts for 20% of the entire chocolate market. (KPMG, 2014).
Even the markets in Russia and China, who have been demanding a “bling bling” luxury chocolate, changed their choice towards authentic, all natural products (KPMG, 2014).
The last years have also seen the arrival of specialized niche products like tea chocolate or beer chocolate from Belgian breweries (Nieburg, 2014). Another wild product was launched by Nendo, launching chocolate-filled paint tubes and chocolate pencils (Nendo, 2013).
At the same time the tractability of the ingredients becomes more important as well as the origin of the products. Overall, 4.8% of chocolate products sold last year featured an origin claim in order to serve that need (KPMG, 2014).
Another feature of the chocolate of the future will be a stronger personalization. One of the first pioneers in this was Mars who have been offering customized M&Ms with pictures, colors or text since 2004 (M&M, 2016). Furthermore, Nestle launched its first customization pilot program with Maison Cailler, offering the opportunity to fill out your own “Chocolate profile” to find your chocolate (York, 2011). Customers also have the opportunity to go the the Maison Cailler, a chocolate house with connected kitchen, and make their very own chocolate in a live session of approximately 1-2h (Cailler, 2016).
Supporting the customization trend is the opportunity to print food. The most recent generation of 3D printers already allows for replicas of faces, pictures, and a wide variety of structures – all made entirely out of chocolate. There are still many difficulties that hinder a wider application of these 3D printers, however technology is quickly advancing and will most likely allow for a wide array of possible applications.Designing a chocolate based 3D model still requires a lot of technical skill and knowledge. The goal of the technology is that customers design their own 3D models at home and send these to a supplier that prints and sends the model to your home. The level of technical skill required is still hindering a wider market penetration. The next step will therefore be the development of a program that automatically assesses whether certain structures are suitable and that are easy to use for end customers. This will facilitate a wider distribution of the technology. Hershey’s offers this technique as an eye catcher already and is working on the technology in order to make it accessible to the every-day customer (Buhr, 2015).
An innovation not as visual as 3D printing is the attempt to substitute cacao butter with natural oil derivatives and sugar by stevia. Stevia was under close inspection of Barry Callebaut because the company was trying to reduce the amount of kilocalories in chocolate and therefore offer a “guilt free pleasure” (Barry Callebaut, 2016). A big disadvantage of using stevia is the effect on the texture of chocolate. While steviol glycosides don’t have the same bulker effect as normal sugars do, the consistence of chocolate changes strongly.
Since customers have been demanding a reduction of the environmental impact of chocolate ingredients, this is most likely to happen as well. Effects will relate to a sustainable use of sugar, palm oil and cacao waste (KPMG, 2014). Sugar, as one major ingredient of chocolate, has only 1% of its worldwide sales approved by the fair-trade mark. Palm oil has been under strong criticism because the production of palm oil has led to massive deforestation. One example of a company that is trying to change this is Mars, pledging to end the deforestation associated with its palm oil demand, as well as Mondelez who is sourcing 100% of its palm oil from certified palm oil plantations. Finally, the grinding of cacao shells has gained interest. Barry Callebaut acquired a patent to grind cacao shells into powder which can be used as a cacao replacement. Also, Daintree Estates is researching for new ways to use the so called “cacao waste”
From my perspective the biggest threat coming from the chocolate industry is that they will and are already selling us products labeled as “cocoa,” “chocolaty” substance, and “chocolate-flavored” as real chocolate (Abel, 2015). Despite the fact that those products look like chocolate per definition they are not. The treats do only have parts of chocolate beans in them but are predominantly no real chocolate. The ordinary consumer will be easily confused by terms like “cacao milk” or “chocolate milk”. An example to describe this is the “too tall” compound bunny (Abel, 2015). Its ingredients list cacao, but cacao butter is substituted with cheaper olive oil (Abel, 2015). Hence we understand the motivation behind that movement: to save costs.
Another change in the product came from the company Mondelez which invested over 10 years to make chocolate heat resistant (The Telegraph , 2013). Heat resistant, in that particular case means to resist temperatures of (40°C) for three hours without melting (KPMG, 2014). The idea behind that product tuning was to enable Mondelez to sell chocolate in areas where the temperatures are generally too hot to consume chocolate without the chocolate melting. With this product change, they might modify the texture but also turn the seasonal product into an all year product since it doesn’t melt in the sun anymore.
Apparently a lot of changes will happen to the products we eat as chocolate. I embrace the opportunities of customization since I think it gives chocolate a personal touch and gives us the opportunity to make presents even more personal. I think the latest trends are more alarming. Mondelez is changing the texture of their chocolates in order to sell it in hotter regions. I generally view this as a good development because it provides people in hotter regions with the opportunity to enjoy chocolate as well. While it seems obvious that this kind of invention is targeted to warmer countries, it could also be introduced to countries that would also support normal chocolate, if the industry can realize significant cost reductions in their supply chain, as chocolate that doesn’t melt as fast requires less attention to the cooling chain.
Still I feel disappointed seeing that some industry actors are seeking opportunities to trick their customers into “cheap” chocolaty products to make profits. I assume a non responsible behavior behind such actions.
Overall we see different trends in the chocolate market, which are influencing the behavior of the big industry players. Overall, the industry has two strategies to react to future challenges. First, to produce innovations to substitute unhealthy ingredients to make chocolate healthier. The companies, that choose to make chocolate cheaper by using lower quality ingredients remain the exception. Secondly, the public pressure on the chocolate industry to accept its share of the responsibility for the obesity epidemic increases. The chocolate industry will have to anticipate that change. The target customers in both the identified major customer groups are open for such changes. The conquest of new markets like for example Brazil is in my opinion rather positive since the movements support the local economy and create job opportunities. The movements, which I classify as rather alarming like for example the chocolate substitution with cheaper ingredients will stay the exception rather than the rule. So I think overall it is fair to say that the chocolate industry is at least on a good way.
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