Valentine’s Day revamp: Refreshing formats elevate premium concepts amid cocoa price surge

14 Feb 2024 --- The majority (92%) of Americans are “embracing the sweet spirit” of Valentine’s Day with plans to share chocolate and candy with loved ones, according to the National Confectioners Association (NCA).

“The confectionery category has remained incredibly resilient over the past few years — even through challenging economic times — because people feel a strong connection to chocolate and candy as part of their celebrations and special occasions,” Carly Schildhaus, director of Public Affairs & Communications at the NCA, tells Food Ingredients First.

“Manufacturers and retail partners work diligently to ensure that chocolate and candy continue to be an affordable and accessible treat.”

F&B launches during Valentine’s have grown by 6% CAGR from 2019-2023, as indicated by Innova Market Insights. In 2023, the US and Canada led the pack, accounting for nearly half (45%) of the global launches, of which two-thirds were confectionery (71%).

For gifting, 60% of consumers favor classic heart-shaped chocolate boxes, while 40% prefer conversation hearts with quirky and endearing messages.

92% of Americans are “embracing the sweet spirit” of Valentine’s Day, says the NCA.Hitting the sweet spot
The overall confectionery category hit US$ 42.6 billion in total sales in 2022, with chocolate representing US$ 23.9 billion. Sales are set to reach US$ 54.3 billion by 2027, states Schildhaus.

In 2022, Valentine’s Day chocolate and candy sales exceeded US$4 billion, driven by top purchase drivers such as consumers looking to make themselves happy (55%), indulge (40%), treat themselves (36%), or relax and wind down (33%).

But, consumers are increasingly mindful of consumption and aim to balance indulgence with health.

“Consumers understand that chocolate and candy are treats — people in the US enjoy chocolate and candy 2-3 times per week, averaging just 40 calories and one teaspoon of added sugar per day,” she says.

Bhakti Pawani, CC & EO marketing specialist for Cargill Food Solutions, concurs.

“We know that today’s consumers want it all — a great tasting indulgent product but not at the cost of their health and nutrition goals, so they are seeking out low sugar options where possible,” she tells Food Ingredients First.

Barry Callebaut’s ruby chocolate imparts a berry fruitiness, luscious smoothness and unique pink color to ice creams (Image credit: Magnum Ice Cream).She mentions Cargill’s Gerkens Sweety Cocoa Powder range that enables chocolate beverage formulators to “hit the sweet spot” for consumers, with a 30% sugar reduction while retaining a chocolatey taste. Its stevia sweetener EverSweet replicates the stevia leaf-based Reb M and D via fermentation and helps F&B formulators meet sugar reduction and clean label demands without compromising taste.

Pawani also tells us about ExtraVeganZa, the company’s vegan chocolate innovation, which draws on plant-based ingredients. It includes sunflower powder and rice powder options and is a label-friendly solution to meet consumer needs.

Exploring experiential formats
Valentine’s Day is evolving, with Gen Z and Millennials redefining traditions, says a recent ofi report.

“From introducing more exotic flavors in confectionery to creating more experiential formats and expanding into new categories, we’re seeing companies inventing new ways for consumers to celebrate the season of love with those who matter most to them,” says Madeline Bills, cocoa innovation manager at ofi.

Many consumers now say they prefer “activities over physical gifts.”

“To tap into this trend, manufacturers should consider trialing new product formats, such as a chocolate tasting board, to offer consumers an interactive and exciting Valentine’s experience,” highlights the report.

Meanwhile, premium bakery is also gaining ground. The classic croissant is being “refreshed” — from the ring-shaped ‘cronut’ to the croissant cube and flavors ranging from chocolate to pistachio and hazelnut.

Meaty valentine
Valentine’s dinner classics, including beef steaks, cheese and desserts, are predicted to perform well on Cupid’s holiday, too.

Valentine’s dinner classics like sirloin beef steaks are expected to do well.“Valentine’s Day 2023 saw the lowest volume performance for the last five years, as shoppers watched their spending during the cost-of-living crisis and average price/kg for meat, fish, and poultry products increased from £6.60 (US$ 8.3) to £7.38 (US$ 9.3),” say analysts at the UK’s Agriculture and Horticulture Development Board (AHDB).”

This year, as shoppers indulge on a tighter budget, sirloins are expected to perform well, with an uplift in cheaper steaks such as rump. Cheese is expected in ‘meal deals’ as an alternative to a sweet dessert. 

Meanwhile, double and single cream sales increased by +6.6% and +12% last year and AHDB predicts this trend will continue in 2024.

Soaring cocoa prices- A dampener?
Amid the festive ambiance, F&B industry is facing a dearth of cocoa supply due to heavy rains and the spread of black pod disease in West Africa, according to a recent CoBank report.

“The cocoa issues come at a particularly challenging time for manufacturers, considering the increase in sugar prices they’ve been coping with over the past three years,” says Billy Roberts, senior food and beverage economist for CoBank. 

“While sugar prices have recently retreated, cocoa futures prices remain near record levels and show little sign of any significant movement. That could lead to a further erosion of chocolate volume sales and impact dollar sales as well.”

Heavy rains and the spread of black pod disease in West Africa is impacting cocoa supply and causing price hikes.Currently, the average global price of cocoa sits at around US$4.4 per kg, a 67.55% increase year-on-year and a 4.48% jump compared to December 2023, as revealed by data from the World Bank’s International Cocoa Organization.

Elevated cocoa prices are expected to stay put until a new cocoa crop from West Africa comes to market later this year.

In response, NCA indicates that 45% of US consumers have started switching between types, brands, pack sizes and retailers to stretch their candy dollar.

The impact on chocolate makers is evident, too, with Hershey Co. recently saying it would cut 5% of its workforce after soaring cocoa prices and inflation-afflicted consumers dampened its fourth-quarter earnings. Mondelez’s chocolate sales volume growth also weakened substantially this fiscal year, while Nestlé SA noted that higher cocoa prices may mean more price increases.

“Supply chain challenges have been well reported and the confectionery industry is not immune to that, but chocolate and candy manufacturers are working diligently alongside their retail partners to ensure that treats remain affordable and accessible for consumers, as they are a key piece of seasonal celebrations,” comments Schilhaus at NCA.

Reimagining tradition
F&B innovators have crafted a line-up of fun and appetizing offerings to pique consumer interests.

Costa Coffee recently launched the 4th type of hot chocolate: Ruby Hot Chocolate (Image credit: Barry Callebaut).For instance, Barry Callebaut’s ruby chocolate — “the fourth chocolate next to dark, milk and white” allows formulators to experiment with confectionery, bakery, ice-creams and desserts.

US-based MyMochi has “reimagined” traditional waffles with its “first ever” Mini Mochi Waffles, made with the sweet rice flour used in conventional mochi.

Mars’ flavor innovation comes wrapped in rich dark chocolate with a sweet strawberry swirl to help consumers enjoy their favorite holiday rituals along with Mars heart-shaped gifts.

7-Eleven is tapping into consumers’ love for sweet treats with its line-up of tangy peach heart gummies, chocolate-flavored heart pretzels, cake slices in rainbow and marshmallow cookie dough flavors, and bake-in-store oatmeal chocolate chunk big cookies made with Hershey’s Milk Chocolate mini Kisses.

By Insha Naureen