Sector Trend Analysis – Chocolate confectionery in the United States

Trade of cocoa and cocoa preparations

In 2020, the United States imported from the world a total value of US$5.2 billion (1,393.2 thousand tonnes) of cocoa and cocoa preparations (including cocoa beans, cocoa husks/shells/skins/ and other waste, cocoa paste/butter, fat and oil, unsweetened cocoa powder and chocolate and other preparations). The largest markets where these cocoa products were imported from were Canada (US$1.6 billion), Côte d'Ivoire (US$800.1 million), and Mexico (US$560.8 million).

In 2020, Canada supplied to the US a total value of Can$2.1 billion (380.7 thousand tonnes) in cocoa and cocoa preparations, which represents a compound annual growth rate (CAGR) of 1.9% over the last 5 years (2016-2020). Top imports from the US were chocolate and cocoa preparations in packages <=2 kilograms (excluding in blocks, slabs or bars and cocoa powder) at Can$791.1 million, followed by cocoa beans (whole or broken, raw or roasted) at Can$697.8 million, and chocolate & other cocoa food preparations in blocks, slabs, bars including formats of liquid, paste, powder, granular, filled/unfilled or other bulk form in packages in less than or greater than 2 kilograms at a combined total of Can$304.2 million in 2020.

In 2020, Canada's top export States within the US for cocoa & cocoa preparations were Vermont at Can$323.0 million with a market share of 15.5%, Pennsylvania at Can$309.1 million (14.9%), and Illinois at Can$229.7 million (11.1%). The top 10 Canadian export markets to the US had a market share of 79.4% totaling Can$1.7 billion, which grew at a CAGR of 2.0% between 2016 and 2020.

Selected regions, including the US State of New York and cities of Seattle, Los Angeles, San Francisco, and Portland: New York ranked as the 4th largest US State (9.4% market share) for imports of cocoa & cocoa preparations from Canada that totaled Can$195.8 million, followed by California at Can$85.4 million (8th largest - 4.1%), Washington at Can$47.5 million (9th largest - 2.3%), and Oregon at Can$8.7 million (26th largest - 0.4%) in 2020. The US States with the highest 5-year growths were Oregon (+53.9%), Washington (+34.7%), and Indiana (+19.8%). Vermont, New York and California reported import declines over the last 5-year period with CAGRs of −4.4%, −4.3%, and −0.1%, respectively (2016-2020).

Retail sales of chocolate snacks

In 2020, the US registered total retail sales of US$21.5 billion in the chocolate snack sector, which included total sales of US$20.6 billion in the chocolate confectionery category and US$859.3 million in chocolate coated biscuit food products. The chocolate confectionery category had a historical CAGR of 2.8% (2016-2020) with expected growth of 3.6% (2021-2025), while chocolate coated biscuits are expected to decrease from 3.4% to −0.01% by 2025. The most popular sub-categories between 2016 and 2020 were chocolate countlines, pouches and bags of chocolate, and chocolate tablets. Seasonal chocolate products are expected to increase in growth from a historical rate of 1.6% to 4.1% and chocolate with toys are expected to decrease from +71.4% to +8.2% between 2020 and 2025.

COVID-19 lockdown and stay-at-home orders have boosted the demand for indulgent treats to help provide many Americans comfort during uncertain and anxious times, resulting in improved performance for chocolate confectionery products in Q2 2020. All top three chocolate categories registered growth in affordable, impulse buys from consumers, while the smaller category of chocolate with toys also grew as parents continued to treat their children who remained at home. The 'Kinder Joy', chocolate egg with toy package launched by Ferrero USA Inc. in 2018 were particularly popular during this time period. While boxed assortment chocolates lost popularity over the review period, as it tends to be considered more as a gift offering, along with subdued sales in holiday seasonal chocolate's over the Easter period in 2020. Recovery and opportunity for increased sales of holiday seasonal chocolate's remained uncertain after the last quarter of 2020 with parents being concerned over the circulation of the virus and many parents did not allow their children to take part in trick-or-treating on Halloween.^{Footnote 1}

An increasingly number of consumers are searching for chocolate treats that address certain lifestyle health trends such as veganism or those with dairy or lactose intolerances. Endangered Species Chocolate brand launched a range of dairy-free chocolate tablets made with oat milk, dark chocolate and plant-based options, in 2020. Moving into 2021, as the population returns more to normalisation, Americans are likely to re-evaluate their health and dietary concerns and reduce their indulgent purchases. Traditionally, many consumers perceived chocolate confectionery to be an indulgence consumed less frequently and therefore were not as concerned over its sugar content. However, reduced sugar or sugar-free chocolate products using a natural sweetener stevia sugar substitute or a patented soluble corn fibre (Mondelez Inc.) to lower sugar levels are growing trends.^{Footnote 1}

Competitive landscape

In 2020, leading retail companies (and top brands) in the chocolate confectionery category in the US included The Hershey Company (Reese's, Hershey's, Almond Joy) at 32.6% value share, Mars Inc. (M&M's, Snickers, Mars) at 27.9%, and Chocoladefabriken Lindt & Sprüngli AG (Lindt, Ghirardelli, Russell Stover) at 8.2%. Private label chocolate food products with it's great value for money recorded growth during Q2-2020, which held a 1.8% market value share.

Leading companies (and top brands) in the chocolate coated biscuits category in the US included Ferrero & related parties (Keebler, Nutella) at 40.0% value share, Girls Scouts of the USA (Girl Scout cookies) at 36.8%, and Mondelez International Inc.(Oreo) at 6.2% in 2020. Private label chocolate coated biscuit products held a 6.1% market value share.

When consumers purchase indulgence products, they often look for new flavours and unique textures, thus manufacturers need to differentiate their chocolate confectionery products to make them stand out to the consumer. While consumers are often loyal to well-established brands, they often pay attention to those chocolate developments that offer new experiences. Two organic brand's that performed well in Q2-2020 were a British brand Green & Black's (tablets) and Justin's (countlines).^{Footnote 1}

Retail distribution channels of chocolate confectionery sector (off-trade)

In 2020, store-based grocery specialists represented the largest distribution value share at a total of 61.5%, followed by mixed retailers (20.6%), non-grocery specialty stores (11.0%), and non-store retailers such as e-commerce & vending machine sales (6.9%). Distribution channels that registered growth over the last two years (2019-2020) were modern grocery hypermarkets and discounters stores, along with the

e-commerce non-store channel. Meanwhile, there were slight declines in sales over the same period from within modern supermarkets, forecourt retailers & convenience stores, traditional food/drink/tobacco specialists & independent small grocery retailers, along with health & beauty non-grocery specialists, and vending machine sales.

Traditionally, a higher opportunity exists for sales of chocolate confectionery made through grocery retailers and smaller channels such as vending machines due to easier accessibility and based on impulse, last-minute purchases; whereby opportunities to create impulse purchases online can be more challenging. Additionally, some consumers may be more cautious about ordering chocolate confectionery online due to the increased possibility of melting or being broken during transit. Nevertheless, there was a notable shift in distribution towards e-commerce shopping with super/hypermarkets and smaller traditional channels benefiting much less with fewer impulse purchases due to forced store closures during the lockdown periods.

Product launch and trend analysis

Global trends in chocolate brands include the improvement of their ethical certification credentials, ensuring sustainable cocoa production made with ethical qualities and commitment to people and the environment ie; illegal deforestation, decreased child labour (Tony's Chocolonely % slave-free chocolate), helping small farmers (fairtrade) etc.^{Footnote 2}

Europe, Russia and Turkey are forecast to record the strongest value growth. European consumers want to see innovation in chocolate brands that are more exciting and take a bold approach to introducing new flavours. Quality taste (78% in UK) is the key driver to satisfy chocolate indulgence with hazelnut remaining as the most popular flavour and aromatic citrus oil flavours like orange chocolate are seeing an increase in launch activity. Brands continue to explore alcohol-flavoured chocolates, especially with gin and tonic or craft beer flavourings.^{Footnote 2}

A Middle East and African (MEA) trend include highlighting its cocoa bean origin (ie; 100% premium Ghana cocoa, pure cocoa from Cameroon, or cocoa from the Kilombero Valley region in Tanzania). In the Asia-Pacific (APAC) region, Australia has the highest per capita consumption of chocolate and growth in low-consumption markets are expected in Vietnam and Indonesia. Chinese and Asian consumers enjoy unconventional, rich-textured, sensual, gooey chocolate flavours to treat themselves that offer a unique/memorable experience in taste and smell (ie; Philippines - Risa Bacon Chili Chocolate with applewood bacon, Japan - Fujiya Loo Muscat flavoured Blue Jewel Chocolate coloured with butterfly pea powder etc). In the APAC region, premium claims (especially in South Korea and Sri Lanka) with a crunchy texture remains the most common attribute in chocolate, while launches with a smooth texture are increasing in profile. In Australia and New Zealand plant-based and vegan options are being introduced that adopts additional ethical and quality-focused features (ie; Australia - Plant-based Chocolate Truffles, a vegan product as a source of dietary fibre containing almond meal and carob powder).^{Footnote 2}

North American markets maintain the highest consumption of chocolate, while Latin American markets like Chile and Colombia are forecast to see strong growth. Seasonal and holiday-themed chocolate products are popular and prevalent in North America (that is, Hershey's - build-your-own chocolate for Christmas). However, it has become necessary throughout the Americas region to tailor to consumer dietary issues such as diabetic and obesity needs with offerings that are low in sugar content and that strive to offer a more diet-friendly image. Additionally, chocolate producers are challenged to deliver innovations on taste and texture to appeal to health-conscious consumers' by cutting back on full sugar products and embracing sugar-reduced/artificial or naturally sweetened confectionery (55% of US consumers have cut back on chocolate in the past year to reduce sugar intake). An example is the 'Choc Zero Sugar Free Dark Chocolate with Hazelnuts and Sea Salt' product launched in the US, which is sweetened strictly with monk fruit.^{Footnote 2}

Mintel indicated that there were 15,348 chocolate or cocoa food (88.7%) and drink (11.3%) products launched (including new variety/range extension, packaging, formulation or relaunched) in the United States between the period of January 2016 and May 11th, 2021.

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	2016	2017	2018	2019	2020	2021 (January to May)	Total
Food	3,015	2,756	2,187	2,705	2,117	840	13,620
Drinks	307	310	381	274	324	132	1,728

Source: Mintel, 2021

Out of a total of 15,348 new chocolate/cocoa food & drink products launched in the US between January 2016 and May 11th 2021, these products contained cocoa ingredient types as followed: cocoa butter (9,552), cocoa fat (8,642), cocoa liquor (4,168), cocoa powder (4,056), alkaline cocoa (4,556), cocoa beans (2,413), cocoa preparations (558), cocoa paste (411), cocoa nibs (238), cocoa shell powder (106), white chocolate (4,424), chocolate/milk chocolate (4,081/2,368), dark chocolate (3,067), chocolate chips (2,211), and semi-sweet chocolate (728).

According to Mintel, top parent companies launching chocolate or cocoa food & beverage products in the US over the 5.4-year period were Aldi Group/Nord (1,090), Mars Inc./Wrigley Confectionery/Chocolate North America (918), Nestlé/Dreyer's Ice Cream (653), Mondelez International/Global (571), and Gruppo Ferrero (398). Top chocolate/cocoa food brands included M&M's (196), Hershey's/Kisses (177), Trader Joe's (174), Russell Stover (128), and Great Value (122). Top chocolate/cocoa drink brands included Starbucks (Keurig)/Keurig Hot Starbucks/Keurig Starbucks (64), Trader Joe's (18), Swiss Miss (17), Williams Sonoma (15), Allegro Coffee (14). New chocolate/cocoa brands launched in the American market include Favorite Day Bakery (iced sugar cookies), Signature Select Simply Churned (Rocky Road reduced fat ice cream), Slimfast Keto Fat Bomb (iced lemon drop snack cup), and Aplenty (dark chocolate with sea salt mini grahams).

The fastest growing flavours in American chocolate/cocoa products were raisin (+700%), vanilla (French) (+400%), cheesecake (+300%), pink/Himalayan salt (+300%), candy cane (+200%), and cake/pie/tart (+150%) [Q2-2021/Q2-2019]. New ingredients included lentil protein, insulin, chipotle puree, cheddar chipotle sauce, potassium nitrate, coconut aminos, tangerine oil, rosemary oleoresin, black rice powder, and croissant. Top growing claims were sugar free (+340%), no added sugar (+181.8%), economy (+172.7%), palm oil free (+150%), and babies & toddlers (0-4) (+100%), while declining claims (−100%) included functional - skin, nails & hair, low/no/reduced saturated fat, diabetic, not pasteurised, and prebiotic.

In the United States, chocolate confectionery was the largest food & drink category with 4,474 new product launches containing cocoa (31.1%) over the 5.5-year period. Whereby, the bakery category launched 3,593 new cocoa products (23.4%), followed by snacks at 2,274 (14.8%). Top growing categories included nutritional drinks & other beverages (+100%), chocolate confectionery (+76.6%), sugar & gum confectionery (+71.4%), sweet spreads (+50%), breakfast cereals (+35.3%), and bakery (+16.3%); while declining categories included hot beverages (−21.1%), snacks (−14.1%), and desserts and ice cream (−1.5%) between Q2-2020 and Q2-2021.

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Resources

• Euromonitor | September 2020. Country Report: Chocolate Confectionery in the US
• Euromonitor, 2021. Data statistics (2016-2025)
• Global Trade Tracker, 2021
• Mintel. A year of innovation in chocolate confectionery, 2021
• Mintel Global New Products Database, 2021

Sector Trend Analysis – Chocolate confectionery in the United States
Global Analysis Report

Prepared by: Erin-Ann Chauvin, Market Analyst

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