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What on Earth are they doing to our chocolate bars?

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Chocolate lovers are restless. Many much-loved chocolate bars are changing shape, getting smaller, or contain a lower cocoa content, so they just don’t taste as good. When it comes to choosing a sweet treat, there seems to be a greater range than ever – but, for many people, the bar they’ve enjoyed all their lives just doesn’t seem the same.

And the truth is, in a lot of cases, it isn’t.

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There’s a lot happening in the world of confectionery. The industry manufactures an abundance of products, from the familiar to the novel, but generating growth through new product development is difficult because consumers can be reluctant to try something new. So the acquisition of rival businesses may be a preferred route to achieving sales growth.

This challenge may explain why Mondelez International apparently is seeking to acquire The Hershey Company, bringing together the Cadbury’s, Tobler and Terry’s brands with Hershey and Reece’s.

The chocolate industry is segregated into global mass producers such as Mondelez, Mars and Nestle, proliferating bars, blocks and bags of familiar brands, and the premium producers, typically smaller organisations such as Hotel Chocolat, emphasising cocoa content – and its origin – in eating and drinking forms.

Mass-produced chocolate is undergoing rapid change. Dairy Milk Marvellous Creations Mix Ups, for example, combines wine gums, chocolates and biscuits, outputs from different Mondelez businesses in a single bag. And Mondelez doesn’t stop there: Dairy Milk Ritz embeds salty crackers in sweet chocolate. These products demonstrate the dual importance of cost reduction and innovation. Costs are reduced by combining operations between previously independent business units, an important post-acquisition agenda.

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In terms of innovation, novelty is achieved by stretching familiar brands over to unfamiliar supermarket shelving – from biscuits to chocolate or vice versa – thereby boosting visibility. Additionally, the innovation of substituting chocolate with biscuits and sweets lowers the cost of raw materials.

Innovation or rip-off?

Adapting products is tricky. According to the concept of “value engineering” new product development must balance the quest for cost reduction with the functions of taste, form and packaging. They all affect product preference. The challenge is to ensure that cost reduction does not result in loss of function or customer dissatisfaction. So, if a bar loses its straight edges in favour of curves – as happened with Cadbury Dairy Milk in 2012 – any loss of substance (the bar shrunk from 54g to 34g) should be compensated for by improved mouth feel or taste experience.

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But a balance between cost and function is not always achieved. A recent Which? survey revealed the widespread shrinking of grocery products with no corresponding reduction in price. As well as the shrinking Dairy Milk bar, Creme Eggs have gone from being sold in packs of six to five, Yorkie has been reduced to five chunks. Mars and Snickers are smaller, although they are less calorific.

Why is chocolate subject to this shrinkflation – and how much of a gamble is it for the manufacturers?

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The trappings of nostalgia

The chocolate industry has an uneasy relationship with “newness”. The desire to create something new must be balanced by food nostalgia – the emotional connections that occur through consumption that shape self-identity. Chocolate eating habits and preferences start in childhood and can be continued through to adulthood. The bestselling brands of Dairy Milk, Maltesers and KitKat are at least 70 years old, suggesting that nostalgia is nothing new. Consequently, the best way to innovate in chocolate bars is to somehow rejuvenate known brands – the Kit Kat Chunky being one such success. When it comes to chocolate bars, something entirely new is unlikely to work.

Cost reduction and incremental product changes seem a logical response to stagnating market growth, increases in the costs of cocoa and cocoa butter and customers who are reluctant to try anything new or pay more for well-loved brands. Will this pattern of acquisitions and value engineering benefit the consumer – or will there be smaller products with less chocolate, thereby weakening the connection between happy memories and what is eaten today?

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Sweet success

Premium chocolate manufacturers – such as Hotel Chocolat or Green & Black, are different in form and strategy. Innovations tend to showcase the ingredients – and cocoa content becomes something to highlight rather than something to be reduced. They also tend to stress their ethical credentials such as fair trade and investing in producers.

The differences between mass market and premium product strategies create a dilemma for businesses wanting to be in both sectors as each requires a different approach to cost management and innovation. Go back 150 years and Cadbury’s found a “mid-way”, pioneering large-scale production of chocolate alongside ethical work practices – building the model town of Bourneville with decent accommodation and an emphasis on the health and education of its workforce.

Today’s priorities are different – and if we want business strategies to change, then consumers need to let go of their past and create a new relationship with chocolate, one based on taste and sustainable futures for cultivators and producers. We will, however, need to pay more for it.

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The Conversation

Leigh Morland, Principal Lecturer – Department of Management, University of Huddersfield

This article was originally published on The Conversation. Read the original article.

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… then let us make a small request. Like you, we here at Raw Story believe in the power of progressive journalism — and we’re investing in investigative reporting as other publications give it the ax. Raw Story readers power David Cay Johnston’s DCReport, which we've expanded to keep watch in Washington. We’ve exposed billionaire tax evasion and uncovered White House efforts to poison our water. We’ve revealed financial scams that prey on veterans, and efforts to harm workers exploited by abusive bosses. We’ve launched a weekly podcast, “We’ve Got Issues,” focused on issues, not tweets. Unlike other news sites, we’ve decided to make our original content free. But we need your support to do what we do.

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