Chocolate is having a moment – CNN | CarTailz

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Between recession warnings, high inflation and fears of layoffs, the news is grim. Why not some chocolate?

Chocolate makers are reporting booming sales as stressed customers reach for something sweet to distract themselves.

In the third quarter, retail sales of Hershey’s (HSY) chocolates, which includes Reese’s, Kit Kat and Hershey bars, rose 12.6%. Mondelez (MDLZ), the global snack food brand that makes Toblerone, Cadbury and others, said its chocolate sales rose 9.3% for the quarter.

Chocolate, like many comfort foods, has had a boost during the pandemic. But unlike other categories like pizza, where interest waned as employees returned to the office and kids went back to school, chocolate is still growing — thanks in part to demand from stressed consumers.

“Chocolate has grown and maintained that growth in 2020, which many industries have not been able to,” says a 2022 report by research firm Mintel. “More opportunities at home, the need for fun and stress relief, and availability and convenience of chocolate all contributed to this upward trend.”

In the year ended Oct. 30, US retail chocolate sales were $17.7 billion, up from $14.6 billion in 2019, according to data from market research firm IRI.

One reason for the growth is higher prices for groceries and snacks, including chocolate. The surge isn’t impacting sales too much — buyers aren’t as sensitive to changes in the price of Chocolate, said Dan Sadler, Principal of Client Insights at IRI, who has experience in the confectionery market and is tracking price sensitivity.

In Q2, IRI found that the elasticity for chocolate was approximately -0.4. That means a 10 percent price increase would result in only a 4 percent drop in sales by volume, Sadler explained.

“You can raise that price and you’ll see a small drop in volume, but not much, not like some other categories,” he said.

Even chocolate makers have been surprised at how well demand is holding up.

Elasticity “remains below expectations,” Mondelez CEO Dirk Van de Put said during a recent analyst call in which he discussed the company’s third-quarter results, which are even lower than pre-Covid levels.We see consumers saying that chocolate really is something they cannot live without.”

Hershey raised its net sales and earnings outlook for the year on Nov. 4 when it reported third-quarter results that beat expectations.

“Our products remain an affordable treat for families and consumers,” Hershey CEO Michele Buck said during an analyst call. “We know that when times are tough, they want to reward themselves. They also use these products to relieve stress. And we believe these trends will continue.”

Customers are making some changes, she noted, like shopping in Value Channels or choosing Value Packs.

Companies like Mondelez and Hershey are largely spared competition from private label or private label brands, which are gaining ground as food prices soar.

According to IRI, only 2.7% of the US retail chocolate market is private label, while that percentage is much higher in other categories. For example, in dairy milk, private label accounts for about 62% of sales. The private label share is also 4.8% for salty snacks and sweets without chocolate.

Shoppers are “brand specific” when it comes to chocolate, Sadler said. “You’re going to make s’mores with a Hershey bar, you’re not going to substitute anything else.”

Mondelez also benefits from this type of brand loyalty. “Shoppers also say they are much less likely to switch to private label for chocolate and biscuits compared to other categories,” Mondelez’s Van de Put said during the call.

Finally, higher prices could hit the chocolate category. IRI is seeing volume sales starting to fall, Sadler noted, suggesting consumers are becoming more price-sensitive.

And while private label sales pale in comparison to national brands, they’re also growing faster than branded chocolate.

Data from IRI shows private label sales in the year to October 30 increased 16% year-on-year, while national brands grew 8.8%.

Still, chocolate isn’t going anywhere. The “position of the candy as an accessible indulgence will help protect it from significant impacts,” according to Mintel’s report.

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