North America Sugar-Free Chocolate Market Size, Share & COVID-19 Impact Analysis, By Product Type (Milk Chocolate, Dark Chocolate, and White Chocolate), Distribution Channel (Supermarkets/ Hypermarkets, Convenience Stores, Specialty Stores, and Online Retail), and Country Forecast, 2021-2028

The North America sugar-free chocolate market size was USD 242.0 million in 2020. The market is projected to grow from USD 270.7 million in 2021 to USD 391.8 million in 2028 at a CAGR of 5.42% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with the North America sugar-free chocolates witnessing a slightly negative impact on demand across all of North America amid the pandemic. Based on our analysis, the North American market exhibited a lower growth of 12.38% in 2020 than the average year-on-year growth during 2017-2019. The rise in CAGR is attributable to this market's demand and growth, returning to pre-pandemic levels once the pandemic is over.

The North America sugar-free chocolate market growth has witnessed significant prospects in recent years due to the consumers' surge in the adoption of health-conscious trends. These chocolates are often regarded as a healthier alternative to sugar-based chocolates due to their low-calorie, high antioxidants, and calming attributes. Chocolate is manufactured by using low-calorie or calorie-free sugar substitutes such as stevia and maltitol. The emergence of COVID-19 has provided a stronger impetus for consumers to improve their eating habits, which has benefitted the market performance. According to the International Diabetes Federation (IDF), in 2019, almost 463 million adults were living with diabetes; the numbers are expected to increase to 700 million by 2045. Thus, the rising incidences of diabetes, coupled with growing health and wellness enthusiasm among the consumers, has positively driven the sales of sugar free chocolates in the region and has nudged the consumers to shift towards sugar-free dessert.

Rise in Consumption of Comfort Foods Amid COVID-19 to Drive Growth

During the COVID-19 pandemic, most American shoppers turned towards familiar and nostalgic snacks, with chocolate being one of the most popular and consumed among consumers of all age groups. The confectionery manufacturers respond to consumers’ demand by introducing more nutritionally enhanced options and providing more flavors and healthier choices. For instance, Russell Stover Chocolates, a brand owned by Chocoladefabriken Lindt & Sprüngli AG, expanded its North America sugar-free chocolates range in the U.S. to increase and strengthen its sales during the pandemic. In North America, demand for food products – primarily chocolate, grew significantly due to the panic-buying and stockpiling in the initial months of the outbreak as a comfort and indulgence food at the time of crisis. Furthermore, the grocery stores and convenience stores remained operational, leading to a slight increase in chocolate sales. According to The Hershey Company, 2020, the company saw a 2% growth in revenue compared to last year, in which the revenue contribution of North America sugar-free chocolate sales was USD 7.40 Billion, which is 91.00% of the total revenue generated in the fiscal year. Lindt & Sprüngli AG, a Swiss chocolatier saw strong performance in retail trade and doubledigit growth of online business in North America in 2020; the Excellence range of chocolates even posted double-digit growth during the pandemic.

LATEST TRENDS

Evolving Healthy and Clean Label Consumption Pattern is a Prominent Trend Driving Market Growth

The evolving food consumption pattern of consumers has nudged them to seek low-calorie, certified, and plant-based products, even for indulgence. With the growing desire for consumers' indulgence, chocolate manufacturers are introducing innovative products: both healthy and delicious. Leading players like The Hershey Company and Nestle S.A. introduce sugar-free, vegan, organic, and non-GMO verified chocolates to their portfolio. For instance, in 2021, the Reese brand of Hershey launched Reese Organic Peanut Butter Cups which are USDA Organic Certified, NonGMO Project Verified, and Rainforest Alliance Certified. The Hershey Company also stated that it plans to launch its first vegan chocolate in the U.S. in 2021.The Hershey Co. has agreed to acquire Lily's, a maker of low-sugar chocolate products, to expand its North America sugar-free chocolate portfolio.

DRIVING FACTORS

Increased Awareness About Health Risks Associated with Sugar Consumption to Boost Sales

The health-conscious mentality is becoming mainstream among the consumers in the region, which offers new opportunities for innovative and luring product development by the manufacturers to cater to the consumers' demand. According to International Food Information Council's Food and Health Survey 2020, 76% of the U.S. consumers surveyed are either trying to limit or eliminate sugar from their diets. Chocolate is one of the confectionery items with a strong emotional and traditional significance among North Americans. Consumers' evolving health and taste preferences have invigorated them to replace chocolate with its sugar-free variant in various recipes such as cakes, muffins, puddings, and others. Furthermore, the rising incidences of diseases like diabetes, obesity, and cardiovascular ailments have also positively driven the consumers towards sugar-free products, which is anticipated to drive the regional North America sugar-free chocolate growth.

Rising Popularity of Premium and Seasonal Chocolates to Augment Growth

The surge in demand for seasonal and premium chocolate during Easter, Christmas, and Halloween significantly contributes to fueling the sales of North America sugar-free chocolates in the region. According to the National Association of Convenience Stores (NACS), 84% of Americans consider eating chocolates delicately at special celebrations and festivities. The seasonal chocolate segment is driven primarily by its attributes such as attractive packaging, vibrant colors, shapes, and flavors tailored to the occasion. Manufacturers aim to make sugar-free, organic, and clean-label seasonal chocolates to address the consumer's health concerns. In addition, manufacturing companies are also offering custom products to meet specific requirements. For instance, in January 2021, GoodSam Foods launched chocolate bars, chips, and chocolate-coated nuts in the U.S. that are incompliant with consumer preferences – taste, health, and sustainability. The chocolates are vegan, organic and sugar-free and utilize allulose as a sweetener instead of cane sugar.

RESTRAINING FACTORS

Higher Raw Material and Production Costs to Impede Growth

The comparatively higher cost of natural and artificial sweeteners such as stevia, xylitol, and others instead of cane sugar in the chocolates, impacts its overall price. The formulation challenges posed by such sweeteners lead to the utilization of additional ingredients to achieve the functional attribute, increasing the cost. Thus, the higher price of North America sugar-free chocolate than conventional chocolate restricts market growth.

SEGMENTATION

By Product Type Analysis

Sugar-free Milk Chocolate Segment to Hold Major Share Owing to its Wide Consumption

This market is segmented by milk, dark, and white.

The sugar-free milk chocolate segment is anticipated to hold a significant share, owing to its higher consumption and popularity for reasons such as flavor, texture, and mouthfeel. According to the American Heart Association, Americans spend USD 22 billion on chocolates annually, and milk chocolate is the most popular type to be consumed. Sugar-free milk chocolate is increasingly being incorporated in the formulation of various beverages and confectionery products, such as cakes, shakes, croissants, and hot chocolate, that enhance its nutritional attributes and drive the milk chocolate segment .

The dark chocolate segment is projected to grow at a CAGR of 5.61% by 2028, owing to the higher nutritional benefits than the other varieties. Moreover, the higher cocoa butter and powder percentages in dark chocolate can enhance cognitive health and are known to work as anti-depressants due to their ability to increase serotonin levels. Such factors are, thus, expected to pave opportunities for the dark chocolate market to flourish in the upcoming years.

By Distribution Channel Analysis

Impulse Grocery Buying Trend Enables Supermarkets/Hypermarkets Segment to Dominate Market

This market is segmented by supermarkets/ hypermarkets, convenience stores, specialty stores, and online retail

Supermarkets and hypermarkets accounted for the highest share due to the unique shopping experience these channels provide to customers. These large stores offer consumers all the products they need under one roof. Some of the larger chains supermarket chains such as Walmart Supercenter, Fred Meyer, and others have the advantage of selling many commodities. People can better shop bulk volume of grocery items at supermarkets. Along with this, the enticing offers on bulk-purchasing given by these mass merchandisers to draw the consumer's attention play a vital role in the factor driving the sales of these chocolates.

Convenience stores are expected to witness the fastest growth due to locally sourced chocolate's cost-effective and wide selection. Counter displays in these stores drive impulse and build sales. Major companies like Nestle, SA., and Mars Inc. consider convenience stores an essential selling stage. Hershey is also looking for growth opportunities in the aisles of convenience stores such as 7-Eleven.

COUNTRY INSIGHTS

U.S. North America sugar-free chocolate market stood at USD 203.3 million in 2020. U.S. is expected to dominate the overall North American market due to high chocolate consumption among the U.S. population. The increase in obesity has been one of the biggest challenges faced by the U.S. According to data from the Centers for Disease Control and Prevention (CDC), the prevalence of obesity in the U.S. was increased from 30.5% (the year 2000) to 42.4% in 2018. In addition, obese people are more prone to develop chronic diseases, including typeII diabetes, cardiovascular problems, and others. The sugar-free alternatives are generally safe for diabetes since they do not affect blood sugar levels. Furthermore, cocoa polyphenols, an ingredient of chocolate, have anti-obesity properties to boost energy expenditure and inflammation while supporting weight loss management. Thus, these factors cumulatively are projected to further drive the market growth in the forecast period.

The Canadian sugar free chocolate market is expected to be driven by consumers seeking out premium chocolates that are locally produced. In Toronto, the largest city of Canada, more than 20 craft chocolatiers are operating and seeking to differentiate their product lines. Furthermore, the demand for seasonal chocolate with nutritionally enriched attributes is substantially high during festivities such as Easter, Thanksgiving, Christmas, or any other celebratory occasion are also likely to contribute to fuel the country’s market.

KEY INDUSTRY PLAYERS

Focusing on Geographical Expansion and New Product Launch as a Strategy to Effectively Penetrate the Market

The North America sugar-free chocolate sector is highly developed, with several multinational companies occupying the majority. Hershey Company, Russell Stover Candies, and their affiliates dominate the market. The primary strategy adopted by the major players is to focus on new product innovations that focus on health, taste, and packaging. For instance, in February 2021, The Hershey Company stated that it would launch new organic and sugar free chocolate products this year to expand into the "best for you" chocolate category.

LIST OF KEY COMPANIES PROFILED:

• The Hershey Company (Pennsylvania, U.S.)


• Ferrero SpA (Alba, Italy)


• Chocoladefabriken Lindt & Sprüngli AG (Kilchberg, Switzerland)


• Godiva Chocolatier (Midtown Manhattan, U.S.)


• KOHLER Co. (Wisconsin, U.S.)


• Jackie’s Chocolate (Wisconsin, U.S.)


• Pascha Chocolate (Toronto, Canada)


• Pobeda Confectionery Ltd. (Moscow, Russia)


• Asher's Chocolate Company (Pennsylvania, U.S.)


• Barry Callebaut AG (Zürich, Switzerland)

KEY INDUSTRY DEVELOPMENTS:

• July 2021 –  Kohler Co., a U.S.-based company, introduced their latest sugar-free, handmade chocolate - with enhanced cocoa content and high-quality ingredients. The new flavors are available in two, four, and nine pieces and are a healthy addition to the brand's highly regarded gourmet creation series.


• June 2021 – Russel Stover Chocolates brand, owned by Lindt & Sprungli AG, launched Joy Bites chocolate bars, the no-sugar-added chocolate crafted with Fairtrade cocoa sweetened with stevia extract.


• September 2020 -  Kohler Co., a U.S.-based company, launched Incredible Sugar-free Chocolate, its first handmade milk chocolate product.

REPORT COVERAGE

The North America sugar-free chocolate report provides an in-depth analysis of the North American market. It focuses on significant aspects such as competitive landscape, product type, and distribution channel areas. Besides this, it offers insights into the various market trends and highlights vital industry developments. In addition to these mentioned factors, it encompasses several other factors that have contributed to the market's growth in recent years.

Report Scope & Segmentation