hello, holiday 2023
Gen Z we love you, trends now and ahead, and do please pass the subscription box
Part one of this long post (if it’s cut off by your email browser you can click “view entire message” or come here to the NB to read it) is an updated post from this time a year ago (2022), where we look closely at holiday sales/revenue, insights on wholesale pricing, and 2023 —> 2024 trends.
In Part two I offer insights on subscription boxes.
The big question, each year this time: Have things changed since last holiday season for chocolate makers and chocolate shoppers? In 2023 it’s yes, no, and maybe.
Today is October 22 and that means the busiest and potentially biggest revenue-generating time of a chocolate maker’s year is nigh upon us, lasting from November 1 until December 24. There’s a bit of lull as everyone sleeps off the turkey and stuffing, then just after the New Year chocolate sales perk back up, ticking up →up → up through V-day.
Looking at the sales analytics from my company Map Chocolate, from 2014 (I launched on Nov 1) through December 2022 (I offered a small collection of holiday bars + drinking chocolate last year), including the one year I had a booth at Northwest Chocolate Fest (2017), the highest calendar year revenue always happened for Map consistently in November. November-December 2022 was my 9th holiday season of offering products.
Some years this was a combination of retail + wholesale, but not every year, so if you are retail-only, don’t fret.
Map’s revenue came from sales:
via Etsy (holiday 2014 through mid-2015),
wholesale accounts (6 years, 2016-2021),
events (NW Fest one time only, in 2017, and 2 other one-time holiday pop-ups in 2018; very minimal “live event” selling for me #extremeintrovert )
online shop retail sales (8 years, 2015-2022)
The helpful thing re: my online sales is the built-in analytics ecommerce data Squarespace (my website host) provides. This is how I know which products sell the best.
My highest overhead for sales was NW Fest: travel + lodging + food + booth space, + the cost of making and preparing all those samples (it’s free for the throngs, but not free for makers). I did gain several new wholesale accounts there, but I capped wholesale in 2018. The other two pop-ups were close to home: no overnight, no booth fee, but cost of samples.
if you have questions about wholesale pricing, the post below is for you.
From 2016-2019 the biggest revenue came from wholesale, but the best profit margin came from direct to consumer retail sales, subscriptions, custom orders, products for professionals (coffee shops—drinking chocolate/single origin syrup, and chocolatiers—couverture). For holiday 2019 I actually did bigger than usual wholesale sales (no, I did not have a pandemic-is-coming crystal ball), because I was transitioning (it ended up being full-time and a bit earlier than I’d planned due to the pandemic) to the Next Batch School.
Now, let’s talk turkey, er, Holiday 2023
According to the Shopify survey just released,
Nearly three in four holiday shoppers (74%) plan to spend about the same or more on holiday gifts this year compared to last year, 41% plan to start shopping by the end of October, Gen Z is feeling the most generous: 37% plan to spend more than last year.
Consumers (and makers, facing higher costs) still have fears about the economy, namely due to rising prices and interest rates. This can effect buyers with tighter budgets, but not necessarily in a negative way: a beautifully wrapped handcrafted bar of artisan chocolate is a wonderful gift. Smaller-budget shopping might translate into bigger chocolate sales. Bigger budget shopping can mean lots of extra “small” purchases, like phenomenal craft chocolate. The added cost of shipping is always a concern for consumers: but before you whip out the “free shipping” sign on your website, you MUST calculate the break point. Otherwise, gaining sales while losing money is not good business sense.
Nearly one in four (23%) shoppers (in the Shopify poll) rank shopping with small and local businesses the top reason they choose one retailer over another. This upside also means that if events/pop-ups are local and free/low-cost, folks who may be foregoing their traditional holiday outings will be looking for festive ways to enjoy the season. If you have a brick/mortar or can do a pop-up locally, this is something to consider.
Brick and mortar stores are open for business, but the biggest share of this season’s shopping could take place online. Almost everyone (93%) will buy at least some gifts online, and nearly half (47%) indicate they will purchase all or most of their holiday gifts online (data via Shopify).
If higher sales are the case, having your ducks (turkeys :) in a row sooner rather than later will be key. Shipping delays are
still a thingbetter, but in some locations weather issues are ongoing.Counting on big events for the bulk of sales is always dependent on weather, crowd size, and other factors out of our control. Pro-tip for events: set your POS to data, not venue wifi to avoid slow sales uploads/crashes when everyone’s booth is busy.
A peek at what’s hot (definitely drinking chocolate), and trend-spotting for 2024
Holiday stocking sales increased 98% in August and September, and those stockings are going to need chocolate.
Mood food, sustainable farming, plant-based are other trends being forecast.
I’m not saying “do these things,” but I am saying, trends are indicators of how perception and tastes shift.
Mood food: Adding botanicals to bars is not a new idea (lavendar in chocolate etc) but, the marketing of it as “a thing” that is helpful/beneficial is new-ish. The research doesn’t mention ceremonial cacao (an un-defined sector of drinking chocolate), but I think it’s a trend that fits here. Callebaut calls this trend “mindful indulgence,” chocolate that the consumer feels is good for them.
Sustainable farming, again, a vague feel-good idea, but the shift is from farming practices (organic) to ethics and sourcing.
Plant-based, and here’s the quote: “The plant-based movement is taking over the chocolate world. It is no longer just small novel producers who are into animal and planet-friendly chocolate products…”
A final word or two. Plant-based is a no-brainer, and easy to prove. The other two, should you slather your packaging with terms you can’t prove, is problematic (it’s called FTC regulations on truth in advertising).
Subscription boxes: why they can be a really good idea, and why it’s not too late to roll them out.
I actually think NOW is the best time to design a subscription box product, whether you have an online shop or not. A few guiding principles:
A subscription box can be bars, an intentional assortment/mix of products, seasonally-themed, created to offer items appealing to a niche of customers (plant-based for folks who avoid dairy, baking chocolate, super dark bars for customers who prefer straight-forward flavor, origin-focused so buyers could experience a new origin each month, etc).
They can be monthly, every-other-month, quarterly: it’s up to the maker to decide.
There must be a sense of “special.” Special can be a chance to try one of a kind bars, special can be a price deal, special can be a glimpse into a maker’s creativity, etc.
I searched online for maker-offered subscription boxes (not subscription boxes from folks who wholesale chocolate, but offered directly by makers), and found that while the big craft makers offer them, most small craft makers are not.
Here’s Raaka’s First Nibs (awesome name, it tells a shopper right away that this is something “special” beyond the bar.)
What to pay attention to:
Seasonally-inspired offerings spark interest AND regular subscribers love knowing they’ll get new/seasonal bars before other folks, and that other folks might not get.
Pricing: a 3-bar monthly set is $24.95, the 2-bar is $19.95. They ship for free (meaning, the shipping is embedded in the price).
Manoa’s is also appealing.
What to pay attention to:
“Members” and “club” language = exclusivity/insider perks (discount on future orders).
One limited edition bar with the two other bars signals “special” and appeals to the serious craft consumers who love collecting latest flavors. The Instagram algorithm might be a bust for most small businesses, but small communities (like chocolate reviewers/tasters) still thrive there.
Special packaging: they use a branded box for shipping, which makes gifting a subscription even more appealing.
There’s a shipping charge.
Markham & Fitz offers a different spin, by having the buyer choose the bars they want. What’s “special” is the discount.
The pros: why subscription boxes make sense for small craft makers
The payments are automatically charged monthly.
For makers who love seasonal crafting they offer an outlet for new bars.
They aren’t limited to just bars: Map’s craft baking chocolate subscription was a big seller. The items sent could include a spread, drinking chocolate, etc, or be focused on a specific product line (like drinking chocolate).
It creates a dependable monthly revenue stream.
They are perfect as corporate gifts or for reward programs.
They are direct to consumer, not wholesale, which means you have the shopper’s contact info for email campaigns, specials, etc, PLUS a higher profit margin.
The cons
It’s a slightly different mindset than making the same/same old bars every month; if you (and you aren’t alone) rarely vary your product line, this might not be a good fit.
Wrappers/ingredient labels for new/seasonal bars are a consideration, and need to be part of an ongoing system, or it will become irksome and too much work.
Your website must be set up to accept subscription payments; selling a monthly recurring product means subscribers save their checkout details (billing info) and your store charges them automatically when their subscription renews each month. After you receive the order, you’ll fulfill it, and repeat that process for each renewal.
You must be able to plan in advance :) and set a monthly ship date. Your subscribers will come to count on this.
Why they work for the holidays, aka, now
If you set them up and offer these in your holiday shop you can set the beginning delivery date to January. This is revenue will come in BEFORE you’ll need to craft the products, and offers shoppers a super fun and easy way to treat themselves or send gifts.
There’s no better treat than that.
Happy making, and thank you for supporting the Next Batch with your paid subscription.
Mackenzie
There is so much to say about this, and I do feel that Quetzal Cacao is poised on all fronts.
As a cacao grower crafting chocolate at origin, we are inherently sustainable and plant based, and our deep connection with ceremony brings in the mood component.
We don't sell wholesale, only direct to consumer through a subscription box, crafting seasonal selections using the ingredients grown on our organic farm. I'm a big fan of the entire subscription model especially in a small country (Panama) that has less than half the population of New York City, so niche is what we're all about.
Shipping international (ouch) is the challenge, just today I went to my shipping company, and to send a box of 12 bars (a quarterly collection) to my subscribers in the US is now over $200 (an increase of $60 since May) for international delivery. I'm pivoting, and shipping bulk to a friend who willl break the big box down and ship individually from there. The bulk of my subs are in Panama and I ship monthly to them. Many have been with me over 2 years now.
My end of year calender is full of small markets and opportunities to put a face to the brand, and to get off the farm and socialize a little bit. It's a whirlwind right now, and I'm grateful for the dedication of my small team that helps on the farm and in the kitchen.
Thanks Mackenzie, for confirming my business model. I love reading you as the alignment in spot on.