Chocolate bars continue to dominate the candy category despite growing competition and consumer interest in "healthful" alternatives. As bars rebound, aided by co-branding, licensing and reformations, savvy retailers should not underestimate the power of chocolate.

The 1.5- to 3.5-ounce candy bar is still the 800-pound gorilla of the candy industry. Still, while all indications point to continuing strong performance in the category, suppliers are monkeying around with ways to keep candy bars uppermost in consumers' minds.

Professional Candy Buyer sources agree there are four general trends in the candy bar world: increasing variety in product shapes and packaging; research into untapped sales venues; continuing consumer acceptance of reduced-fat items; and more promotional co-branding with partners from other industries.

In the chocolate category, bars are still the big product, says Susan Smith, senior vice-president of public relations for the National Confectioners Association. Sales in the category are up slightly overall, including snack size, with sales of reduced-fat bars steady at about four percent of total chocolate sales.

Smith suggests the reduced-fat data is particularly interesting, since the segment might have been expected to dip slightly after initial rollout.

John Tuffin, trade development manager for M&M/Mars, Inc., concurs. Single candy bars represent slightly more than 50 percent of M&M/Mars' business, Tuffin says, noting that singles are always trending up.

Tuffin adds M&M/Mars' year-old, reduced-fat bar, Milk Way Lite, is a particular heavyweight when it comes to sales. "It's doing excellently," he tells Professional Candy Buyer. "All the growth in the [Milky Way] brand is in the Milky Way Lite product."

The success of Milky Way Lite might presage the introduction of other reduced-fat versions of M&M/Mars brands, Tuffin says. The company's 3 Musketeers brand, for example, has always had a relatively low fat content and now carries a message on the wrapper trumpeting the fact. And, Tuffin says, the com-pany is looking at fat-free versions of other items, although it would be tough for the Snickers brand.

Confirming an overall trend, Tuffin says M&M/Mars is spending a good deal of time researching new distribution venues.

He says the company has a separate department that looks at putting candy where it isn't. The results of this effort have led to tie-ins with entities such as FTD, where candy can be included in flower arrangements, and with the trendy New York-based F.A.O. Schwartz toy retailer, which operates F.A.O. Schweetz.

M&M/Mars also has licensing agreements with Oscar Mayer Co., which includes Snickers in its Lunchables, a pre-made lunch product, and with Cap Toys, which manufactures candy dispensers.

"The licensing concept is growing very fast -- we're looking at more of these kinds of deals," Tuffin tells Professional Candy Buyer. "These are new ways to sell candy."

Tuffin adds M&M/Mars also is looking at a really new way to sell candy -- on the Internet. He says web sites already exist for M&M's, Snickers and Milky Way, but more to the point, Tuffin talks of co-ops through which Internet users can shop from home, logging on to place orders that will later be delivered to the cyber-shopper's door.

These co-ops provide a shopping list to consumers, and potential savings, he says, and it's happening now.

What isn't happening, and what Tuffin doesn't see happening in the near future, is a trend toward price increases.

Tuffin suggests that as long as inflation stays around three or four percent annually, there won't be a need for price increases. "We see prices remaining stable in the short term," he says.

Regarding new items, Tuffin tells Professional Candy Buyer, that while the company has launched VO2 Max, a vitamin-enriched energy bar (which could herald another trend), no other introductions are planned this year.

Meanwhile, Nestlé Chocolate & Confections is rolling out a good example of another trend in the cate-gory -- Nestlé Magic, a plastic ball coated with a one-ounce layer of Nestlé Milk Chocolate. Inside kids will find inside figures from Disney movies, such as Hercules, 101 Dalmatians, Aladdin and The Lion King.

"We are so excited about this product," says Tricia Bowles, manager of public relations for Nestlé. "There are few products you can buy where you get candy and a premium."

Retailing for between 99 cents and $1.09, Bowles says Nestlé Magic offers great value, because the items don't end with the chocolate.

The new item is the latest marketing example, of what Bowles calls, the Nestlé/Disney worldwide alliance. That alliance has also seen Nestlé launch Nestlé Milk Chocolate candy bars moulded into likenesses of various characters from The Lion King, Pocahontas, The Hunchback of Notre Dame, and Toy Story.

In addition to Nestlé Magic, the company recently launched another product, teaming with Frito-Lay to roll out Nestlé Pretzel Flipz. These are Frito-Lay's Rold Gold pretzels covered in Nestlé milk chocolate or white fudge.

Bowles explains Nestlé was initially looking at supplying Frito-Lay with the chocolate for a similar product Frito-Lay was planning on making. However, both parties decided that since each company was the expert within its own field, and the chocolate part of the process was the most involved, they would join forces to have Nestlé produce the item.

Nestlé also is making adjustments to existing brands to help boost sales. Bowles says, for instance, Nestlé has updated the packaging for Raisinets.

She adds the company wants to move Raisinets more into the mass market, capitalizing on the candy's 40 percent less fat aspect.

Hershey Chocolate USA, along with Nestlé, is building strong ties to Hollywood, launching its first movie-linked product tied to the blockbuster Jurassic Park sequel, The Lost World. Many of its mass market brands, including Reese's, Hershey's Milk Chocolate and Milk Chocolate with Almonds were decorated with dinosaurs and hit retailers' shelves as the movie opened at neighborhood theaters. The tried-and-true Hershey bar, which until now had undergone little change over the years, comes stamped in nine dinosaur shapes, and The Lost World's prehistoric beasts show up on wrappers.

"This is definitely a departure for us," says Hershey spokesman Mike Kinney. "Other than when we celebrated Hershey's 100th anniversary, we've never altered the bar or varied from the traditional maroon-and-silver package."

Kinney says The Lost World promotion runs through the summer, which is traditionally slow when it comes to chocolate candy sales. He tells Professional Candy Buyer the launch was timed that way to help increase sales during the slow period.

Kinney says it's really too early to gauge the overall success of the tie-in, but so far, the program has resulted in increased incremental sales across the board.

Hershey is on a drive to garner consumer awareness in other ways, too. To celebrate the 90th anniversary of Hershey's Kisses, the company shifted into gear and trotted out the Kissmobile. The 25-foot-long, 11-foot-high vehicle, designed in the shape of three Kisses, will not only raise brand awareness, but money for Hershey's long-time charity partner, the Children's Miracle Network. The Kissmobile began a 35,000-mile cross-country tour this May, and plans call for it to pull into more than 25 cities by the end of the year.

Kinney says Hershey candy bars are still the company's mainstay product, even in the face of the growing popularity of bite-sized candy items in this era of health-awareness and parents' concerns about the kind of candy (and how much of it) they're giving their kids.

Because of this portion-control aspect, packaged candy does extremely well, but the bar is still most recognizable among consumers, Kinney says.

But will our grandchildren grow up with the good ol' traditional candy bar? Maybe not, says Dr. Elizabeth Sloan, who heads Applied Biometrics, an information and trend-tracking firm. Sloan says a resurgent interest in calorie intake, coupled with concern about health problems connected with diet, could change things in the candy bar business.

Clearly, most interest is in products in the low-fat area, where the products have done very well, she tells Professional Candy Buyer. "Sales of so-called diet candy jumped 20 percent, and we've been watching a resurgence in the concern over calories -- it's up 12 percent since 1995," she says.

Sloan explains that growing interest in such items is not surprising since 68 percent of all adults are over their ideal weight range. Also, diabetes in the U.S. has doubled since 1958, now affecting 16 million people.

There are even scarier statistics, she points to, that could have significant implications for the future in terms of what consumers will be looking for in candy.

For instance, 22 percent of all adolescent girls and boys are obese, meaning they're 15 percent over their ideal weight, she says. Furthermore, one out of every four children has at least one risk factor for heart disease.

As these kids grow up, Sloan adds, chances are they'll be looking for low-calorie candy. As a result, Sloan says the candy industry might be called to make substantial product adjustments.

The industry is sensitive to being responsive to health concerns, she says, but it has always thought of health-conscious consumers as a small segment. This market, however, is growing.

Illustrating how things are changing, Sloan says: "I know of lots of companies looking at bars that will knock down cholesterol content."

Will such cholesterol-lowering products and other "healthful items" become the rule, rather than the trend, in the future?

If you believe what the Baylor Medical School projects, that just might be the case, Sloan tells Professional Candy Buyer. Baylor researchers predict that by the year 2020, all Americans will be obese. If that projection turns out to be true, then it might just be that low-calorie, fat-reduced and fat-free candy might be the norm.

However, oddly enough, suppliers of premium candy bars, who haven't taken part in the low-cal, low-fat movement, appear to have benefited, and likely will continue to benefit in the near future, from the increase in awareness about calories and related health concerns.

This is because there is a backlash effect among some consumers who still want to treat themselves regardless of calorie or fat concerns being expressed by other consumers.

Confirming this movement, Mark Sugden, marketing manager for Callard & Bowser-Suchard, says the launch of low-fat products on the domestic front has brought some people back to premium chocolate.

"We think there are many people who won't buy healthy products if they don't taste great. Rather, people will restrict their frequency of consumption, saying: 'If I'm going to eat less chocolate, what I eat is going to be top-quality chocolate.'"

With this in mind, Sugden says the future of premium chocolate bars probably doesn't hold the same low-calorie/healthful scenario Sloan sees for mass market brands.

Reinforcing his view, Sugden says fat content is a non-issue in Europe, which means future European imports will not be low-fat.

And that will be just fine with members of a focus group gathered by Cleveland-based Pat Henry Market Research for a study conducted for Professional Candy Buyer.

According to the study, the group consensus was that something was missing in most low-fat chocolate products (Milky Way Lite being the sole exception) and that low-fat chocolate didn't satisfy their craving. More to the point, said the group, low-fat items will never replace real chocolate bars.

Maybe consumers' grandchildren will grow up with good ol' chocolate bars after all.

Identifying Chocolate Consumers

hocolate consumers fall into two main groups, according to research recently conducted by Pat Henry Market Research, Inc., of Cleveland, in conjunction with Professional Candy Buyer.

The small sample research shows the main difference between mass market consumers is that respondents who bought chocolate candy primarily for themselves were driven by personal cravings for chocolate, but respondents who bought mainly for their household were concerned with pleasing the entire family.

Household purchase groups make brand decisions based on chocolate candies that will make themselves and their families feel good, indicating chocolate is a comfort food for them and they buy it when they want to do something nice for their families. They base their brand purchase decisions on chocolate candies that they liked as children, but are not as loyal to the type of chocolate that they purchase. They are more willing to buy a variety that is on sale or a variety for which they have a coupon.

The household group also tends to have more flexibility toward the brand they purchase, which means if a store is out of the brand they intend to buy, they will buy another brand that is on sale and/or looks good to them.

The self-purchase group, on the other hand, is willing to go to another store to get the bar they consider their favorite "everyday" chocolate bar.

Regarding category trends, the survey respondents say low-fat and fat-free products aren't as good tasting as regular chocolate. The respondents also mentioned concerns about such products' ingredients and whether there might be some ingredient in the reformulated chocolate that is equally bad for them.

Offering opinions about what type of chocolate candy bars they liked, the respondents were divided on white chocolate candy; there were those that liked it and those that didn't.

All respondents liked some type of filling in their chocolate whether it be nuts, fruits, or caramel. Interestingly, none of the respondents mentioned that they craved plain chocolate.

Also, one respondent indicated that her ideal chocolate would be an assortment within a single chocolate bar, providing bite-size pieces of different varieties to suit different moods. Another finding from this sample of chocolate consumers is that household purchasers are more flexible when deciding which chocolate candy to purchase. This suggests advertising would best be geared toward "household" purchasers, since they are most willing to respond to sales and special price promotions.

This report is the first step in a more detailed and statistically projectable study planned by Professional Candy Buyer.

Selling Chocolate In The Summer -- Technology Might Have A Solution

hat heights could chocolate bar sales reach if they could be easily sold year-round? Despite refrigerated transport, clever displays and promotions, the summer months remain slow for chocolate bars and probably frustrate all but non-chocolate candy suppliers.

What's more, the problem of chocolate and its tendency to melt is not only restricted to warm-weather months. From the need for refrigerated cases in shops to restricted mail-order shipping and refrigerated trucking, the cost
savings alone associated with distribution of chocolate products that are heat-resistant would find wide acceptance.

Development of heat-resistant chocolate is being undertaken by food technologists and chocolate manufacturers trying to produce new items that are capable of withstanding summer temperatures, but still melt in the mouth -- just like ordinary chocolate.

From a manufacturer's perspective, the challenge is not just producing products that taste and have the mouth feel of regular chocolate, but producing cost-effective products that, most importantly, conform to Food and Drug Administration definitions of "chocolate."

Working to offer a solution, the Choco Sol division of Zero Visibility, Inc. and Food-Tek, Inc. have jointly introduced products utilizing a fat immobilization and stabilization technology originally developed by Food-Tek's founder, Gil Finkel. Patented in 1987, the technology incorporates ingredients such as sorbitol, mannitol or glycerin into chocolate. These ingredients cause the fat in chocolate to become immobile, which makes the chocolate appear to be non-melting. However, when it is eaten, it gives the same mouth feel as ordinary chocolate.

Choco Sol President Victor Davila explains: "If you take water and add sand to it, the water will become less flowable; however, it is still liquid. When applying the same principle to chocolate compositions, the fat in the chocolate, although still liquid at elevated temperatures, is now unable to become continuous. That is, it appears to be non-melting."

When first patented, only certain types of manufacturing were possible because the treated chocolate set very quickly and a coarse texture often developed. Chocolate needs to remain fluid for long periods in order to be applied, which made the 1987 technology unsuitable for enrobed candy bars -- until now, says Davila.

He tells Professional Candy Buyer Choco Sol has overcome the quick-setting problem and the results show great potential in the mass production of chocolate bars, coated cookies and chocolate chips. More recent research illustrates the potential production of heat-resistant chocolate with a similar mouth feel, and surprisingly, such chocolate products can be produced less expensively and virtually in the same fashion as ordinary chocolate. Most importantly, the FDA's definition of "chocolate" will not be compromised.

The future of chocolate, according to Davila, will likely include the incorporation of such technology, which is the subject of several new patents, into commercially produced chocolate.

In addition to aiding the domestic market, Davila says heat-resistant chocolate technology will give a competitive edge in developing warm-weather, export markets, such as Asia and Central America.

Originally published - July/August 1997 -
Professional Candy Buyer.

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