In an exclusive interview with ConfectioneryNews.com, Hawk said the rise of his firm’s contract manufacturing segment was driven by supermarkets introducing more own brand confectionery.
He also gave insights on how big players outsource production for specialized products and how US consumers increasingly demand quality in their confectionery.
Pennsylvania-headquartered Gertrude Hawk Chocolates posted sales of $100 million last year. The company has 70 own-stores, an ingredients arm and a subsidiary brand Mark Avenues Chocolates available in retailers.
Supermarket confectionery
Contract manufacturing also represents 10% of the company’s volume. It produces finished goods for big firms such as General Mills, Mars and Hershey, and products for private label supermarket brands.
Private label production for supermarkets is slightly bigger for the firm than contracts with multinational manufacturers.
“This is one of the faster growing segments of our business,” said Hawk, adding that growth was expected to continue.
He said that the dominance of Mars and Hershey in the US had previously stopped supermarket confectionery brands from enjoying the same success as in Europe, despite many US private label products in other food segments.
“The states are starting to come around to the idea in confectionery,” he said.
This trend would fail to hurt his own company’s activities, he said, but could harm the market leaders: Hershey and Mars.
According to Hawk, Costco and Best Buy are among the retailers doing well in private label confectionery, while European-based Trader Joe’s has also enjoyed success.
Outsourcing
However, he added that large manufacturers such as Hershey and Mars are outsourcing smaller quantities today than there were a few years ago.
Big players are tending to outsource specialty products, such as sugar-free versions of existing brands and keeping the core ranges to themselves, he said.
Demand for higher cocoa content
Another trend Hawk has been noticing in the US is increased demand for superior products.
“The US is becoming more sophisticated and is looking for a better quality product,” he said, adding that this was coming from Europe – which gave the US higher quality coffee and cheese.
“There is a trend toward darker chocolate and high cocoa content,” he added.
His view goes contrary to analyst John Morris, European head of consumer markets at KPMG, who previously told this site that big firms may cut cocoa content in products amid escalating commodity costs. (See HERE)
However, Hawk argued that prices for cocoa, sugar and tropical oils have come down this year after much volatility in 2011.
GMOs: ‘non-issue’ in US
According to Hawk, organic and all-natural confectionery are also growing in popularity.
However, consumer worries about GMOs, such as corn syrup and soy lecithin, had been less pronounced in the US compared to Europe, he added.
“It’s a big deal in Europe and it’s a non-issue in this country,” said Hawk.
Although it would seem that GMO regulation is unlikely at federal level, Californians will go to the polls next month to consider enforced GMO label declarations on food products sold in the state. (See HERE)