Chocolate makers losing bet on seasonal products?

Holiday, or Seasonal sales refer to Christmas, Easter, Valentines and Halloween. In 2004 these sales reached $3.4 billion, a large percentage of the overall annual chocolate market estimated at $15.1 billion.

But although seasonal sales by volume have increased by 1.5 per cent between 1999 and 2004, seasonal sales revenue has declined 10.5 per cent.

This suggests that seasonal sales have become blurred with general chocolate sales. This will greatly concern confectioners who have traditionally relied on strong sales at certain times of the year.

More worrying still, figures for the overall annual chocolate confectionery market are beginning to reflect those for the holiday periods and suggest a general downward trend is forming. An overall market increase in volume of 7.6 per cent fails to hide the fact that the chocolate confectionery sector has experienced a 5 per cent decline in annual revenue.

At Christmas now, people will receive products that are available all year round. In the past, they might have received products that would only have been given at that time of the year, such as Christmas packaged chocolate.

In addition, where people buy these gifts has also changed. It is now possible to buy seasonal chocolate confectionery nearly everywhere. Supermarkets with their own private lines have started to cash in on the lucrative holiday market, which has led to greater price competition.

With nearly two thirds of chocolate sales being shared by Hershey's and Masterfoods, it may be the case that a couple of strong brands consistently sell throughout the year and thus aren't included in holiday sales figures, despite the fact that they are being bought as Christmas and Easter gifts.

If the big chocolate confectionery companies are to improve their holiday sales they need to focus on key growth sectors. One rapidly growing area is the premium and gourmet market, along with organic chocolate.

More than three quarters of respondents to Mintel's survey were given premium chocolate for the Christmas or Valentines holidays last year and two thirds of products bought in the holiday seasons were from gourmet stores.

Tailoring premium, organic, natural and fair trade chocolate into seasonal gifts could well be the most effective way to offset an estimated 13 per cent decline in holiday season chocolate sales until 2009.