Montreaux Chocolate USA:

Are Americans Ready for

Healthy Dark Chocolate?
 Consumer Foods Group (CFG) of Apollo Foods had purchased the distribution rights of
Montreaux European chocolate products in USA
 Andrea Torres, Director of New Product Development at Montreaux Chocolate USA, was
studying the data from a recent Nielsen Bases II test
 She was satisfied with the research and methodology that her NDP team had employed to
assess the market opportunity in U.S.A.
 She was expected to make a solid and compelling presentation regarding the
acquisition/assimilation of Montreaux and the plan for the launch of the new product on
December 10, 2012 in a board meeting
 David Raymond, had committed to a set of aggressive sales forecasts that placed even
greater significance on the accuracy of the research
 Torres had to pragmatically evaluate whether she wanted to do further product testing,
launch in segmented market or launch it nationally
 Corporate and Company Background
 Apollo Foods was a L.A. California based, global consumer packaged-goods powerhouse, it
offered unrivaled portfolio of brands and manufactured confectionery
 It had a distribution channel across 170 countries
 CFG was one of the four operating divisions and contributed $19.1 billion in revenue and
$1.26 billion in net income
 Apollo was successfully fulfilling it’s consumers requirements for bold flavors and easy meals
by offering more than 70 new products in the past 3 years
 In June 2011, Apollo aquired exclusive rights to manufacture and market Montreaux
Chocolate products in U.S.A.
 Apollo enjoyed a number two position in the global confectionery market, due to products
such as candies and gums. This acquisition was an opportunity of mutually rewarding a
relationship
 Apollo has considered purchasing a chocolate manufacturing facility in Pennsylvania to
support production but it decided to wait until NPD group provided a launch strategy and
timeline
 The management of this arrangement was given to CFG, forming a new division called
Montreaux Chocolate USA
 David Raymond,division manager committed to achieve aggressing goals by end of year
2015. These goals included:
1. National distribution of new Monteaux product line
2. $115 million in annual sales
3. Be in the top 25 in revenue
 One engineer from Switzerland was assigned to support Torres for two years in product
development and process engineering
 Apollo opted to market the product by using it’s large sales force instead of using
Montreaux’s existing broker network. Allowing them to penetrate the traditional retail
channels
 The Chocolate Confectionary Market
 Dark chocolate typically contains minimum 55%
cocoa, it can go upto 70% in high quality products
 Higher concentration of cocoa is the source of its
claimed health benefits
 Global Confectionary Market: Europe- 45.2%,
America- 33.9%
 Consumers in U.S.A focus more on health and
fitness that prompted Montreaux Chocolate USA
to expand their business featuring a healthy focus
 Chocolate market in USA is composed of 7 product segments: Bar/Bag/Box (3.5oz), Seasonal
Chocolate, Bar/Bag/Box (<= 3.5oz), Snack size chocolate, gift box, sugar free and novelty
chocolate

 Trends in USA chocolate market

1. Premium chocolates move to mainstream channels
2. Dark chocolate sales benefit from health benefits
3. Low- calorie options such as reduced fat etc.
4. Bigger packaging that appeal to economically conscious consumers
5. New labeling
6. Increase in pricing attributable to rising commodity costs
 Consumer Attitudes and Usage
Confection-Eating Eating Capacity on Average Penetration/Reach
Adults 7.8 Pieces of Chocolate 92%
Confectionary per month
Children >3.9 Pieces of Chocolate 95%
Confectionary per month

• Chocolate Consumption Spanned Age, gender(Women 94% > Men 90%) and
household income groups
• Target Market : 45-64 Age (Premium and Speciality Chocolates) . Spend more
when buying for others. High income groups like boxed chocolate . More Buying
during Sale
• Shifted to Dark Chocolate as people grew older
• Loyal Fanbase : Females of age 45-64, College Educated ,Married + Children,
Income of $50000+, Concerned about health and weight & more likely to eat than
gift
What Motivated Consumers to Purchase Chocolate
 Positive Experience – Personal Reward , Mood Enhancement
 Women – Reacted positively to new ingredients and flavours , purported benefits of improved
cardiovascular fitness and lower blood pressure
 Men – Reacted positively to price and practical characteristics like energy boosters , quick easy
and convenient
 Premium Chocolates were believed to offer better taste and greater flavour variety as per women
against men
 New Product Development At Montreux
 NPD objective: To achieve National Distribution of
Montreaux Chocolate and to continue significantly in
chocolate business in US
 Partner with Nielsen BASES to quantitatively assess and
optimize the new dark chocolate
 BASES Model for project volume potential of new product :
1. Product opportunity and strategy
2. Strong Consumer Viability
3. Deliver the Financial Potential
 BASES IDEA SCREENING TEST
Four factor which that promote the foundational strength of an initiative:
• Distinct Proposition
• Attention Catching
• Need/Desire
• Advantage
 BASES SNAPSHOT CONCEPT TEST
 After the initial screening Montreaux decided to further prioritize the concept
lines preliminary indicators as well as improving optimization
 Without actual product tasting, total of 200 consumers were asked to evaluate
the concept they viewed online and provide feedback to identify which
concepts have stronger potential in the market
 Dark chocolate with fruits concept was identified as attractive and relevant
 Blueberry, cranberry and pomegranate was decided to be top flavours by the
team
 After this testing, NPD team gave development priority to chocolate with fruits
concept, one with 70% cocoa and other with 90%
 FOCUS GROUPS
 After reducing product formulation to manageable size, NPD made 2 varieties of chocolate
bars with different sizes and conducted eight focus groups to determine optimal level of cocoa
 Qualitative research found out consumers preferred 70% cocoa bar more than other and the 3
fruits were also top preferred ones. Healthfulness was given most importance in the offering

MARKETING ISSUES
 Health benefits and taste were major attributes for positioning the product
 One positioning issue was the consumer’s perceptions about the Montreaux chocolate brand
vs its primary competitors
 Also for size and packaging, some consumers preferred the smaller square for portion control
while some want standard 3.5 ounce candy bar, NPD needed to choose one size of the two
 Second BASES Snapshot Concept Test
 A total of 200 consumers per concept were asked to
evaluate concepts they viewed online and give feedback

 4 combinations of 70% cocoa dark and fruit concept with

alternative positioning and size/packaging options were
evaluated to decipher revenue potentials of the
four optimized lines
 PRELIMINARY EVALUATION RESULT
 5-ounce stand-up pouch with healthy positioning was projected to offer the greatest
revenue potential
 3.5-ounce bar with taste messaging would possibly encourage frequent purchasing, however
was pegged to be generic
 Smaller ones with taste positioning were further pegged to generate less revenue than
bigger ones with health positioning
 Taste however, was a relevant secondary consideration which was to be accounted for
 BASES II TESTING
 This would:
 Help evaluate market readiness of thee new dark chocolate
 Provide 1-year volume forecast by creating simulations of alternate markets
 The 70% cocoa dark chocolate with healthy messaging and standup pouch was chosen for
testing
 Results of likelihood of purchase were average to Torres, to the tune of:
 23% definite purchase
 40% probable purchase
 FINAL STEPS DILEMMA
 Product name?
1. Parent company’s name- Apollo to build brand reputation or
2. Montreaux to keep European brand equity or
3. Another brand or sub brand name to describe health benefits
4. A sub brand within parent company- Apollo
 The prototypes were produced at Apollo’s R&D centre. There was a need for a plant yet no
project on that is in place
 Launch product nationwide or recommend further product testing?
 FINAL STEPS DILEMMA CONTINUED
IF TESTED
 Full scale, in-market test in 2-4 nationally
representative cities through normal
distribution channels.
 Pros:
1. Allows to holistically gauge viability
of dark chocolate in market with
close to actual market conditions
 Cons:
1. Expensive: roughly $3 million
2. Time consuming: would push the
introduction to 3 years after
acquisition
3. Very difficult to find cities
representative of the nation
IF LAUNCHED
Pros:
1. Beats competition that has also tested
dark chocolate with fruit concept and
wasn’t far from introduction
2. Creates a niche in the market
Cons:
3. Production may suffer due to
unavailability of plant
4. Bases 2 testing showed that only 23%
would definitely buy and 40% would
probably buy the product which were
unsettling figures
5. Product is strong but impact on the
market will be low according to forecast