How 3D chocolate printing open up new opportunities for The Hershey Company?
How can additive manufacturing help the US leader of the chocolate industry to address the current challenges facing its industry?
By collaborating with pastry chefs from all around the world, I had the opportunity to observe the special relationship that connects chefs and consumers with this unique confectionary: chocolate. While it remains one of the most exciting consumer goods, substitution for other snacks, a negative health perception and a slowdown in promising markets (China and Brazil) threaten to undermine this market. (1) This may partially explain why the Hershey company (THC), which dominates the US chocolate market with 32.2% market share (2), innovated in 2015 by launching the “Cocojet chocolate printer”, which combines 3D printing technology from “3D systems” and the expertise in chocolate of THC to print chocolates in various shapes, sizes and geometry.
Additive manufacturing, also known as 3D printing – “a process used to create a three-dimensional object based on a digital file, in which tiny layers are printed one over the other until a complete structure is formed” (3) – represents a great opportunity for this company for two main reasons. Firstly, it offers a great marketing tool to address the consumers growing demand for customization, and thus to increase revenue and loyalty. Segment’s Report (4) found that 71% of consumers express some level of frustration when their shopping experience is impersonal and 44% of consumers says that they will likely become repeat buyers after a personalized shopping experience. This high need for customization matches where 3D printing simply works best (which compensates the absence of economies of scale)(5). This increased loyalty could help to hedge THC’s exposure to an impulse decline – in 2016, 62,6% of THC sales came from Impulse products. (1) Secondly, this technology could open up the door to new markets, in which THC has little market share: B2B. As of today, most top pastry chefs in the US order their customized chocolate through a French company – PCB creation (6). While this solution works well in France, it leaves significant opportunities abroad. As of today, chefs need a long lead time, which is both cost ineffective and operationally challenging. While this only represents a niche market for THC, this would open up the door to the growing B2B market, which is more significant than the customized chocolate market and more profitable in a context of challenging retail environment (manufacturers squeezed from the demand side by retailers). (1,10)
To address these goals in the short term, THC will mostly use its 3D scanning and printing technology to print out customer’s pictures on their chocolates during marketing operations instore. Although this may seem simple, this process is quite complex since chocolate have much different melting and cooling properties than something like plastic. The machine thus requires a relatively long time to perform its task. That’s why, Jeff Mundt, Hershey’s tech marketing executive, explains that for now THC will mostly use this technology for 2D design since the “main goal is to have customers interacting with the technology, be delighted by it, without having to wait half an hour” (7). As regards the introduction of B2B, Hershey announced in 2017 a new partnership with the world-renowned Culinary Institute of America (CIA). The CIA will thus integrate into its curriculum 3D printing technology so that chefs can explore its creative, design and functional capabilities, using new techniques that will integrate 3D printing into the professional kitchen (8).
I would recommend THC to use its 3D chocolate printer to introduce significantly the B2B market with a brand for professional. To do so, THC should first continue to “educate” the younger generation through sponsorship with schools and start training the current generation of chefs about 3D printers. Once this knowledge is widespread, I would develop a brand for professionals that will feature a range of specialty chocolates. This range should 1) match the quality of the current leader in the industry – Valrhona (9), 2) match the growing demand for healthier and organic goods (10), and 3) feature specific organoleptic characteristics that would differentiate THC from its competitors in terms of performance when used with its 3D printer. Most pastry chefs and food distributors rationalize their supply chain to only carry one brand of specialty chocolate. Therefore, using this competitive advantage could enable to convince chefs to switch to THC. While this would require time, educating the market would certainly fasten this process since distributors will always carry the products requested by their demanding customers.
However, would such a large corporation be willing to invest in a long-term strategy to introduce a new distribution channel? Reducing cost and new processes (increasing automation, voxel control and improving software) are key drivers that will grow the 3D printing market (11) in the coming years but will this be enough to convince pastry chefs -with little time and tech background– to switch to this new technology?
- Passeport GLOBAL CHOCOLATE CONFECTIONERY OVERVIEW: CHALLENGES, OPPORTUNITIES AND RISKS – August 2016
- US chocolatiers looking for new sweet spot -https://www.cnbc.com/2016/04/07/us-chocolatiers-looking-for-new-sweet-spot.html
- 3D Printing is Changing the Face of Multiple Industries http://web.a.ebscohost.com.ezp-prod1.hul.harvard.edu/ehost/pdfviewer/pdfviewer?vid=1&sid=1601f84a-73d7-41cb-a5ad-b282eb8df466%40sdc-v-sessmgr05
- The 2017 state of personalization report – http://grow.segment.com/Segment-2017-Personalization-Report.pdf
- The limits of 3D printing (Links to an external site.). Harvard Business Review Digital Articles (June 23, 2015).
- Hershey’s Chocolate 3D Printer Whips Up Any Sweet Design You Want https://techcrunch.com/2015/09/16/likeachocolateselfie/
- Hershey continues to explore the possibilities of 3D printing – https://www.confectionerynews.com/Article/2017/12/04/Hershey-continues-to-explore-the-possibilities-of-3D-printing
- Packaged facts – Chocolate Candy: U.S. Market Trends and Opportunities
- Tech Forecast: What’s Next for 3D Printing?https://www.machinedesign.com/3d-printing/tech-forecast-whats-next-3d-printing
Student comments on How 3D chocolate printing open up new opportunities for The Hershey Company?
Thanks for the interesting article. All of a sudden, I have a sweet tooth 🙂
I thought the future applications of 3D printing for chocolate were interesting, but I couldn’t help but wondering about the quality of the end product. Did Hershey mention anything about the quality of the products being the same standard as their traditionally produced chocolate? Or would the ingredients need to be altered to accomplish the unique melting and cooling process for 3D printing chocolate? Just another consideration I was curious about that I thought would affect their investment in the space.
Great post! As a chocolate lover myself, I didn’t know the Hershey Company had launched the 3D Printing project as early as 2015, and it’s super interesting to read about it.
Given you mentioned the project can serve as a marketing tool for Hershey, I think they can do a better job marketing this to the Millennials and younger generation who may be more open to try it out.
Given the decline in Hershey’s core market mentioned in the post, I think the B2B market opportunity is a very attractive one for Hershey.
However, I’m a little concerned about the direction the culinary industry is taking 3D Printing. I am fascinated by the beautiful plate decorations the chefs create, and I wonder if one day it can be achieved from my own kitchen counter – by specifying a few parameters I will be able to “print” something equally beautiful to decorate my own dinner plate.
I would have never considered this application of 3-D printing! Do you know where I can find a sample (for a friend, of course)?
I have a few questions about entering the recipe into the machine. How accurate can the machine measure specific ingredient, and how thoroughly can the chef interact with adjusting the machine’s output to make sure that the finished product is of good quality? Also, do you think Hershey has considered introducing other chocolate variations to this project?
Great summary of what’s happening in the market!
I think technology like this could provide chocolate products at a low cost to markets, which may not have access to a steady supply of chocolate products!
A few thoughts: pastry chefs sometimes charge a premium for what they produce, the quality of ingredients used and tend to emphasize the process of how the chocolate has undergone many processes to bring out subtle flavors. Would printing chocolate or “commoditizing” it (to a certain extent) mean that some pastry chefs would no longer be able to charge a premium for their products? Additionally, there continues to be a trend in the marketplace emphasizing healthy, organic foods – a trend which has sustained for some time and may continue to do so. How do you convince a pastry chef or consumer that a chocolate from a 3D printer is not “processed” and natural – is this a valid concern?
Tremendous article! I think you make an important point about sub-branding. Hershey has plenty of credibility but may be facing an uphill battle on quality as it seeks to convince pastry chefs that its 3D printed goods are worth the expenditure. B2B is a logical market for Hershey with the US restaurant industry growing 4.3% to nearly $800B in 2017 and the number of new restaurants growing at a slightly faster rate. One key question is whether Hershey’s would need to build out a separate distribution network in order to make this business feasible. As the author mentioned, chocolate introduces a significant fragility challenge, so the costs associated with developing this product line could dissuade Hershey from moving further into the B2B channel.
Thank you for the very informative and delicious post 🙂
It’s interesting that Hershey launched such a cool initiatives in 2015 yet hasn’t seen huge traction, although this is consistent with the fact that additive manufacturing in general hasn’t taken off as much as people expected. I love your ideas around setting up the distribution channel, and what I would add to it is building a strong online channel where people can order customized chocolates conveniently to increase repeat purchases, especially after more people have experienced the fascinating chocolate 3D printing process in store once.
One concern I have though is that the customized 3D printed chocolates are selling the appearance instead of taste (people might actually not want to eat it if the shape is too special!), which allows for more competitive services from companies/startups who aren’t as sophisticated with recipes. I would suggest Hershey’s to test Facebook/Instagram ad promotions with its customized products (chocolates with names/faces of loved ones) ahead of special holidays such as Valentines, Christmas to drive adoptions, in order to build awareness before any competitors do so.
Fascinating article! I would never have thought of additive manufacturing in chocolate so thank you for helping me think outside of the box. I think you raise a really interesting question on how this technology could be integrated, especially since pastry chefs spend years fine-tuning their art only to have a machine replace some of their craft. Chefs do currently outsource some of their production, I would question how big the market for this technology would be as I expect only high-level pastry chefs would be utilizing this technology. Furthermore, once customers know that their chocolate is printed rather than carefully crafted, would customers still want to pay a premium for these services?
Responding to the question, investments in this type of technology could only be made by firms as big as THC. However, at the same time, while the investments needed to apply this type of technology are still considerably high, I find it hard to get a clear benefit from this technology besides as a marketing tool. My impression is that the price you would have to charge for these chocolates would be similar or higher than premium chocolate brands. Besides, I believe that consumers of premium food products are more interested in taste than in shape. Therefore, I wouldn’t further explore the use of this technology at THM unless the prices for implementation went drastically down in the future.
Fascinating article about an application of 3D printing I had never thought about! I am very curious to see whether this type of technology ever gets adopted as a mainstream production mechanism by pastry chefs. I agree with the point made in the article that it can be a quirky way to attract the modern consumer and show off new technology in an unexpected context. However, I wonder if it will grow bigger than that and become a tool used by pastry chefs worldwide. As the article points out, I’d imagine that most chefs are not necessarily early adopters of technology and may lack the time to re-train themselves in a completely new way to develop chocolates and pastries. I liked the point about embedding this new technology in the education of the next wave of young chefs.
Thank you for sharing this interesting application of 3D printing. Utilizing the Cocojet chocolate printer as a B2C marketing tool to drive awareness and customer loyalty in the challenged chocolate market makes total sense to me. However, it is disappointing that actual 3D chocolate printing at this stage is not feasible and that THC will revert to using it predominantly for 2D designs.
Given the unique properties of chocolate that limit the 3D printer application in B2C, it is not immediately clear to me how you expect THC to overcome the same issues in the B2B market, unless there are meaningful advances in 3D chocolate printing. A B2B application will require significant production scale, even for the specialty chocolates use case. For example, HBS alone produces ~5,000 cookies (arguably not chocolate – but similar) per day for consumption on the HBS campus. At half an hour per chocolate, that would equate to 2,500 hours using one machine.
Due to the low production capacity and limited use cases of 3D chocolate printing outside of B2C marketing, it appears too early for THC to invest in a new distribution channel. I believe that the company should continue to monitor process improvements in the technology and re-evaluate their distribution strategy when 3D chocolate printing becomes more viable.