Opportunities Exist For High-End Chocolate As Shopping Patterns Shift

Cleveland — Pandemic food and beverage sales have brought a very interesting dichotomy in the types of products consumers are buying. On the one hand, many consumers are experiencing significant economic pressure after job loss, furloughs or working for lower salaries than pre-pandemic, notes Anne-Marie Roerink, founder of 210 Analytics.

Economic pressure typically translates into a focus on money-saving measures, such as buying items on special, private brands, items that are lower in price or decreasing the frequency of purchase. Interestingly, confectionery has been fairly recession-proof during the last couple economic downturns with category growth during bad and good economic years.

On the other hand, sales of more premium products are also surging during the pandemic, Roerink says. Across categories, Americans look for little treats, rewards, recreating restaurant experiences at home or new experiences. Seemingly overnight, a large percentage of food dollars shifted from foodservice to food retail, including purchases of premium items.

This shift in food spending patterns has a big impact on the sales of premium chocolate. NCA defines premium chocolate as being sold at retail for $12.85 or more per pound during the latest 24 months, excluding novelty and seasonal items as well as items that reach the threshold due to a novelty or packaging factor. 

Across channels, premium chocolate sales increased 13.5 percent throughout the pandemic versus year ago in dollars and 4.4 percent in units. Throughout the pandemic, the grocery channel has seen tremendous strength as shoppers seek to consolidate purchases into one trip. For premium chocolate, this has resulted in a 21.3 percent increase in dollars versus year ago for the grocery channel. In contrast, the drug and conveniences stores have experienced pressure on trips and sales and while premium chocolate dollars increased, unit sales were off versus year ago.

 Pandemic dollar salesPandemic dollar growth vs. YAPandemic unit salesPandemic unit growth
MULO +C$599MM+13.5%217MM+4.4%
MULO$552MM+14.0%186MM+6.0%
Grocery/food$305MM+21.3%101MM+14.7%
Drug$97MM+3.0%27MM-4.5%
Convenience$47MM+8.0%31MM-4.1%
Source: IRI, March 15-October 4, 2020 versus year ago

Grocers are merchandising against the many at-home moments that are ideally positioned for a little premium chocolate treat.

Coffee moments: At the onset of the pandemic, online sales tracking firm Profitero Ltd. reported an enormous surge in the purchase of coffee makers. Consumers moved their Starbucks moments to at-home spending and continue to do so, going by highly elevated sales of coffee and coffee creamers. Much like coffee shops, cross-merchandising a little treat with the morning, afternoon or evening cup of coffee can be highly effective.

Baking: America started baking like never before at the start of the pandemic, resulting in doubling of baking aisle sales and empty shelves for flour, yeast, eggs and other ingredients. This enthusiasm has waned significantly since. Instead, indulgent bakery item sales are making a comeback. This illustrates that Americans are still looking for a little indulgence or treat amid these challenging times, but are starting to outsource their treats versus making them at home. Both the use of chocolate in baking and as a dessert or treat are big opportunities. 

Alcohol:  Retail alcohol sales are up 18.6 percent versus year ago during the pandemic period. Many grocers have started to cross-merchandise premium chocolate with wine and beer. Others are providing ideas for paring and sampling the two categories at home through social media and virtual events.

Holidays: Premium food purchases are highly influenced by holidays. While most people still celebrated the various pandemic-affected holidays this year, the celebrations looked very different. There was less travel, smaller gatherings and mostly at-home celebration. That is likely to continue for the winter holidays. Surveys show that people will be much less likely to travel and instead many are planning one or more smaller celebrations, which will certainly affect food choices, including premium food choices. It is likely that online sales of premium chocolate for gifting to loved ones will see a big boost.

To understand how the pandemic has affected chocolate, non-chocolate, gum and mints sales, consumption habits and channels, download your copy of NCA’s Sweet Insights studies.