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Snacks & Candy

Premiumization Is Driving the Chocolate Market

Category’s c-store sales increased nearly 2% between August 2017 and August 2018
Photograph: Shutterstock

ROCKVILLE, Md. -- Convenience stores are reaping the rewards of chocolate candy. The category’s c-store sales increased nearly 2% between August 2017 and August 2018, according to Chicago-based research firm IRI.

As a whole, the U.S. chocolate market has grown 2% annually since 2013 and is expected to reach about $23 billion in total retail sales by the end of this year, according to a new report from research firm Packaged Facts.

"The chocolate market is indisputably dynamic with a strong pace of innovation, an influx of creative new players, and a steady flow of new products that engage diverse groups of consumers," said David Sprinkle, research director for Packaged Facts. "There remains consumer devotion to confectionery products and the role of chocolate candy in particular as an accessible luxury, creating many opportunities to trade consumers up to premium products."

Such premium products include new chocolate items that differ from traditional chocolate bars, including Mars Wrigley Confectionery's new line of chocolate-covered nuts for its Dove brand and the Hershey Co.’s Dipped Pretzels line, which debuted at the recent 2018 NACS Show.

The growth of online shopping has especially increased consumer demand for chocolate premiumization, said Sprinkle.

"Online shopping is truly the new playground for premiumization," he said. "Shifts in shopping behavior such as self-checkout and online purchasing have potentially dampened the types of in-store impulse purchases that traditionally drive a high level of chocolate sales; however, this is offset to an extent by e-commerce increasing the availability and purchasing of specialty products, including local, nostalgic and premium gift chocolates."

Seasonal promotions are also increasing demand for premium chocolate, according to Packaged Facts. The company estimates that holiday chocolates account for about 25% of the category’s total market sales.

Suppliers are listening loud and clear. In August, Hershey launched an array of new Halloween chocolate products, such as Glow in the Dark Snack Wrappers, Spooky Foils and Kit Kat Dark Chocolate Snack Size. In mid-October, Michele Buck, president and CEO of the Hershey, Pa.-based company, said Hershey is on track to deliver its first $600 million Halloween season for both in-store and online sales.

Chicago-based IRI is a market research company that provides consumer, shopper and retail market intelligence and analysis focused on the consumer packaged goods (CPG) industry.

Packaged Facts, Rockville, Md., publishes market intelligence on consumer demographics shopper insights, consumer financial products and services, consumer goods and retailing, consumer packaged goods, pet products and more.

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