Dairy free products are no longer relegated to the far edges of the marketplace. They are increasingly taking a more mainstream role in meeting consumer demand for healthier food options. This is even true for foods and snacks that are considered indulgences, like chocolate.
Increased demand and offers are propelled by consumers choosing a dairy-free diet for health reasons, such as weight management, diabetes, and lactose, rather than, say, choosing vegan as a lifestyle choice.
Solving the Chocolate Confection Claim Challenge
What dairy alternative ingredients are trending?
How do chocolate manufacturers create and position their products with more health-conscious consumers in mind? One way is to feature dairy-free ingredients on their packs. These halo claims help mitigate the idea that chocolate is less than healthy, both high in fat and sugar. But which ingredients resonate most with consumers? The chart below gives us an indication.
US Social Listening Sample: 1 January 2016 - 1 April 2018
Increasing cocoa content is one way of cutting out any dairy ingredients, yet not all consumers like the bitter taste of dark chocolate. Those looking for creamy flavors could find their chocolate heaven with alternatives such as coconut.
Raaka’s bar, for instance, is 100% dairy free and relies on a variety of coconut-based ingredients to fulfill a promise to consumers that their bar is a smooth, sweet experience. Priced at $6, this treat does not come cheap.
Not surprisingly, with the desire for healthier products, consumers are also on the look-out for products combining dairy free and protein. Though these products, like Cocoa+, are just beginning to emerge in the chocolate space, we anticipate them making their way to the mainstream given the strength of the trend in other categories.
According to Statista, the world-wide plant based protein market is expected to grow from 10.5 billion USD to 16.3 billion USD in 2025. Small players are already innovating in this space and larger ones should therefore also look for ways to deliver these new ingredients at scale.
Pea and hemp are popular choices for dairy-free protein sources, which easily can replace whey protein. This little bag of happiness seems to have it all, and is marketed as a NON-GMO, gluten-free, paleo friendly, plant-based protein. Chocolate consumers rave about the “filling” effect of this protein, while satisfying their craving for something sweet. Chocolate manufacturers – watch this space!
Who’s in the halo claim game?
Halo trends in chocolate have given rise to a plethora of start-up brands that embrace one or more of these halo features, allowing them to ride the current wave of consumer interest. However, these same trends represent a big challenge for larger brands that have worked decades to develop stable supply chains and calibrate their manufacturing around a consistent formula, not to mention building their brands’ equity.
Nearly all of the competitors who are offering these halo claims are small start-up brands, and the large players have yet to enter the space. This causes an erosion of market share and probably over-segmentation in the marketplace.
If these claims are important to consumers and are here to stay, as it appears they are, how can large manufacturers assess which claims make the most financial sense for their brands? If the claims that consumers are demanding cannot be delivered by their current portfolio, what then?
Meeting the demand: To build or buy?
In 2017, Ritter Sport, a Germany-based chocolate company, launched a range of vegan chocolate products and bravely decided to price them at almost double their non-vegan equivalents. This was to address a growing base of vegan consumers within this market.
By contrast, in 2015 Mondelez acquired Enjoy Life Foods, offering allergy-free products, including dairy-free, to tap into the “free-from” trend. The company runs as a stand-alone operation, keeping its brand intact.
Technology can also be the answer. Nestle’s recent launch in March of 2018 of its Milkybar Wowsomes, with claims of containing 30% less sugar, relied on scientific innovation of the sugar molecule itself to make its bar taste as sweet with less sugar. We are also seeing the emergence of alternative sweetening systems which are using fibers, polyols, stevia, and monk fruit.
Acquisition remains an option for companies lacking technological innovation or brand flexibility, and there are a multitude of start-ups to choose from. Here’s a taste of the smaller brands in the space:
Moo Free – This British manufacturer of “free from” chocolates is replacing milk with rice milk to give consumers a creamy sensation without using any dairy.
iChoc – Their slogan is “the vegan way to enjoy chocolate”. iChoc’s product relies on rice and nut ingredients, and comes in multiple flavors from white nougat crisp to almond orange.
ChocZero – Specifically targets diabetics with its no sugar offering. Their ingredients includes monk fruit and fiber.
There is a clear consumer tack towards healthier lifestyles, and it’s having a disruptive effect on the chocolate and confection marketplace. As consumers demand healthier options, manufacturers both large and small have to showcase their ingredients in the form of halo claims. We see the smaller players getting in the game. What will the larger brands do?
Signals Analytics and its cloud-based data platform, Signals Playbook™, connects disparate data collected from consumers, products, markets and technologies to help brands better identify, validate and act on evolving trends.