What's New at Uncle Sam's?

Summer is normally a slower time at Uncle Sam's, but not this summer. We worked hard to expand our retail store parking lot to 34 off-street spaces. You can now enter and exit our new lot directly from Albany Street! Visits to Uncle Sam's Chocolate Factory are now easier than ever!

From MSN Money, 3/21/2007 2:57 PM ET
World chocolate shortage ahead?

Cocoa futures hit three-year highs as a drought in Africa has combined with changing consumer tastes to put pressure on the chocolate supply.
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By Elizabeth Strott

It's every chocolate lover's nightmare: A chocolate shortage.

A drought in Western Africa and unrest in the Ivory Coast -- the world's biggest cocoa producer -- has combined with rising consumer taste for cocoa-rich dark chocolate to raise concerns about a shortage in supply.

As a result, cocoa futures have been trading at three-year highs, with prices rallying since the beginning of the year.

"In the last few months, cocoa prices have rallied on expectations for a smaller crop from the Ivory Coast and Ghana," said Boyd Cruel, a senior analyst at Alaron Trading who covers the cocoa market.

World production of cocoa is down 5.5% on a year-over-year basis from 2005-2006, according to the International Cocoa Organization -- and cocoa's price has risen 44% since November 2005.

But don't fret over $5 Snickers bars just yet: Cruel said that markets have already factored in the supply issue. The highs reached this week are technical in nature, he said, because news of the drought has been out for months.

Another commodities analyst agrees.

"On the fundamental side, we don't expect to see changes in demand," Barclays' Sudakshina Unnikrishnan told Bloomberg News from London. "Going into the second quarter, the real wild card continues to be based on the conditions and political situation in Ivory Coast."

Blame the trend?
Part of the problem, say chocolate experts: As customer taste has shifted from milk chocolate to dark, demand for cocoa has risen; the darker the chocolate, the more cocoa is required for production.

Dark chocolate has recently been considered the "healthier" of the chocolates, with high levels of flavonoid antioxidants; it has also been found to lower blood pressure.

Chocolate manufacturers have been happy to encourage the trend, as dark chocolate is also a higher-margin product.

"Consumers are very interested in the goodness benefits of chocolate, including the antioxidants found naturally in dark chocolate," said Michele Buck, Hershey (HSY, news, msgs) chief marketing officer, in a statement today. "This interest is driving explosive growth in dark chocolate."

In the U.K., dark chocolate bars are outselling their milk chocolate relatives in the retail chain Woolworth's for the first time ever. In the United States, retail sales of chocolate have climbed about 3% every year since 2000, the National Confectioners Association has reported, with dark chocolate one of the fastest-growing categories.

"Two years ago the hot thing in chocolate was white. Now dark is the flavor of the month," Woolworths CEO Trevor Bish-Jones told British paper The Independent. "Consumers are doing the same thing in chocolate as in the rest of the food market. They are trading up and being more discerning about what they buy," Bish-Jones said.
Should candy companies worry?
In the short term, candy companies like Hershey and Cadbury Schweppes (CSG, news, msgs)should be able to absorb the boost in price, as they hedge aggressively for the volatile cocoa market.

"In terms of resell prices, this won't have a major impact immediately," Alaron Trading's Cruel said.

But there could be problems down the road if the drought continues.

Nestle, Hershey and Cadbury did not return calls for comment.

Three million tons of cocoa is produced around the world each year, worth $5.1 billion.

U.S. dark chocolate sales soar on health benefits
By Anupreeta Das Fri May 4, 5:58 PM ET

U.S. dark chocolate sales are anything but bittersweet, as its much-touted health benefits and mass marketing introduced by companies such as Hershey Co. and Lindt & Sprungli Co. Plc. turn the product into a popular, guilt-free indulgence.
Dark chocolate sales increased 49 percent to $1.88 billion between 2003 and 2006, according to one study.
"It tastes good and at the same time people have the perception that it has added health benefits," said Marcia Mogelonsky, a senior analyst with research firm Mintel International, who authored the March 2007 study.
Analysts expect to see more competition in this segment, as more companies begin marketing dark chocolate through grocery stores and other mass outlets -- called the "mass" or "entry-level" premium chocolate category. Some companies are even beginning to market chocolate as a "health" food.
"Mass has been under-penetrated as far as dark and premium chocolate goes," said Mitchell Corwin, an analyst who follows the confectionery industry for Morningstar Inc.
"You're seeing more premium brands hit the mass retailers because that's where consumers are going in greater numbers and they are demanding higher quality products."
DARK IS EVERYWHERE
The dark chocolate trend began about five years ago and is peaking now, Mogelonsky said.
"Companies have been working hard to introduce people to different ranges of dark chocolate, from 45 percent to 75 percent cacao," she said.
Last year, Mars Nutrition for Health & Well-Being, a division of Mars Inc., launched CocoaVia, a line of dark and premium
chocolates and chocolate products sold purely on a heart-healthy platform.
Lindt and Ghirardelli, which are perceived as premium brands, have also expanded their distribution in mass channels through products such as Lindt's 72 percent Cocoa Bar and Ghirardelli's Intense Dark range.
Hershey's Extra Dark and Cacao Reserve premium dark chocolate lines drove sales growth in the most recent quarter, the company said recently.
Hershey has acquired niche dark and organic chocolate brands such as Dagoba and is also investing in research and
marketing to drive category growth.
"Continued growth in both our Special Dark and Extra Dark enabled us to maintain our leadership share within a segment that is experiencing explosive growth," Chief Executive Richard Lenny recently told investors in a conference call.