The Chocolate Confectionery Market

Chocolate is made by roasting, crushing, and refining cocoa beans. Dark chocolate is typically at least 55% cocoa; higher-quality products contain at least 70%. Milk chocolate, on the other hand, typically contains a maximum of 50% cocoa, to which milk is added. The higher concentration of cocoa in dark chocolate is the source of its claimed health benefits.

Chocolate is the most lucrative segment of the global confectionery market, accounting for 52.6% of the market’s total value. In 2011, Europe captured the largest regional share of the global confectionary market at 45.2%, with the Americas following at 33.9%.1

For the exclusive use of Y. Okou, 2017.

This document is authorized for use only by Yobouesseth Okou in International Marketing-1 taught by Seung-Hyun Lee, University of Texas at Dallas from July 2017 to January 2018.

Montreaux Chocolate USA: Are Americans Ready for Healthy Dark Chocolate? | 914-501

HARVARD BUSINESS SCHOOL | BRIEFCASES 3

The U.S. confectionery market reported total revenues of $35.648 billion in 2011, representing an annual compound growth rate of 2.8% between 2007 and 2011. Total revenue for the chocolate segment in 2011 was $17.664 billion, a 1.9% increase over 2010. The U.S. chocolate market was expected to grow almost 2% annually through 2015.2

Consumers’ focus on fitness and health in the U.S., which sharpened over the past three decades, prompted Montreaux Chocolate USA to consider expanding its chocolate offerings to include products that featured a healthy focus. As the emphasis on healthy eating habits heightened, however, so had the number of competitors and the rate of new product introduction.

Fishers, Inc., a Dallas, Texas-based firm, was the leading global player in 2011, generating a 16.8% share of the market’s value. Apollo Foods solidly held second place at 15.4%, with Swiss food giant Cornelius S.A. following at 9.1%. None of these companies, however, was the leader in the U.S. chocolate market; that honor went to Lancaster Company, with a 34.8% U.S. market share. Fishers closely followed with a 34.4% share.

The chocolate market in the U.S. is composed of seven product segments, with the top four accounting for 94.4% of market value:

1. Bar/bag/box (3.5 oz.+): $7,149 million, with 7.6% growth between 2009 and 2011

2. Seasonal chocolate: $4,407 million, with 9.9% growth

3. Bar/bag/box (less than or equal to 3.5 oz.): $3,479 million, with 18.5% growth

4. Snack-size chocolate (less than or equal to 0.6 oz.): $2,522 million, with 10.8% growth

Other segments include gift box, sugar-free, and novelty chocolate.3

The overall market for chocolate in the U.S. is segmented by mass market and premium, with the mass market accounting for 80.3% of sales and premium for 19.7%. The premium segment is further segmented into everyday gourmet/affordable luxury, upscale premium, and super premium, which represent 16.8%, 2.2%, and 0.7%, respectively, of total sales.4

Grocery, drug, and convenience stores, and Walmart, collectively sold approximately 45.3% of the chocolate candy in the U.S. in 2011. Grocery was the largest channel, accounting for 15.8% of sales followed by convenience stores at 11.7%, drug stores at 9.0%, and Walmart at 8.8%.5

Trends in the U.S. chocolate market in 2011 included:

1. Premium chocolate products moving to mainstream channels (i.e., supermarkets, mass merchandisers)

2. Dark chocolate sales benefiting from flavanols—antioxidants that can help to lower cholesterol and provide cardiovascular benefits

3. Low-calorie options such as reduced fat and aerated chocolate

4. Packaging going to stand-up pouches and bigger sizes that appeal to economically conscious consumers

5. New labeling with terminology emphasizing shareability, portion control, and saving a piece for later

6. Increases in pricing attributable to rising commodity costs

For the exclusive use of Y. Okou, 2017.

This document is authorized for use only by Yobouesseth Okou in International Marketing-1 taught by Seung-Hyun Lee, University of Texas at Dallas from July 2017 to January 2018.