Chocolate is still a favourite indulgence of the nation but sales are flagging. The solution, according to Nestlé Rowntree, could be to market products by provenance. The company hopes that chocolate can sit alongside products such as wine, coffee and cheese, which stress the origins, whether regional or national, of the product as a way into consumers’ hearts and, more importantly, wallets.
The marketers at Nestlé say they are on a long-term mission to educate the UK population on the intricacies of chocolate by calling attention to the origin of the beans. In the case of new launch Double Cream, the beans come from Ecuador. However, one retail expert on provenance says that massmarket chocolate brands will not lend themselves to such a strategy.
In real terms the chocolate sector has barely advanced during the past five years. In 1997 retail sales of chocolate by value was &£3.01bn, according to Mintel. Estimates suggest that by the end of 2002 the figure will have risen only to &£3.24bn. Disregarding inflation, this represents only a one per cent rise over five years.
But chocolate is still a lucrative sector and brands are highly sought-after properties, as shown by the feeding frenzy surrounding the possible sale of American independent manufacturer Hershey.
Nestlé is investing in the Double Cream launch and has earmarked &£34m for a five-year marketing campaign. Television advertising, which broke last week, carries the message that the chocolate is a premium product made from Ecuadorian cocoa beans. Nestlé marketing director Andrew Harrison says: “This is a big, important category but it has been flat. We think Double Cream offers the trade an opportunity to bring value back to the category.”
Harrison says that in a decade or two consumers in Britain could come to understand that different kinds of cocoa beans give different tastes. “Whether it will get as far as them knowing the difference between Ecuadorian versus Ghanaian, I don’t know. At the moment people are very inarticulate about chocolate, they don’t really have a vocabulary to describe the taste of chocolate apart from saying that it is very chocolatey.”
Competitors are taking the threat of Double Cream very seriously. Cadbury’s has gone for a price promotion, cutting its Dairy Milk back to its 1992 price, 25p, while Masterfoods is rumoured to be reassessing the Galaxy brand in response to the Nestlé’s launch.
Harrison calls Cadbury’s price cutting “crazy economics” and says that the move “commoditises the product and will reduce the value of the market even more.”
Rolf Fallegger, the managing director of Lindt, says: “During the past few years we have seen a clear trend towards more premium chocolate in the UK. Unlike the mass market, the premium market is growing, driven by new products, strong marketing and trade support.”
He agrees with Nestlé’s assertion that marketing products through provenance has potential. Lindt offers block chocolate under the Excellence umbrella brand, with the products stressing the origin of the cocoa beans. The range includes chocolate from Ghana, Madagascar and Ecuador.
Other food sectors are also looking to provenance as a marketing tool. British Cheese Board secretary Nigel White says he is trying to reposition cheese products to present them in the same way as wine is marketed.
White says the cheese sector in the UK grows about one to two per cent by value a year. Retail sales have been static but food service and food manufacturers have driven the growth. He adds that cheddar still dominates with 55 per cent of all retail sales but there is segmentation within the cheddar sector, in particular with vintage and branded cheddar.
He says the market became undifferentiated in the Seventies and Eighties. To a large extent this is what the supermarkets wanted as it meant that they could buy cheese more cheaply.
But he also says that growing consumer interest in provenance has made supermarkets think twice about commoditising cheese. He bemoans the fact that the sector lacks education at point of purchase and on the packaging of the product.
Chris Booth, marketing director at upmarket chain Booths Supermarkets – which has won awards for its wine retailing – says that the marketing of wine on its provenance is centuries old. He adds: “The biggest thing that has changed in the past 20 years is the way that the New World wines have marketed themselves. Instead of saying where the wine has come from, they have marketed it through the grape type.”
Booth has also overseen a research project into which brands could benefit using provenance. He says confectionery is one of the sectors seen as least likely to be able to use provenance. He says the project would have more credibility if undertaken by a small organic brand such as Green & Black’s than by a giant on the scale of Nestlé.
Whether baskets of chocolate will be ranged along supermarket shelves with the name of cocoa beans displayed above them seems to depend on the consumers’ sophistication of palate and willingness to be educated about the product. Nestlé is beginning to experiment with this strategy but whether others will follow in its footsteps is still open to question.