MEMORANDUM

TO: David Raymond, Division Manager

FROM: Andrea Torres, Director of New Product Development
DATE: September 29, 2015
SUBJECT: Launch of Montreaux Chocolate USA

The purpose of this memo is to explore the possibilities and solutions of launching
Montreaux Chocolate USA. There are a few issues surrounding the introduction of Montreaux
Chocolate USA. Should the chocolate be named after Apollo Foods, Montreaux Chocolate, or an
entirely new name? Who are the target consumers and where should the product be sold to
reach these target consumers? What fruit should be included in the chocolate, and what
percentage of cocoa provides the best flavor? How should the chocolate be packaged, and
what should the packaging look like? The following information will address these questions
and their possible solutions.

Montreaux Chocolate in the United States

Launching Montreaux Chocolate in the United States is a good idea because two well-
respected companies back the new chocolate products: Los Angeles based Apollo Foods and
the Swiss Montreaux Chocolate Company. Apollo Foods already has a loyal customer base in
the United States, which may incline consumers to try the Montreaux Chocolate USA’s
products. On the international front, Montreaux Chocolate Company is known for their high
quality chocolate products, which may cause consumers to be curious about their products in
the United States. It would be most beneficial to combine the names of the two companies
because consumers are more likely to recognize at least one of the trusted companies, instead
of an entirely new name.

Target Consumers
Apollo Foods is familiar with its consumers’ wants and has been successfully feeding
their hunger for bold flavors with more than 70 new product innovations over the past three
years. Chocolate consumption spans gender, age, and household income groups, with slight
variations in the formats purchased. Consumers’ focus on fitness and health in the United
States has significantly increased over the past three decades. With this in mind, the new dark
chocolate fruit flavored products should be targeted towards adults that are health conscious.
Because the health benefits of dark chocolate are being emphasized, health conscience
consumers may be more inclined to buy dark chocolate in place of milk chocolate and/or white
chocolate.
Montreaux Chocolate USA “loyalists” were female, aged 45-64, college educated,
married with children, with a household income of $50,000+, concerned about health and
weight, and more likely to purchase chocolate for themselves. This product should be
advertised as a treat when bought, and not an everyday chocolate. This will most likely appeal
to the already present female audience.
The Product
There have been some noticeable trends in the United States chocolate market.
Premium chocolate sales are moving to mainstream channels, including supermarkets and mass
merchandisers like Wal-Mart. Dark chocolate with fruit flavors and antioxidants have increased
due to the fact that the antioxidants can help lower cholesterol and provide cardiovascular
benefits. The market has seen an increase in low calorie, reduced fat, and aerated chocolate
options.
After extensive research, it has been decided that the Montreaux Chocolate USA dark
chocolate products will include cranberry, blueberry, and pomegranate flavors with 70% cocoa.
The most popular size with consumers is bar, bag, or box that is 3.5 ounces or more. This goes
in hand with the economically conscience consumer. However, I do suggest selling a large
package of individual portion sizes that consumers can grab on the go. In general, there have
been price increases in chocolate due to rising commodity costs; this has not affected the
customer base. It is suggested by the screening that the chocolate be sold for $4.49. For
individual sized portions, I believe this to be a fair price. For larger quantities, the price would
need to be adjusted.

Packaging
It is more common to buy chocolate in stand up pouches and bigger sizes that appeal to
the economically conscious consumers. With this packaging, I suggest including a zipper close
top in order to keep the product fresh. However, many consumers value the individual portion
sized packaging.
The chocolate industry has seen an increase in new labeling with terminology
emphasizing shareability, portion control, and “saving a piece for later”. The packaging should
include a phrase that emphasizes it is a health conscience treat, or that it is in a “grab and go”
packaging. Although Apollo Foods’ consumers are mainly women, including phrases like
“energy booster”, will help target a male audience.

Distribution
By opting to employ Apollo’s large sales force to maximize their already existing
relationships, Apollo will be able to penetrate the traditional retail channels. This course of
action includes “big-box” supercenters, supermarkets, drug stores, and convenience stores.
Grocery, drug, and convenience stores, and Wal-Mart, collectively sold 45.3% of the chocolate
candy in the United States in 2011.
The new flavored dark chocolate treats would benefit from being distributed nationally
in a large supercenter like Wal-Mart. This would result in maximum exposure because Wal-
Mart is located throughout the United States. As an initiative, sample stations could be set up in
Wal-Mart to encourage new consumers to buy a package. If the product does well, the product
could be sold at grocery, drug, and convenience stores.

Competitors
As the emphasis on healthy eating habits has increased, the number of competitors and
the rate of new product introduction have also increased. For example, Ghirardelli produces a
similar product: individually wrapped squares with a fruit flavored filling. The individually
wrapped squares sold in a bag are convenient for consumers, but this chocolate is rather
expensive. At Montreaux Chocolate USA, we strive to produce a high quality product without
the hefty price tag.
Brookside Chocolate is also a competitor with a very similar product. Brookside
Chocolate sells chocolate covered fruit, including the same flavors sold by Montreaux Chocolate
USA. However, their product is more fruit than chocolate and we feel that our chocolate has
just the right hint of fruit flavor in balance with the dark chocolate. Brookside Chocolate does
sell their product in an economically conscience bag, but does not offer individually portioned
bags like Montreaux Chocolate USA.

I hope this memo addresses the concerns of launching Montreaux Chocolate but I feel
the company with have great success in the United States. Please let me know if there are any
other concerns.

Sincerely,

Andrea Torres
Director of New Product Development