Nestle bites into luxury chocolate market

20 Feb

Buy Quality Chocolate Online at Moo-Lolly-Bar AustraliaNestle, known for mass-market chocolates like the KitKat bar, is trying to get a bigger piece of the growing market for fancier sweets. Its idea: customized confections.

Internet shoppers in Switzerland and Liechtenstein can order a Maison Cailler taster pack with five kinds of chocolate. After completing an online survey to determine a “chocolate personality,” recipients get a bigger box with flavours and cocoa content selected for those particular taste buds.

Luxury products can succeed even amid the economic downturn, said Laurent Freixe, head of Nestle’s European business. Global sales of premium chocolate are growing faster than the overall market and may be worth about $8 billion (U.S.) a year, according to market researcher Mintel.

“It may sound counterintuitive, but what’s happening in the crisis is a quest by consumers for value, for more affordable product, but also for products that overtake their expectations,” Freixe said. “And what is squeezed in the middle are mainstream products.”

More than 20 years after Nestle, based in Vevey, Switzerland, started selling the Nespresso capsules that helped create the luxury home coffee market, it is applying a similar approach to chocolate. The venture may help Nestle in the premium segment, where rival Swiss brand Lindt & Spruengli has prevailed, with sales rising twice as fast as the market in 2011.

While Maison Cailler is starting small, the approach has served Nestle well in the past.

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Nespresso began in only two countries in 1986, and the strategy evolved over time, with Nestle introducing online sales in the 1990s and stores in 2002. Now it’s a 3 billion Swiss franc ($3.3 billion U.S.) brand, with about half its sales coming from the Internet, and more than 250 boutiques worldwide.

The coffee unit probably helped drive a 7.1 per cent increase in so-called organic sales for 2011, according to the average of 12 analysts surveyed by Bloomberg. The measure excludes acquisitions, disposals and currency shifts.

Nestle has been taking its cue from Nespresso’s success with other premium products. The company last year began selling BabyNes formula milk capsules, a year after introducing Special.T pods containing top-quality tea in France.

“Consumers like to be treated as individuals rather than as a mass market,” said James Amoroso, a food industry consultant based in Walchwil, Switzerland.

While Nestle’s KitKat bars are the ninth-biggest chocolate brand, according to Euromonitor International, the Swiss company has had mixed success in the premium segment.

Nestle, which merged with Cailler in 1929, sought to revamp the brand in 2006 with packaging designed by architect Jean Nouvel and higher prices, though the overhaul was scrapped after it failed to boost revenue. Cailler still isn’t well-known outside of Switzerland, with only 8 per cent of sales coming from abroad.

“Nestle is a strong player in the mass market, but in the premium segment it doesn’t have a strong reputation,” said Patrick Hasenboehler, an analyst at Bank Sarasin in Zurich.

Maison Cailler may also have to contend with the impulse-buying aspect of chocolate sales. Many consumers tend to buy chocolate on the spur of the moment for themselves or at the last minute as a gift, according to Marcia Mogelonsky, an analyst at Mintel in New York.

Source: The Star

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