Fine Chocolate Lovers Take a Hit from Hershey

Hershey announced yesterday they were closing the Scharffen Berger Berkeley plant. Those of us who had visited the plant knew it as more than a plant. It also had a terrific although too small restaurant. The people who worked at the plant obviously loved as family making special chocolate. The plant tours were delightful and full of their passion as lovers of fine chocolate. A tour and a lunch was a memorable experience that symbolized the meaning of the brand.

Now it's gone.

Hershey either didn't seem to know or else didn't seem to care about the symbolic importance of that plant to the brand. It embodied the brand; it served as a solid touchstone of what Scharffen Berger meant, much more solid, tangible, touchable, than any written brand description of promise and personality will ever convey.

Now it's gone.

Hershey purchased Scharffen Berger and Joseph Schmidt to gain entry into the rapidly growing premium segment of the chocolate market. While they are one of the largest chocolate companies in the world, entering this elite club of fine chocolate eluded them and the other large American chocolate companies. Europeans and a few specialty chocolatiers were driving the market as Americans discovered the many French, Belgium, Swiss and other European fine chocolate makers. Rather than learn how to manufacture and market to this fine niche, Hershey bought.

Back about thirty years ago a few enterprising foodies started Dove Chocolates in Chicago to offer an incredible chocolate ice cream bar. The ice cream was from rich whole cream, the chocolate rich and thick. But then they sold to Mars. And slowly it changed. Now Dove is still a good ice cream bar but it doesn't carry the cache it once had. It went from being the Ferrari of bars to just being a fast BMW. Companies that value tonnage rarely have the fine touch to stay on the leading edge of a specialty market.

And now Dove is chocolate pieces, and cookes and whatever. An expensive Hershey bar.

Hershey will never understand the challenge of being a specialty marketer. It is not in the genes of a company that large. They understand tonnage. Not specialty. Just another Mars.

The challenge of creating and nurturing the customer base for a specialty product is in a different world than marketing Hershey Kisses. Tonnage marketers fail to understand the critical importance of a touchstone such as the Berkeley plant. They think they can use their tonnage approach to market their specialty product. The customers are different; they value different things. And they expect that their loyalty will be honored with challenging new and exotic tastes.

Kisses with caramel doesn't work.

Scharffen Berger will probably continue to be a great -- at least very good -- product. But when the chocolate market continues to move to greater heights, to country of origins, to fine chocolatiers like Vosges and the many fine Europeans, Hershey will once again be left behind as they watch their specialty brand turn into just another very good chocolate.

It's not that they closed the plant. They closed the soul of the brand.

A Parable

Let's say you want acorns. Lots of acorns. What do you do -- you go out and purchase an oak tree.

Then to get lots of acorns you become skilled at making that oak tree "happy". Water, some fertilizer, plenty of sunshine, good soil. Everything an oak tree could want. And then it gives you plenty of acorns.

But you want more acorns. Lots more. And you have mastered making that first oak tree happy. You can't make it happier.

You need another oak tree. And you treat it like the first one. And it gives you many acorns.

The finest in Chocolate Milk

At the market today I noticed a new product. Always on the lookout for anything new and for anything chocolate. This was both so it really stood out.

And it stood out for another reason -- $5.49 for a 32 oz bottle.

Liquid gold. But the packaging was classy, the bottle made of glass. Great design. And it had a whole paragraph of how this was good for you because chocolate was so good for you. And then another paragraph about the milk which was from organically grass fed cows. And the milk had not been homogenized and contained something that actually helped your cholesterol.

But did I buy it -- almost. It had too much sugar.

Maybe tomorrow. At that price it's got to be grand. Doesn't it.

Funny how a high price, great packaging and a good story all add up to our impression of a premium product. While that packaging has to cut into their margin, they would never get that price with cheaper packaging. Stories come free -- with good storytellers. Although, organic milk has always carried a slightly higher price.

This is a great paradigm for the small CPG marketer. Because of the small size, distribution takes a lot of the margin. If you can create enough margin, you'll build up the funds to build a brand as a premium product. With the growth of the brand, the leverage of distribution diminishes while your margins just grow.

Sweet.

Great Moments in Marketing 103

Having passed through fatherhood some years ago, I find the E-Trade baby spitting up a reminder of days gone by.

But not good days.

I particularly remember having my then baby daughter spit up, her breakfast running down the front and back of my suit as I was leaving for work. Yeeech.

Does anyone else find this baby annoying?

Does annoying make good advertising?

And why does the Scottrade guy fly around in helicopter - other than to write it off?