ChocXO Rebrands to Gain Broader Appeal

Confectionary brand ChocXO is launching new packaging that executives hope can marry its roots in the keto community with a more premium positioning.

What is ChocXO?

Founded in 2015, ChocXO, the sister company of chocolate co-packer Chewters, produces low-sugar chocolate squares, nut butter cups and chocolate-covered almonds. Based in British Columbia, the two companies are the creations of longtime confection expert Richard Foley, who has been importing or developing chocolate products since 1981. There are 90 employees between the two companies, with ten devoted to ChocXO exclusively.

The business has been primarily driven by sales in Canada, which represents roughly two thirds of revenue. In the U.S., the company is sold in retailers including Costco, Wegmans, Fred Meyers, Safeway, and Vons, with a strong presence in the club channel.

Because of Foley’s background in the chocolate industry, ChocXO has been able to source higher quality beans at lower prices. Combined with its ability to self-manufacture, Foley said, the company is able to create a premium chocolate product with higher cacao percentages while still offering mainstream price tag and supporting solid margins. Though the company has seen some success as a co-packer, growing that business 60% in the last year, Foley said ChocXO has offered him an opportunity to take advantage of white space in the category.

“As a co-packer, you don’t get to express your passion, you just make what others want you to make,” Foley said. “For us, lifelong chocolatiers and passionate about this industry, we can express our best in class now through our own brand, with its own message.”

Why Rebrand?

At the end of last month the company announced a rebrand, departing from more neutral packaging for colorful bags that greater emphasizes the brand name and the tag line of “simply better chocolate.” The rebrand also professionalizes the packaging, helping it look less like a commodity product. Foley said that while the prior packaging was focused on product attributes, it “failed to deliver a brand story.”

“[The goal was] to establish ourselves as a known brand, not just known for products or attributes,” he said.

Though the keto movement directly contributed to the company’s initial success, Foley said, in order for the brand to have longevity and create customer loyalty, it needed to appeal to shoppers for more than just its nutritional facts. With the rebrand the company has pulled back on its keto and sugar packaging callouts for its cups and almonds, a move that may also carry over to its snaps.

“We discovered via focus groups that the keto call out was important to about 21% of consumers, and that we were over-emphasizing the attribute,” Foley said. “The bigger message is our brand, [and] what we stand for, simply better chocolate, low in real organic sugar, high in healthy cacao.”

How Does This Fit in the Category?
Low-sugar, better-for-you chocolate is a segment of the store with a lot of competition. Thanks in part to the astronomical growth of chocolate brand Lily’s, competition within low-sugar, better-for-you chocolate has been heating up, with companies ranging from Russel Stover to Midday Squares to Skinny Dipped all launching their own products over the past year. Some within the space carry significant institutional investment: Skinny Dipped  counts CAVU as a backer and Lily’s, which was formerly a VMG portfolio brand, is now owned by Hershey’s.

Still ChocXO has a possible advantage over some other options, eschewing using alternative sweeteners in place of simply using less sugar overall. By sourcing less bitter cacao and refining the roasting process, Foley said, the company is able to produce a low-sugar chocolate that is free from artificial ingredients. Supported by a stronger brand presence, the company can now also go after more premium shoppers who are also used to higher cacao percentages and who look for brands that emphasize sourcing.

“In the past, large chocolate companies masked the bitterness with sugar. New wave low sugar companies just use the same beans and bitter cocoa mass and mask it with sweet sugar alcohol,” Foley said. We are purists, we believe that real chocolate lovers want more.”