With the rising competition in confectionery market, analysts verdict mainstream chocolate like Hershey may have to compete against its premium contenders.
According to Steven Strycula, consumers look for alternatives and experiment with new products and premium chocolates. Moreover, Americans tend to purchase the sweet treats only when it's time for season greetings like Halloween, Easter or Christmas.
The downgrade of chocolate sales has been studied by the UBS analyst. He figured out that aside from the high competition, a sweet tooth may no longer purchasing chocolates regularly, rather, depending on the trends. So, what is in today's trend? According to Strycula, today is the era of dark, low sugar, and nut chocolate bars.
Given the fact, U.S chocolate annual rate falls down at 10 pounds in 2015. For the comparison, the 2005-2006 sales reached more than 20 pounds. This signifies that the chocolatiers performance slow down despite the increasing price per unit. Looking behind the scene, cocoa inflation is the cause that drives the growth in price - which does not mean the increase in consumers demands.
For the record, Hershey totaled an amount of $100 m of the loss last year stating that the decline was affected by China sales drop. Realizing that it could fall further anytime soon - mainstream brands like Mars and Hershey quickly released a line of a healthier option for the sweet treat - including dark chocolate category.
The no milk chocolate is said to have a great sales increase last year and expected to grow 8.58 percent more this year. Considered as a healthy indulgence, the alternative brings more health benefits to consumers and is becoming a trend in snacking.
According to Strycula, the weakened trend highlights the importance to grow and diversify products without sacrificing the taste. Consumers do want to try new things and innovation would be the key to keeping up.
