Soup-To-Nuts Podcast: How is the war on sugar impacting chocolate?

By Elizabeth Crawford

- Last updated on GMT

While the ongoing war on sugar is taking a toll on sales of conventional chocolate in the US, it is creating an opportunity for once-niche, better-for-you options, including sugar-free – as long as the taste and experience are not compromised in the trade-off, according to industry players.

Market research firm Euromonitor predicts that functional, organic and reduced-sugar chocolate will grow twice as fast in retail value and volume than regular chocolate confections between 2016 and 2021, with sales volume of so-called health and wellness chocolate growing at a compound annual rate of 2.6% compared to only 1.3% of regular chocolate during the period.

The consumer research group Market Research Future is even more bullish on sugar-free chocolate, predicting that globally it will grow at a compound annual growth rate of 6.85% from 2017 to reach $5.84 billion in 2023.

Much of this growth is fueled by consumers’ rising awareness of the dangers of high levels of sugar and fat in their diet, as well as advances by manufacturers of better-for-you chocolate to improve the flavor and eating experience of sugar-free or reduced-sugar options.

In this episode of FoodNavigator-USA’s Soup-To-Nuts podcast, prominent players in the sugar-free chocolate space from Lily’s Sweets and ChocZero share what is driving this momentum and how they are innovating to keep consumers engage. A director from Lake Champlain Chocolates also chimes in with alternatives strategies for continuing to market premium chocolate without ditching sugar altogether.

Stevia sweetened Lily’s Sweets charges ahead

Lily’s Sweets is one of the fastest growing sugar-free chocolate manufacturers on the market with a 96% jump in dollar sales during the first half of 2017 to $2.03 million, according to IRI data.

Company Co-Founder and President Cynthia Tice attributes part of this growth to consumers’ desire for indulgence without restraint – which is why she created her stevia sweetened chocolates in the first place.

“I am a chocoholic and as I got older I wanted to eat sugar less and less because it was making me fat and making me crazy, and I also am the kind of person where a lot of people said to me, ‘You can still eat chocolate, just eat a little bit.’ But I don’t want to eat a little bit … So, I began to think about how can I have my chocolate and eat it, too,”​ Tice told FoodNavigator-USA.

The answer was to use stevia instead of sugar, Tice said. Although she acknowledged getting the formula right wasn’t easy.

“I chose stevia because I was intimately familiar with it because I used it for years. … But when I began to work with it in my chocolate initially I tasted some of the worsts chocolate you have ever tasted.  But eventually we were able to figure out how to blend with other sweeteners and with fibers that really made the flavor much more round and much more generally appealing,”​ she said.

She also attributed the success of her products in part to increased acceptance of stevia in products across categories, making it a more familiar ingredient that is not intimidating to consumers.  

ChocZero strives for a one to one substitution

For the creators of ChocZero simply being sugar-free wasn’t enough – they wanted an elevated, artisanal option that was so good that even people who eat sugar would happily choose it over conventional chocolate.

The company’s marketing director Rhea Monique explained how difficult this task was, and how swapping monkfruit for sugar helped the creators reach their goal.

She explained that early attempts by confectionary companies to make sugar-free chocolate that claimed to taste “just like the real thing,” ​but fell woefully short, made convincing consumers that ChocZero succeeded where others failed “an uphill battle.”

But by using Monkfruit and fiber to replace the sugar and using stoneground chocolate to adjust the texture in a way that better masked off notes, Monique said ChocZero nailed creating a sugar-free product that really did taste like its conventional counterpart.

After perfecting the basics, ChocZero is stepping up its game – and expanding its consumer base – with the recent re-launch of its Keto Bark.

Rhea explained that with only two net carbs per serving, ChocZero was already a shoe in for many followers of the low-carb, high-fat Ketogenics diet, and that the new format has a more artisanal appeal for consumers looking for a decadent treat that they can feel good about eating.

The Keto Bark, which is positioned as a more premium product, is packed with almonds, coconut or hazelnut – all of which are classic flavors that dieters often crave but until now might not have had access to.

“It all goes back to when people are on diets … or you get diagnosed with diabetes and  you want what you used to eat, and if you can’t get that you want a real close substitute. So that is our whole goal – to create these healthier options for people … that they didn’t have before and to give them a chance to stick to their lifestyle better,”​ Monique said.

Reduced sugar offers a compromise that works

Completely ditching sugar is not the only way for chocolate manufacturers to hold on to health conscious consumers.

According to Allyson Meyers, who is the director of sales and marketing at Lake Champlain Chocolates, many consumers will settle for simply less sugar if it means they can continue to eat chocolate or eat more of it.

She explains this compromise has fueled consumer interest in darker chocolates as well as options that use better-for-you inclusions to displace some sugar.

Lake Champlain Chocolates is meeting this desire by offering new “extra dark chocolates”​ with upwards of 80% cocoa and the addition of cocoa nibs or inclusions, such as passion fruit, that contribute to taste and texture while still displacing sugar content.

“Another trend is dark milk chocolate,”​ which allows consumers who like the sweetness of milk chocolate and aren’t quite ready for dark chocolate to find a middle ground, she said, noting that Lake Champlain Chocolates offers a milk chocolate at 43% compared to the more typical 38% cocoa content.

Tice of Lily’s Sweets echoed Allyson’s comments about demand for both dark and milk chocolate.

Meyers also noted another strategy is to sweeten chocolate with honey or maple syrup, which some consumers perceive as healthier alternatives to traditional sugar.

Consumers want transparency, connection

Sugar reduction is not the only consumer-led trend pushing chocolatiers to innovate. Increased demand for transparency and a perceived connection to those making the confection also is influencing what shoppers buy.

For example, Meyers points to the rise of bean-to-bar chocolate, which shortens the supply chain and ensures farmers are paid fair prices.

Monique says this interest in who is making the products also is creating a new opportunity for smaller companies making artisanal chocolate.

“In the 1970s and '80s it became really popular to be a fan of big brands, but now it is kind of all about can you get good customers service, and thanks to the Internet this American dream is kind of back because anybody can do anything, and I think that is very much what ChocZero is about. We are just a small group of people with a big dream,”​ she said, adding that many small competitors and startups are in the same position.

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