Nestle has a long history in chocolate, a history marked by numerous innovations over the past century. While many consumers love chocolate in its purest form, the form it has been in for nearly 200 years, Nestle nevertheless faces three modern issues:
- How does the company update its products for both the major consumers of candy (teens) and the biggest demographic group (baby boomers)?
- How to deal with the fact that private label is creating a good enough product that competes with mainstream chocolate bars?
- How can Nestle make its products more convenient?
One would think a candy bar is a convenient form for on-the-go snacking. However, with the amount of multitasking that consumers do now, it may not be convenient enough. Also, there may not be enough sound and texture in a traditional chocolate bar to keep consumers interested for all the moments one needs or wants a snack.
So Nestle has created a new form for its popular (but old — 1938) Crunch bar: Crunch Stixx. The remake moves the product to a more premium space (and hopefully justifies the price vs. private label) and also makes it more convenient. For this review, our taste-testers sampled Nestlé’s Crunch Dark Stixx.
Understanding the marketplace
Manufacturers are scrambling to create products for aging baby boomers. Why? There still are a lot of them, they like to eat more premium foods and will pay for them, they are willing to pay for nutritional convenience, like 100 calorie packs (which in effect give the consumer less product for more money), and they seek out nostalgic brands like Nestle Crunch. But boomers also are willing to accept a new twist on an old product form.
Seeking “new” and “cool” makes boomers feel youthful. However, teens consume the most candy. So this creates a dilemma for candy companies of trying to deliver what boomers want while not alienating teens. Per capita consumption of chocolate has averaged around 4.2 lbs. of cocoa in the U.S. (chocolate liquor equivalent), according to USDA’s Economic Research Service.
Sales of premium chocolate in 2004 were $624 million, an increase of just 0.8 percent from the previous year. Key players are Russell Stover with a 44 percent market share, Mars at 11 percent, Lindt at 11 percent and Hershey and Ferrero at 8 percent each, according to 2004 Mintel Intl. figures.
The segment has seen some changes due to the appearance of higher-end brands in mainstream retail channels. Higher-end and exclusive brands such as Ghirardelli and Lindt are now available in food, drug and mass channels. This is causing mass premium brands like Kraft, Russell Stove and Ferrero to lose sales. For example, Switzerland’s Lindt & Sprungli AG (which includes the Lindt, Lindor and Ghirardelli brands) has seen sales growth of 39 percent from 2002 to 2004, while Kraft (Toblerone and Terry’s) sales were down 36 percent in that same period.
In 2004, U.S. sales of premium chocolate bars under 3.5 oz. were $44 million. This is a subsegment that has been declining for the past six years. Key players are Ferrero at 25 percent market share, Lindt at 16 percent, Russell Stover and Mars at 14 percent and Nestle at 11 percent. Looking deeper, sales of Mars’ Dove brand small bars have increased 50 percent and Lindt & Sprungli products have increased 17 percent in the past two years, while most other brands have declined.
From both the overall premium chocolate segment and the subsegment of premium chocolate bars under 3.5 oz, the shift in brands and sales is causing companies like Nestle to reconsider how their mainstream brands play in the marketplace. Can Nestle get a portion of this shift in brand sales, or at the very least not see a slide in their Crunch brand sales due to changes in brand availability in the mass channels?
Nestle has found consumers are eating more snacks and products on the go. The U.S. has leveled off on its chocolate consumption, but new snack forms are growing. So Nestle is leveraging its overall chocolate brand along with a change in product form to play to premiumness for boomers and the multitasking behavior of teens.
Premium chocolate candy is about romance. The products are more than just excellent chocolate, they include smaller sizes, multiple textures (crisps, fillings) and beautiful designs. Nestle is looking to adapt a new form (a rod) and move an old product to a more premium product space while extending the textural experience of their Crunch bar.
The interior is a chocolate crème, surrounded by a thin cookie wafer coated with the traditional chocolate and crisped rice. While you could consider this a Pirouette cookie or any other cream wafer roll, Nestle created this extension of Crunch in a form that is familiar but different.
Our Crave It! Insight studies find chocolate is a mood food for many. It can be about the taste experience and/or a treat (indulging). Both men and women report very similar chocolate behaviors. Key attributes are flavor, texture and that melt-in-your-mouth quality. Chocolate is consumed after lunch, mid-afternoon and late evening.
The key trends are convenience, indulgence and premiumness.
Convenience: It’s difficult to find chocolate that is easy to eat while multitasking with both hands. Poppable formats like Mars M&Ms and Hershey’s Bites enable the consumer to eat while doing something else. The rod form allows the consumers to hold onto the product in their mouth or fingers while multitasking with both hands. Multiple textures of crunchiness and the rod shape also allow “ritualized” eating behavior (do I eat the top, the bottom, other sections or suck on it?).
Indulgence: Pleasure is important in this busy world. We have seen many products focused on healthy aspects, but the pleasure of chocolate is still a strong trend. Chocolate in the form of a rod takes a consumer to a different place with smaller bites, more premiumness and learning to savor the food. Just as this rolled form is associated with special cookies, so it is an easy mental jump to an indulgent chocolate product.