HuffPo: What’s Fancy Chocolate Made Of That Makes It So Expensive?

Your two points are extremely important and often – unfortunately – get overlooked in the larger discussion, especially by small makers.

I think the article did a great job of introducing the topic without overwhelming the audience, who probably have no background in the supply chain or economics of making chocolate from the bean. It was enough to prompt consumers to think about what they're paying for in a bar of craft chocolate, and that's progress.

I agree with many of the comments already made, so I'll keep myself to two points.

As the article points out, small chocolate makers don't have the economies of scale of mass market chocolate makers. The small chocolate maker's production and ingredient costs are going to be significantly higher, and while some of the higher cost is attributable to paying more for better quality cacao, most of it is going to be in labor costs. The small chocolate maker is doing something for their community by creating jobs, so that's great. But labor is not an insignificant portion of the cost, and it's not money going to the cacao farmer.

While I agree that paying $10 for “the best” of something is a pretty good price, I have to ask what makes craft chocolate bars “the best”? Just because they're made in small batches by an artisan doesn't make them the “best”. Making chocolate from the bean is a manufacturing process that involves chemistry, physics, engineering and sensory skills. Many chocolate makers see themselves as artisans and may feel that having too much process control takes the “artisan” out of the chocolate. I would argue that not having rigorous process control only results in an inferior product that is not the best to offer consumers. Based on my experiences with customers, most consumers want their chocolate bar to offer smooth, creamy texture and delicious, complex flavors. They want a product that is similar to what they grew up with in terms of function (a smooth, dark bar of chocolate) with a much better flavor profile and more complexity. If a maker is asking the consumer to pay $10 or more, then the maker needs to deliver a product that the consumer considers worth the $10.

Many consumers want to have a connection with artisans and the farmers, and to be a part of the story. If that's what makes a particular chocolate the “best” for a particular consumer, then it's worth the $10 to them. I speak from experience when I say that when a customer is standing in front of the maker and hearing the maker's story, the customer will buy the chocolate and enjoy it because they feel like they're part of the story. After purchasing the chocolate, if they don't like it, they won't buy it again, even if they enjoyed it in the moment of that personal experience with the maker. Does that make the bar the “best”?

Speaking as a consumer, not a maker, but still not totally business- or food science-blind, this issue has played out in the “wine world” forever. Economies of scale do matter, as Brad indicated. Also, criollo beans are rarer, and by all accounts, more temperamental to grow, so there's the potential for more loss of the crop. (This is why you never see Guernsey milk any more — those cows are delicate and temperamental, so too high-maintenance, even if they produce great milk.)

So, higher cost of ingredients, and often greater care, I can see. There's effort in keeping single origin or estate origin beans separated, etc. However — I've also had my share of “artisan” bars that, as said above, were gritty and when I see “stone ground” on the label, I've become hesitant to buy it at any price. I grew up in a small family business and I want to support small businesses and artisan makers, but if the end product is unpleasant, I'll choose to support an artisan who gets it right.
Lecithin? I've tasted great bars with and without it. To me, that's the maker's choice and if the result is great, I'll stay out of the way and I don't care if it's non-GMO lecithin or whatever. Again, maker's choice and I want to keep the make in business, not put unnecessary obstacles in front of him/her.

As for price, the key is to deliver the goods. Being an artisan is terrific, but if you don't get the taste, aroma, texture, and flavor pleasant, then repeat customers will not be forthcoming. Dressing the bar up with fancy packaging and a nice story are great, but if the above factors don't back it up, then the bar will be the emperor with no clothes.

How to balance the cost of making such great bars with the price the consumer is willing to pay? That's another difficult hurdle for the artisan. Big companies have huge marketing budgets, PR people, distributor networks, and on. I don't mind paying more for an outstanding bar. Fortunately, some smaller makers who have been able to last, like the Bonnats and Amanos, etc. (haven't found Choklat yet but I'm sure it's good) have a reputation now, and it's getting around. More power to them. $12-14 for a great 90-gram artisan bar that lasts me two days is worth it.

Great article! Many people don't understand cheap chocolate, too comes at a cost ie. low wages and worse conditions for the workers.

What did the article get right?
Craft chocolate takes more time to make. While they touched on the hand making process, I think they could have elaborated a bit more. It takes SIGNIFICANTLY more manhours to make chocolate bars by hand than, say, a Hershey's factory that uses 100% automated machines to make the 10's of thousands of bars they do every single hour. There is a huge cost in labour for a craft chocolate maker.

I like the point about buying the best of something for just $10. That's a point well made and I think the public needs to be reminded of this more.

I also like the fact that a good part of the article touches on the craft chocolate maker celebrating the flavours of the beans they buy – rather than blending it all into a common chocolate as is done in industrial applications.

What did the article get wrong? Dan Azzara made the generalization that mass produced chocolate has a smoother finish than artisinal chocolate. Maybe this is the case for a lot of craft chocolate (thanks in large part to the crappy stone wheeled lentil grinders that people use to make their chocolate), but not for those craft chocolate makers who use proper equipment. Bonnat, Amano, Choklat, Potomac and a host of other experienced craft chocolate makers create absolutely decadent, silky smooth chocolate. Frankly I find it surprising that when people think of “craft” or “artisan” products, they generally associate those terms with a higher standard of care and attention to quality – hence the higher price. However in the chocolate industry it's the exact opposite. “Artisans” are producing gritty, acidic, brown crap wrapped in fancy paisley paper and then convincing customers that this is what craft chocolate is supposed to taste like – and charging a premium for it to boot! Wow.

Lecithin is another item that the article got wrong. Apparently Azzara's experience in the chocolate industry was brief, because anyone who really knows chocolate, knows that lecithin isn't an emulsifier for chocolate. It's a lubricant. It bonds well to the solid particulate and allows it to flow through the fat easier. Chocolate is a suspension, NOT an emulsion. Furthermore, the use of lecithin in chocolate is not necessarily an indication that it's industrial or cheap chocolate. A good milk chocolate will have more solid particulate in it than others due to the powdered milk, and in some cases needs lecithin to flow well. I personally make a milk chocolate that will stand up to almost any milk chocolate in the world (in fact a number of other chocolate makers have contacted me and asked me to refer my powdered milk supply to them). It needs lecithin to be workable.

The use of more expensive ingredients is another innacuracy. Yes, some ingredients are. However what would have been better to cover with more than just a sentence would be the economies of scale. A small chocolate maker might only be able to get vanilla for $600 per lb, whereas Callebaut, or Cargill will get it for $35-$40 per lb because they are buying an entire rail car of the stuff. Then there's also the use of vanillin – which can be labelled as “natural flavour” if it's extracted from cloves. Vanillin can sell for as little as $45 per lb and it's so concentrated that 1 lb is equivalent to 60lbs of vanilla! Properly used only the pickiest of picky can tell when vanilla is used in a well made chocolate as opposed to vanillin. Economies of scale also apply to cocoa beans. Here at Choklat we pay an average of twice market prices for our beans, yet at the end of the day that extra price is only reflected by 50 cents or so per bar. This equates to a very small percentage of the retail price of $10 per bar. At the end of the day a craft chocolate maker may pay food costs $13.00 for every kg of chocolate they make whereas an industrial processor may only pay $5.00. However the costs are significantly offset by the fact that the industrial chocolate may only sell for as little as $4 per 100g bar (or $40 per kg) whereas a 70g craft chocolate bar sells for $10 which equates to an astronomical markup of their kg of chocolate to $142 per kg! At the end of the day, the craft maker's overall food cost is significantly lower and their margins are greater. ….much greater in spite of paying much higher prices for ingredients.

Anyone else care to weigh in?

Brad Churchill
CEO
Choklat