March 10 (Bloomberg) -- Nestle SA, the world's largest maker of dark chocolate, will open a Swiss research center that will develop new chocolate products to meet anticipated growth in demand for luxury and premium confections.

The center will employ 30 chocolatiers and will open in the first half of next year at the candy maker's factory in the Swiss town of Broc, Roland Decorvet, head of Nestle Switzerland, said today at a press conference. Nestle will invest 20 million Swiss francs ($19.5 million) in the project.

Belgian chocolatier Pierre Marcolini will help advise on premium ranges at the center after forming an alliance with Nestle in December. Marcolini adds flavors such as lavender and Earl Grey tea to his confections, which are sold in shops in Brussels, Tokyo, Kuwait and New York. Vevey, Switzerland-based Nestle aims to focus on the most expensive chocolate to increase its presence in the fastest-growing part of the industry.

Nestle sells about 10 billion francs of chocolate a year, making it the world's largest chocolate maker after Mars Inc., said Petraea Heynike, head of Nestle's chocolate unit.

The 3.7 billion-franc market for luxury chocolate expanded 8 percent annually between 2004 and 2006, Nestle said, citing researcher Euromonitor. It valued the premium chocolate market at about 14 billion francs.

Cocoa Prices

The markets for luxury and premium chocolate may increase more than 10 percent over coming years, the maker of Cailler chocolates said. The total chocolate market is increasing about 5 percent a year, Heynike said.

Higher cocoa and dairy prices are leading chocolate makers to focus on premium brands of dark chocolate, where margins are higher. Cocoa futures have gained about 40 percent in 12 months.

Global demand for cocoa may rise at a slower pace this year because of higher prices, the World Cocoa Foundation forecast last week. Consumption may increase between 2 percent and 2.5 percent in the year ending this September after gaining 3 percent in the prior period, the group estimates.

Nestle, which bought the company that invented milk chocolate in 1929, sold factories in France and Italy last year to Barry Callebaut AG and agreed to buy liquid chocolate from the company.

Sales of chocolate made in Switzerland rose 9 percent to a record in 2007, led by exports to the U.S., the U.K., Brazil and China, industry group Chocosuisse said in February.

Separately, sales of the Cailler brand should return to the level they were at two or three years ago at the end of this year or early 2009, Roland Decorvet, head of Nestle's Swiss business, said today. Sales had been hurt by a product revamp in 2006.

Nestle raised prices on chocolate in Switzerland between 2 percent and 5 percent in February, Decorvet also said.

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net.

Last Updated: March 10, 2008 11:06 EDT