- Morgan Stanley analyst Eileen Khoo told the Wall Street Journal that as people emphasize quality over immediate satisfaction, the chocolate market could move away from impulse-driven purchases.
- Currently, a report by the financial services company cited in the Wall Street Journal states that 70% of chocolate buys are in the moment.
- The chocolate industry is already experiencing the effects of reduced impulse buys as some retailers like Tesco in the U.K. and CVS and Raley's in the U.S. have listened to consumers who asked that chocolate be taken out of checkout lanes.
While there is little likelihood that chocolate will fall entirely out of favor, in a market where consumers are increasingly concerned with the health of their purchases, highly processed candy bars that rely on impulse purchasing habits may find their sales less than sweet in the future.
Already retailers from Target to Costco are taking note of Americans' increasing concern with the negative health effects of sugar and are stocking more health-conscious candy brands such as Justin's, and candies using ingredients like dark chocolate.
Recently, Raley's took an additional step by unveiling a "better-for-you" checkout experience for its customers, reducing candy offerings at its check stands by 25% and completely eliminating conventional candy. Instead, shoppers will find a selection of snacks focused on better nutrition, portion control and reduced sugar content.
While some customers may miss the ability to grab a last-minute Snicker's bar, others will likely be grateful not to have the temptation. And that is where chocolate manufacturers will face their biggest struggle. Recent studies show that items placed in checkout lines do indeed make it easier for consumers to find and buy those items. But that's no secret — that's why the chocolate was there in the first place.
So as stores begin to swap out traditional checkout line offerings in favor of healthier treats, chocolate makers are responding with dark varieties. With a host of studies extolling the values of dark chocolate, manufacturers have been quick to jump aboard and position their dark varieties as healthy or better-for-you options, while enabling consumers to indulge, in order to expand the item's reach.
Perhaps more importantly than their removal from checkout lines, chocolate CPGs are having to contend with the new trend toward online shopping. From the growth of home delivery to click-and-collect, one downside to digital is that a quarter of shoppers have cut back on snack purchases because they are able to avoid checkout lines, according to NOSH. In response, big CPG companies like Hershey have started implementing more data-driven targeted advertising to shoppers. Hershey, in particular, has worked its way into shoppers "carts" by using pop-up ads to give suggestions to shoppers about candies or snacks they can add to their shopping bag, especially when consumers aren't meeting the minimum for free shipping.
Even with all the marketing, manufacturers also have to contend with shipping woes especially during the warmest months of the year when chocolate tends to melt.
One bright spot for the segment, however, is premium chocolate. Although a small portion of the chocolate market now, growth in the U.S. — driven by demand for premium varieties and sugar-free and dark chocolate products — is expected to surpass the $30 billion mark by 2021, according to a 2016 TechSci Research report. Premium chocolate has been transformed into a "sensorial luxurious experience," Khoo told the Wall Street Journal, for which consumers are willing to pay higher prices. Especially in the e-commerce market, which accounts for less than 3% of the industry’s total sales, premium chocolate presents a sweet opportunity to capitalize on planned chocolate purchases where the price tag may compensate for the decrease in purchase frequency.