Original sin

On the face of it, chocolate is a marketer's dream. Almost everyone likes it and a good proportion of us are mildly addicted. While it faces some flak from the health lobby at a time of spiralling obesity (it packs a hefty punch of saturated fat), the more classy varieties at least try to offset the damage by packing an equally large dose of phytonutrients.

Flick through the latest choccie statistics (p30), however, and you'd be forgiven for thinking that the European love affair with the brown stuff is starting to turn sour.

Sales are steaming ahead in emerging markets such as Russia, China and India, with new factories from the world's biggest chocolate supplier Barry Callebaut springing up near Moscow and Shanghai in recent months. But while the Russians might be chomping through more chocolate per person than the French, volumes in western Europe are predicted to grow just 2.1% over the next three years from 2.455bn/t to 2.539bn/t, with value growth (at retail prices) only slightly higher at 2.6% [Euromonitor].

This compares with a predicted 18% rise in value in eastern Europe. Western European sales of countlines, which slumped from $7.4bn in 2006 to $7.3bn in 2007, are predicted to drop to just $6.9bn in 2010.

But all is not lost. While western Europeans are unlikely to consume significantly higher volumes of chocolate in future, they are more than happy to trade up. Whether it's organic, fair trade, single origin, white chocolate with added fruit, plant sterols, extra polyphenols or added exoticism through jasmine, chilli or saffron, chocolate is moving upmarket, fast.

gourmet doesn't come cheap

Luckily for manufacturers, aspiration doesn't come cheap and consumers are already demonstrating that they are more than willing to pay a premium for single-origin products, says Barry Callebaut, which has developed more than 40 different varieties of origin chocolates.

"Of course, the snob factor has a lot to do with it," says chief innovation officer Hans Vriens. "But it's a trend we're seeing across several agricultural commodities - it's not so much that some cocoa beans are self-evidently superior to others; its more about diversity and distinctiveness. They are all different."

Indeed, Callebaut's publicity material reads more like a wine label than a chocolate bar. Note the entry on chocolate from the island of São Tomé, which is "characterised by its strong and distinct taste, firm body and sumptuous mix of subtle floral and herbal aromas"

Commercially, the opportunities to exploit this yearning for provenance are endless, says Vriens. "The place of origin can't be exotic or specific enough. You can focus on regions such as the Amazonian basin, countries such as Papua New Guinea and Tanzania, regions within countries [Arriba cocoa from northern Ecuador] or even individual plantations.

"Soon we'll probably be talking about beans from the south-facing side of a particular plantation. With an agricultural product, you've also got scarcity value - which makes it even more exciting. If you've got a plantation that only does 2,000kg, you have the ultimate limited edition [Costa Rica: Vintage 2006; Vietnam: Vintage 2007]. That's exclusive chocolate."

Puratos, which has recently launched a new range of single-origin chocolates in order to cash in on the trend, says each one is the chocoholic's equivalent of a single malt. UK marketing director Matt Crumpton says: "Just as consumers might recognise and prefer pure Costa Rican coffee over another variety, the same applies to chocolate."

He adds: "We're constantly scouting for new beans. We have new 80% cocoa chocolate from Uganda and a new 44% chocolate from Vanuatu, New Zealand. But we only take on new origins if they add something new to our portfolio. There's no point in having scores of varieties just for the sake of it if they all taste the same."

This desire for more 'authentic' chocs also ties in nicely with the growth of fair trade, Rainforest Alliance approved and organic chocolates, he says. That is, consumers are prepared to pay more for a product that makes them feel better about themselves (hefty carbon footprint notwithstanding).

While organic chocolate represents just 0.5% of the global market, it is predicted to grow by more than 8% a year for the next five years, according to Callebaut.

Another niche but growing market opportunity, is reduced-sugar chocolate, which is growing four times more quickly than the rest of the market, albeit from a small base (it represents less than 1% of the global chocolate market at retail value).

According to Callebaut, one in 20 new chocolate products launched since 2005 carried a low sugar claim, while one in 100 carried a low fat claim. This isn't bad going, says Vriens. But considering that four out of 10 European consumers say they buy into these concepts, they are not setting the world on fire either.

One reason could be the laxative warnings currently gracing bars that have replaced sugar with polyols like maltitol, he says. The biggest problem, however, is not the ingredients, but the marketing, he believes: "People are selling them as a diet product. Who wants to eat diet chocolate?"

Feed the mind, body and soul

Perhaps the most lucrative opportunity for manufacturers looking to give the brown stuff a new spin is 'functional' chocolate, the market for which Euromonitor predicts will double by 2010.

For a start, consumers already suspect that chocolate gives them a 'boost' of some kind. Results of research published by Callebaut last year revealed that large percentages of European consumers believe chocolate increases 'vitality', mood and memory; interestingly, far fewer cited cardiovascular benefits - which is what manufacturers seem to be focusing on.

Commercially, it's early days, however, with many exciting concepts - probiotic chocolate, 'tooth-friendly' chocolate made with isomaltulose and dairy-free 'milk' chocolate made with rice powder - still in the embryonic stages.

Functional chocolates have also come under fire from nutritionists, who not unreasonably point out that probiotics, prebiotics and cocoa flavanols may be good for you, but sugar and fat are not - and they're hard to avoid where chocolate is concerned.

This fact is also keeping manufacturers awake at night, not least because the controversial nutrient profiling system enshrined in the EU Nutrition and Health Claims Regulation could put an end to health claims on foods high in fat or sugar, such as chocolate, whether they are packed with 'healthy' ingredients or not.

If a one-size-fits-all profiling system is adopted, Mars will be unable to make any claims about the benefits of its flavanol-rich chocolate Cocoavia, complains Klaske de Jonge, corporate communications director of Mars Europe. "We feel strongly that the Regulation has gone too far."

Indeed, even the phrase 'contains antioxidants' might be regarded as an implied heath claim and, as such, might have to be accompanied by an approved health claim under the new Regulation. If the latter is prohibited on chocolate under the nutrient profiling system, could references to antioxidants be banned as well?

Such a draconian approach would prove particularly frustrating for Barry Callebaut, given that you don't actually have to consume bucket loads of fat and sugar in order to reap the benefits of its Acticoa polyphenol-rich chocolate, says Vriens. "Just 9g of Acticoa dark chocolate provides your recommended daily intake of polyphenols. That really isn't very much."

Whether companies in functional chocolate should get their knickers in a twist about health claims is a moot point, however, given that consumer research consistently suggests that hard health claims are not the primary growth driver behind functional foods.

Most of us are vaguely aware that chocolate naturally contains some beneficial chemicals. Spelling out precisely what they do and why on pack may not matter as much as manufacturers believe.

Besides, it could be some time before more specific health claims about chocolate get the thumbs up from regulators anyway, irrespective of nutrient profiling, says Zachary Sniderman, marketing director at Spanish functional ingredients company Natraceutical Group. "The public moves far faster than the regulators."

There is reams of scientific evidence about the beneficial effects of polyphenol-rich cocoa and chocolate on endothelial function, cholesterol, blood pressure, the immune system and even cognitive function and mood, but manufacturers are not making hard claims about these benefits, says Sniderman. "Our customers generally talk about high antioxidant levels on pack; if consumers want to find out more, there is a lot of information available elsewhere."

Longer term, Natraceutical believes products rich in soluble cocoa fibres could also take off (the firm has patented a process to convert some of the insoluble fibre in cocoa beans to soluble fibre using enzymes). Such products offer multiple benefits, says Sniderman. "You can talk about texture, fat replacement, added fibre and cholesterol reduction. Studies show that our soluble cocoa fibre has the same effect on cholesterol as beta-glucan. Like many soluble fibres, it also appears to have a satiating effect."

That said, manufacturers should always bear in mind that they are selling chocolate, not dietary supplements, he points out. "We're not talking about 'healthy' chocolate, but a healthier chocolate - something exquisite and indulgent that in small quantities can also do you some good. If health messages about chocolate are going to have any traction with the public, we have to be measured in our marketing."