Before the Mars Retail Group transformed itsEthel M Chocolates store at Fashion Show into Ethel's Chocolate Lounge inSeptember, company executives did no advance consumer research to study whethertourists and locals would embrace the new concept. They merely wanted to see,on a small scale and in real-market time, how the lounge would fare in LasVegas.
Mars executives liked the results of thechangeover: Sales inside the 1,200-square-foot store grew by double digits.
Now, based on the improved sales, Mars' testrun is leading to an entirely new business model for Ethel M Chocolates, abeloved, locally based brand that's been a Southern Nevada mainstay since thecompany's Henderson headquarters and factory opened in 1980.
In the next two months, Mars Retail Groupwill change all nine of the company's Ethel M Chocolates stores across the LasVegas Valley into Ethel's Chocolate Lounges.
The transition is under way inside stores atthe Henderson plant and at The District at Green Valley Ranch. Conversions areplanned for the remaining stores inside the California and Flamingo hotels, theMeadows Mall and McCarran International Airport.
Future stores, both locally and nationally,will carry the Ethel's Chocolate Lounge logo.
"We are calling this a chocolateevolution," said John Haugh, president of Ethel M owner Mars Retail Group,a Henderson-based division of global food giant Masterfoods USA. "We'rebuilding on the best part of our past as a regional leader in chocolate. Bytransitioning Ethel M to Ethel's, we're at the forefront of innovation."
Fans of Ethel M needn't lament the brand'sdisappearance from storefronts.
The nameplate will live on in the Ethel MClassic Collection. Consumers will be able to buy seven of the company'sbest-selling product lines, including assortments with Almond Butter Krisps,Lemon Satin Cremes and Milk Chocolate Raspberry Satin Cremes. Ethel M's ButteryPecan Brittle and Chocolate-Stribboned Pecan Brittle will also be available, aswill the Las Vegas Slot Box featuring foil-wrapped chocolate coins and theTaste of Las Vegas collection with its box cover featuring the Strip skyline.The collection's prices will range from $8 to $33.
The local changeover to Ethel's ChocolateLounges follows a 10-store rollout in Chicago in 2005 and 2006.
Unlike the Las Vegas debut, the Chicagolaunch involved extensive consumer research. The company's studies "saidthere was a space for us to go after a more contemporary lounge environment andmore everyday premium chocolates," Haugh said.
With Ethel's Chocolate Lounges, Marsofficials want consumers to enjoy chocolate beyond key holidays such asValentine's Day, Easter and Christmas. In addition to splurging on big candypurchases for special occasions, consumers could also frequent theirneighborhood chocolate lounge for regular, smaller indulgences in gourmetconfections.
Inside Ethel's Chocolate Lounges, patronscan buy 10 chocolates and hot cocoa for two for $18. Chocolate fondue for two,with dipping items such as strawberries, bananas, marshmallows or pound cake,costs $18 to $25.
The chocolate flavors in the Ethel's linealso depart from the standard butter-cream fare of more conventional lines.Truffles come in espresso, honey and pi a colada varieties, while the CocktailCollection serves up chocolates with hints of spiced rum, brandy, champagne andmixed drinks such as mojitos and margaritas.
The American Pop Collection offers PeanutButter and Jelly, Cinna-Swirl and Apple Pie varieties.
The confections feature custom touches suchas hand-squeezed juices for the Fruit Collection and individually painted ortransferred art on candies in the Cocktail Collection.
Candies sold through Ethel's have commandedabout a third more in price than Ethel M chocolates. A 1-pound, 1-ounce box ofEthel M Creamy Milk Chocolates, for example, contains 40 pieces and sells for$29. A 24-piece box of Ethel's chocolates retails for $24.
Food-industry experts say Mars RetailGroup's brand makeover is a wise one given the trend toward trading up -- thenotion that middle-class consumers are seeking small-scale luxuries they canrelish every day.
Steve Lalich, president of theIllinois-based food-marketing firm Lalich Resources, said the proliferation of"higher-quality food" in recent decades means more consumers candistinguish between upscale and mid-market products. That ability to taste adifference makes many consumers more keen on investing in gourmet delicacies,Lalich said.
People have also shown a greater willingnessto spend on occasional goodies.
"When it comes to a small treat orpiece of candy -- something where you're not buying a month's worth of food tofeed a family -- you're usually consuming in smaller quantities, so you cankind of justify the higher expense," Lalich said.
Ryan Montague, president of Gourmet BusinessSolutions in New Orleans, said other major chocolate makers are going high-end,such as Hershey's with its new Cacao Reserve line.
"A lot of companies are entering theupscale market," Montague said. "Larger companies have seen theenormous growth in the gourmet-food segment, so they're trying to get a pieceof that growth."
Mars plans to expand Ethel's locally andnationally. By the end of 2007, "a couple more" Ethel's ChocolateLounges should have opened in Las Vegas, Haugh said. The company is eyeing newlocations near Boca Park at Rampart and Charleston boulevards and Town Square,which is under construction at Sunset Road and Las Vegas Boulevard.
Executives are preparing for nationwideexpansion in 2008. Mars officials haven't solidified entry into specific citiesyet, though Haugh said the emphasis would be on markets with diversedemographics and high concentrations of gourmands.
"We're talking about the usual suspects-- L.A., Dallas, Atlanta," Haugh said. "We're looking for premium'foodie' markets."
The company will also make capitalinvestments in its Henderson factory as the plant switches more of its outputto Ethel's products, though Haugh didn't disclose the price of theimprovements.
Haugh said the company doesn't plan to letworkers go or hire new staffers to accommodate the brand swap. Mars RetailGroup employs about 450 workers in the Las Vegas area.
Food marketers said expansion could bringeven sweeter success to Mars Retail Group.
"If you look at Starbucks, going for acup of coffee there is kind of the 'in' thing to do," Montague said."It's become a status symbol. The chocolate lounge could follow in similarfootsteps. It may not be as large an industry as coffee, because so manyconsumers are drinking coffee. But a chocolate lounge could be the next hitdate thing. Instead of grabbing a cup of coffee, people might go to the newchocolate lounge and have a couple of gourmet chocolates. It's possibly one ofthe great, new, emerging trends."
Agreed Lalich: "I don't see a slowdownin gourmet trends in the near future. I just see the gourmet market ascontinually moving up. I think there's a market for (Ethel's)."
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