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Big Interview: Gene Dunkin, CEO Thompson Brands

Thompson Brands CEO: Novelty chocolate doesn’t have to be cheap and nasty

By Elaine Watson+

06-May-2013
Last updated on 06-May-2013 at 07:38 GMT2013-05-06T07:38:17Z

Gene Dunkin took the helm at Thompson Brands in 2010 after 15 years at luxury chocolate maker Godiva
Gene Dunkin took the helm at Thompson Brands in 2010 after 15 years at luxury chocolate maker Godiva

Founded in the same year that Edison created the first functioning light bulb, Thompson Brands is one of America’s oldest chocolate companies. But it hasn’t stayed in business this long by resting on its laurels, CEO Gene Dunkin tells Elaine Watson.

Connecticut-based Thompson, which makes chocolate novelties under the Thompson brand, customized private label products, and calcium-infused chocolate supplements under the Adora brand; was going through a difficult period when he took the helm three years ago, says Dunkin.

“Every business goes through ups and downs and when I joined Thompson about three years ago we were struggling a bit.

“So we stepped back and realized we were not leveraging our core strengths. The novelty chocolate market is very price driven and many of our competitors are using compound chocolate that contains [cheaper fats such as] corn oil and palm oil instead of cocoa butter.”

Instead of trying to compete in this margin-crushing market by racing to the bottom, Thompson decided to focus on its strengths: producing premium chocolate with an ‘all-natural’ positioning (no compound chocolate), vanilla (not vanillin) and no artificial colors or flavors.

It then added some elegant - but contemporary - new packaging, and launched a new website , says Dunkin, who previously headed up the North American business of luxury chocolate maker Godiva. 

Non-GMO milk chocolate still a challenge

And the strategy paid off, he says.

“Thompson Chocolate’s Q1 net sales this year exceeded last year and are above projections.

“Retailers are now placing orders for the fall and winter holidays and we’re expecting similar success given that we’ve re-launched and reenergized the Thompson-branded novelty business and also our private label business.”

Growth has also come from developing a better brokerage network, developing more efficient internal processes, and building more direct relationships with major national retailers.

Adora: The texture of some of the other products we’ve seen just doesn’t come close to ours

Each Adora disk contains 30 calories and provides up to 50% of the daily value of calcium, plus vitamin D3 and magnesium for optimal absorption.

But what lies in store for supplement brand Adora?

It won't be going head-to-head with Centrum any time soon, observes Dunkin.

However, there is still significant room for growth, which will come in part through exploring new channels to market from fitness clubs to health spas, but also in targeting younger women (who often don’t get the calcium they need) as well as the core market of middle-aged and post-menopausal women.

And while several players have tried to grab a slice of this market, Adora has stood the test of time, primarily because it is a chocolate company selling vitamins, not the other way around, he says.

 “Adora is unique in that it is the first supplement made from all-natural, solid, premium chocolate. It’s not a chocolate ‘flavored’ chew. We are a chocolate company at our core, so indulgence is our forte – whereas some pharmaceutical competitors are struggling to replicate great taste when it’s not their core competency.

“The texture of some of the other products just doesn’t come close to ours. There is no gritty aftertaste."

Dunkin won’t say whether other chocolate-based supplements are in the pipeline, but confirms that he is “exploring other nutrients” as chocolate is a surprisingly effective delivery vehicle for some bioactives. It also offers a more pleasurable alternative to pill-popping and can improve compliance.

Consumers also are on the hunt for ‘better for you’ products, even in the chocolate novelty world

In the private label chocolate market, meanwhile, it is highlighting its all-natural, premium credentials.

Private label, in general, is becoming a more accepted practice across the board in the chocolate industry”, notes Dunkin.

“All-natural chocolate offerings are big sellers right now – and retail buyers are cognizant of this trend and are looking for products with no artificial ingredients.

“Consumers also are on the hunt for ‘better for you’ products, even in the chocolate novelty world. We’re unique in this area in that Thompson’s experience and heritage reinforces our reliability over newer all-natural players, enabling us to meet the expectations of our customers and supply demands.”

As for differentiating itself in the contract manufacturing space, Thompson’s flexibility enables it to handle small manufacturing runs, he says.

We are also able to create product with other people’s chocolate formula. We use a broad range of recipe formulations and packaging for our white label business. We are uniquely agile in this respect; our flexibility allows us to meet a broad range of requirements, from automated to hand-foiled processes.”

Our customers also allow us to lock-in forward buys for an extended period of time

Asked about how volatile cocoa prices have affected the business, he says: “Surprisingly, we have felt little impact. Our supplier partners have been incredibly proactive about giving early advice on market price changes, which has helped minimize volatility. 

“Our customers also allow us to lock-in forward buys for an extended period of time, which has also been successful in minimizing short-term volatility and aligning Thompson’s pricing in the industry.”

High-end indulgent products are hitting the mainstream

While non-GMO lecithin is now available for chocolate makers, sourcing non-GMO verified dairy ingredients for milk chocolate products remains a challenge, says Dunkin.

As to how the market has evolved in recent years, he says that one interesting phenomenon is that multinationals such as Lindt and Nestlé - who in the past would approach smaller firms such as Thompson or its rivals to produce novelties for them - are increasingly manufacturing them themselves.

Meanwhile, the overall chocolate market has proved to be incredibly dynamic in recent years, he says.

The chocolate segment has been very active and innovative in the past decade at all levels, from the lower price-driven product segment to the organic, all-natural craft chocolate entering the market.”

Ethically grown cocoa, pastry chef-led innovation, and unique flavor combos

He adds: “Trends we’ve witnessed as of late include artificial, chocolate ‘flavored’ products, licensed products with toy or entertainment brands, and even small, niche companies launching high-end brands with attributes such as ethically grown cocoa, pastry chef-led innovation, and unique flavor combos. 

“We’ve also witnessed a consolidation of bigger players in the chocolate market buying smaller boutique brands. Price continues to be a major factor, though high-end indulgent products are making their way more mainstream.”

 

 

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