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Life at the Chocolate Bar


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October 20, 2006

Life at the Chocolate Bar

Lauren Young

Folks who know me (or my byline) know I'm a chocaholic. I'm obsessed with chocolate--I love eating it, but I'm equally enthusiastic about covering the industry. So it's with great interest that I digest (forgive the pun) the news that Hershey's is purchasing Dagoba Organic Chocolate. If you don't know about Dagoba, it's one of the "greener" lines featuring organic, fair-trade chocolates.

Hershey's has made some interesting acquisitions lately. It bought Joseph Schmidt, a small upscale San Francisco company that makes beautiful chocolates, as well as Scharffen Berger, a favorite brand of pastry chefs and foodies who use it for baking.

My best chocolate source, Clay Gordon, editor of Chocophile.com, says Hershey's is buying Dagoba so no one else can. "This is a defensive purchase," he says, noting that Cadbury's owns Green and

Blacks.

Hershey's just launched its Cacao Reserve line--I got some samples a few weeks ago, and they quickly disappeared from my desk. At $1.99, these bars cost more than the typical Hershey's bar, but less than what you'd pay for something truly upscale like Jacques Torres. And the chocolate is pretty good. Not amazingly good, but pretty good.

With offerings at different price points, Hershey's is taking a smart approach to get newly-educated consumers (like yours truly) to move up and buy more expensive products that bear the Hershey's brand. Gordon says Hershey's will be more successful than Mars/Masterfoods because their strategy is more diverse. Careful readers know that Mars has just one major upscale house brand, Ethel M, and Gordon thinks is a huge strategic mistake. (Mars also owns ethel's, a fun chain of chocolate cafes.)

"By building a stable of diverse brands aimed at different markets that are complementary to the core brand--in the sense that they give educated consumers the opportunity to spend more money with Hershey's rather than with another company after Hershey's has spent all that money educating them--Hershey's will be able to ride the wave of growing interest in higher-quality chocolate," Gordon says.

He predicts that more small, startup chocolate companies will be acquired. "Not only will we see more roll-ups in the area but we will also see a swarm of new, venture-backed artisan chocolate companies coming out of the woodwork," Gordon says.

I dream of a world where chocolate comes out of the woodwork. It's so Wonka-esque.

03:14 PM

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