What the Chocolate Industry Needs is A $100 Bar of Chocolate

Clay Gordon
@clay
11/03/12 11:09:55AM
1,680 posts

When I was in London a couple of weeks ago speaking at the Academy of Chocolate conference, I had the great privilege of being the last speaker of the day. This enabled me to pay attention to what everybody else was saying and present a summary of what I heard in the context of my own panel presentation which was billed as, "The Global Future of Chocolate."

After presenting a summation, I urged the audience to consider a number of calls to action. Too often at conferences like this one a great deal of good information is shared but then that information does not get disseminated after the conference is over. We all go our own separate ways and little substantive really occurs.

I presented two calls to action that are related to each other:

1) The fine chocolate industry needs professional certification programs similar to ones that graduate professional sommeliers in wine.

2) The fine chocolate industry needs a $100 bar of chocolate.

If you think about it, if all wine was priced under $20/bottle and the majority of it was mass market and not very well differentiated, there would be no need for sommeliers. The fact that there are $1000 bottles makes $100 bottles seem less extravagant and the $100 bottles make $10-20 bottles seem like very good deals indeed.

More to the point, the actual manufacturing cost difference between the $1000 bottle and the $100 (or $20 bottle) are not as great as the price differences indicate. The price differences are a result of many factors that include wine quality, origin, manufacturer, scarcity, and reviews. What this means in practice is that there is a lot of money in the system that can be used to pay professionals whose job it is to educate people about why it's okay to pay $1000 for a bottle - or $100 for a bottle - when there are lots of much-more-than-adequate $10-20 bottles around.

Getting back to chocolate, most of it is mass market blah that costs $1-3 per bar. Most bars are in the $3-7 range.There is a small handful of bars that cost $10-15, and an even small number of bars that cost $20 or more at least here in the US. Some of the price differential is related to manufacturing costs - e.g., higher prices for beans in smaller quantities. However, here in the US, the largest factors contributing to high retail prices on the most expensive bars are exchange rates (the US$ is fairly weak right now), the cost of importing, and a relatively high cost of specialty foods distribution here in the US. The Bonnat Porcelana bars that cost $25 here in New York can be purchased for half that price in France.

Because the vast majority of chocolate bars is under $7 at retail, there is no money in the systemto pay for professional chocolate sommeliers and professional chocolate critics. There is a small group of people - relatively speaking - who do this, but I don't know a one who can make a decent full-time living being just a chocolate sommelier/critic.

What this means is that there is neither any need for, nor any economic value in, someone pursuing a professional certification because there is no way for anyone to generate a decent return on investment on the time and money invested in earning the certification, in part because the market does not recognize the need for it.

With a $100 chocolate bar (or, ideally, many $100 chocolate bars), the stage is set for the conditions that support professional certifications. The $100 chocolate bar makes the $10-20 bar seem not so unreasonable in price, and, thus "more affordable" for people looking to expand their taste. More importantly, the actual cost of production of a $100 bar is not 10x the cost of a $10 bar, which means that there would be more money in the system for marketing - which supports a host of other activities.

It is also very important that any $100 bar of chocolate be worth that price based on intrinsic factors that people who are knowledgeable about chocolate will agree support that price. The bar doesn't cost $100 because it is decorated with gold leaf or contains every expensive other ingredients: the bar costs $100 because of what went in to its making.

Now, having said that, I don't know exactly what those factors are. However, the idea was also presented at the Origin Chocolate conference in Amsterdam actually for a 100 bar just four days after I proposed it by Philipp Kauffmann, one of the founders of the Original Beans chocolate company, independently of my bringing it up in London. So I am not the only one thinking this way.

Having said all that, I am writing this in the hopes of hearing from members: a) what they think of the idea, in general, and b) what they think attributes of a $100 bar might include. Following are some of my ideas for factors that could contribute to a $100 bar:

#1) When I was talking with Mikkel Friis-Holm in London, he mentioned that he had some chocolate that was inedibly tannic when it was made. He put it away for a couple of months and then tasted it again and the level of tannins was much lower than it was when the chocolate was made. Still inedible, but much better. He is going to taste the chocolate again several months from now to see if it's any better. The corollary here is that there is actually very little wine that is made to be drunk in the days or weeks immediately after it's produced. Virtually all wine made is aged to some extent- and a lot of wine is made knowing that it will take years (or decades) before the wine reaches its optimal drinking condition. Virtually all chocolate is made to consume "young." Even when it's got a shelf life rating of two years, it's made to be consumed within weeks of being made. I wonder what would happen if people deliberately started making chocolate that was not going to be fit for consumption for two to five years, or more? And then selling "bar futures" on the chocolate.

#2) I was talking with Sepp Schnbchler of Felchlin in Amsterdam and he mentioned that Felchlin has quantities of the the 65% Grand Cru Maracaibo dating back to 1999. Whenever a new person comes into his department, they are tasked with re-tempering some of that chocolate which is, of course, all Form VI crystals at this point. Sepp notices some differences in taste between the 1999 "vintage" and the current "vintage" -- mainly in the fact that some of the top-note aromatic notes have disappeared. At the same time, the loss of those top notes should allow other flavor notes to come forward. There are wine and spirits industry practices of vintage blending. For example, in rums, solera blending adds small amounts of aged rum to younger rums to up the "tasting age" and make a limited supply of aged rum go much farther. I wonder what the outcome would be of blending a small amount of a much older chocolate with younger versions of the same chocolate (or different chocolates)? You could get the "youth and vitality" of the newer chocolates with some of the depth and complexity of the older chocolates.

#3)What about inoculating a milk chocolate with a specific mold spore after being aged for one year and then age it for one or more years longer?

The fact is, no-one really knows what the outcomes of such practices would be, because the economics of the $7 bar market don't support such lines of experimentation. But I put the challenge out there to chocolate makers around the word, especially to companies with stock of older chocolates, to start exactly that sort of experimentation - to set aside a very short-term outlook and think about practices that could result in a $100 bar of chocolate that everyone agrees is worth it.

I don't think that the $100 bar will appear this year or next, but it could. Five to ten years is a more reasonable time frame, but only if we get started down this path soon.

Your thoughts?

[Note: Edited by the OP to correct grammar and typos. ]




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clay - http://www.thechocolatelife.com/clay/

updated by @clay: 04/09/15 11:51:24AM
Andy Ciordia
@andy-ciordia
11/03/12 11:41:34AM
157 posts

This has some interesting points.. I'm torn on the concept of having to have a $100 bar to achieve it though when wine makers and their chain of professionals attached to them don't have to leverage the $100 bottles to achieve greatness. Also many winemakers are just like chocolate makers, stretched very thin and more passionate than economically feasible unless conglomerated (a few family wine makers here.)

A perfect night at a tasting meal with it's accompaniments don't have that kind of cost per wine unit, $25 here, $30 there, $50 maybe.. but really, $100 across the board doesn't make sense. You'd wedge yourself into such an exclusive category that would be untouchable and reeked with the wrong demographic that it would take decades to equalize in the community.

Your point though, which should have been all that there was--is that there is a potential, a possibility, for a much deeper relationship with chocolate. One that hasn't been given real time or study but might should. If it was, what would be needed to accomplish such a task and that is interesting.

Like all things though, these studies, experiments and all that come with it come with the task of either doing it on your own time, dime, and love then finding a market that can respect that. It will still take decades for that line of thought to enter the market too since it's too much of a commodity. Taking a commodity and raising the epitome is tricky. Coffee has done it on a few occasions with Cup of Excellence winners getting up to $70 a # but it's not a market normal and not normally market accessible.

You've definitely pushed some neat thoughts out though. Kudos on that. ;-)

Thomas Forbes
@thomas-forbes
11/03/12 01:03:48PM
102 posts

I am also torn at the thought of paying $100 for a bar of chocolate. The fact that much of the fine chocolate is turned into confections would expand the role of a chocolate critic or sommelier beyond the same in the wine industry. I am so new to understanding chocolate and the industry, I am unsure how someone would make a living as a chocolate sommelier beyond writing about it. Would it help people who are currently doing tasting and/or pairings? There are already professional tasters who are identified by the industrial chocolate industry; would the small artisan makers employ them in some manner?

The idea of aging chocolate in interesting. I find that letting my homemade chocolate sit for a month or two brings the bitterness down a notch.

Love reading your post Clay and your broadcasts on Heritage Radio.

Tom

ChocoFiles
@chocofiles
11/03/12 11:01:59PM
251 posts

There already was a $100 bar... when NOKA was around. haha

ChocoFiles
@chocofiles
11/03/12 11:05:00PM
251 posts

And who can forgetCocoa Gourmets Chocolats Haute Joaillerie Royal Collection?... for a mere US$1250!

Tom
@tom
11/04/12 04:52:03AM
205 posts
I think that is a very interesting idea. As someone who may potentially buy one i would say history and reputation of a company would be important. A new market entry would find it difficult to produce and sell a $100 bar of chocolate. As for what characteristics a chocolate bar would have to have to be worth it, well approaching it from a makers (hobbyist) perspective who has delt with fermentation studies over several years from the same plantation i would say i would need the same control a wine maker does over each vintage. Ideally i would have a plantation with 3 to 4 varieties, i would have control over the growing ie pruning, watering, fertilising, harvest time etc. ideally monitoring parameters deemed important such as pH and sugar levels of the fruits. I would then want control of the fermentation, ie aging the fruit before ferment, time of ferment, possibly starter culture etc. then i would want control over the drying, shipping, roasting, blending, formulation......you get the picture. I would then require 10 years of experinece applying and tinkering with different ideas in all these areas and then i would feel comfortable in offering up a chocolate bar worthy of a $100 price tag. Oh and in that 10 years establish a good reputation and build brand equity to support the $100 price tag.
Sebastian
@sebastian
11/04/12 05:41:01AM
754 posts

Fritz used to have a $250 truffle - it's been some time since we chatted, so i'm not sure if he still does or not.

I'll happily make a $100 bar, sold by the dozen. You choose the beans, blend, and concentration. Pls let me know when you'd like me to start shipping them 8-)

Brad Churchill
@brad-churchill
11/04/12 01:28:52PM
527 posts

Sebastian;

I'll one-up you and offer a baker's dozen for the price of 12.

...and free shipping.

Haha!

Brad.

Clay Gordon
@clay
11/04/12 02:48:23PM
1,680 posts

Andy:

The wine makers who thrive in the $10-$100 price range benefit directly and indirectly from the $1000 bottles - even though they don't make bottles in the upper price range.

It's not necessary for a chocolate maker to make only super-premium priced products, just as it's not necessary for a wine maker to make only super-premium wines. However, in an evening where you're trying some $20-30 reds, a $100 Bordeaux is an interesting addition. Why not see chocolate that way?

The coffee analogy is interesting, and prices for brewed coffee vary widely and are not necessarily dependent on bean quality. Some of the worst coffee I have ever had has been some of the most expensive ... in hotel dining rooms. That said, I do see a cocoa equivalent of coffee's cup of excellence as a very good thing in its own right.




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clay - http://www.thechocolatelife.com/clay/
Clay Gordon
@clay
11/04/12 02:53:00PM
1,680 posts

Wine sommeliers are often hired by restaurants to curate their wine offerings and in many cases they are part of the wine service - their salaries are built in to the prices paid for the wines in those settings. There are some occasions where I have been approached to curate a chocolate selection for a restaurant but not one of them has ever resulted in actually getting hired to curate a selection, let alone create a program where a person was involved in service.

Turning the chocolate into confections is one way to raise the price charged for the chocolate, but that price increase is incidental to the other aspects of the confection's creation.

There are professional tasters in the chocolate industry but I don't see the small artisan makers employing them. Like wine makers, the chocolate makers make what they make and independent experts pass judgment that the market values and pays for.




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clay - http://www.thechocolatelife.com/clay/
Tom
@tom
11/04/12 02:53:56PM
205 posts
Perhaps rarity is the key, you could grow two or three trees in a green house in an odd place like New York or Vatican City and take it tree-to-bar making only a dozen to two dozen per harvest. Or shoot for twenty six bars.
Clay Gordon
@clay
11/04/12 02:54:52PM
1,680 posts

Lowe:

A case of deceptive marketing practices that was ultimately unmasked. However, there is a kernel of truth in the fact that part of any consumer market can be swayed by marketing. The people perceived that the chocolate was worth the price they were paying based on the story (now known to be false being told about it.

Okay, we know that the market, or at least a part of it, will pay that amount of money for chocolate. Now we just have to create one that deserves that price point on its merits.




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clay - http://www.thechocolatelife.com/clay/
Clay Gordon
@clay
11/04/12 02:56:32PM
1,680 posts

Lowe:

The Cocoa Gourmet instance is an example of where the ingredients (and presentation) being the major cost of the final product, not the chocolate itself, which is re-melted Felchlin. Gold and silver leaf, custom wood boxes ...

The point is to create a chocolate that doesn't need gilding to be seen as deserving the price paid.




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clay - http://www.thechocolatelife.com/clay/
Clay Gordon
@clay
11/04/12 03:01:37PM
1,680 posts

Tom:

This is along the lines of what I was hoping to elicit. What is interesting is that I see examples in places where this is starting to emerge. Take what Frank Homann is doing on the farm side at Xoco, for example, or what Gianluca Franzoni has been doing in a vertically integrated way from farm to factory ... his 100% Criollo bar is about as close as it comes today, IMO, and the price is extremely reasonable at about 5/25gr.




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clay - http://www.thechocolatelife.com/clay/
Clay Gordon
@clay
11/04/12 03:03:06PM
1,680 posts

Sebastian:

Fritz's truffle is expensive as it is - it's made to order, only - because of the ingredients, including gold leaf.

For the $100 bars you're offering to make, what characteristics of the bars make them worthy of the price tag, other than made to order in extremely limited availability?




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clay - http://www.thechocolatelife.com/clay/
Clay Gordon
@clay
11/04/12 03:03:23PM
1,680 posts

Brad:

You ship now? To New York?

<big grin - sorry, couldn't resist, hope you don't mind the humor>




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clay - http://www.thechocolatelife.com/clay/
Melanie Boudar
@melanie-boudar
11/04/12 03:21:38PM
104 posts

Hawaii has the rarity , a diverse genetic pool, rich, volcanic soil and benefit of being the only US location to have a chocolate industry with the ability to grow its own material. Now what we need is some skilled bean to bar chocolate maker to come in and elevate that.
I totally agree that when you raise the top end, the bottom comes up in price and the mid range experiences stronger sales. I' saw this over and over in the my former career as a large jeweler, and continually tested and tweaked it. Marketing is one aspect. I Think the Heirloom Cacao Initiative is one of the means in the future to facilitate the reality of higher priced and appreciated bars, provided skilled hands are working with the beans.

Tom
@tom
11/04/12 03:48:11PM
205 posts
I agree the beginings are there. A lot can be borrowed from the wine industry in achieving this, the parallels in wine and chocolate producting were very apparent when i was a post doc at the universities wine research campus. What was also very apparent is how much behind the choclate industry is and how much opportunity there is. I have a lifetimes worth of experiments id like to work on.Perhaps this is why two Australian chocolate company founders came through the same institution as wine makers. Both Bahen and Co Chocolate Makers and Kennedy and Wilson were founded by wine makers. All be it Kennedy and Wilson start with liquor, they do some very nice blends and flavour combos.
mda@umgdirectresponse.com
@michael-arnovitz
11/04/12 07:28:38PM
59 posts

Ive been saying this for some time, and I will continue to press my case: when it comes to efforts to raise the apparent value (and price) of chocolate, the model should not be wine. The model should be coffee.

For the first 100 years after it became fairly popular (ca. mid-1800s) coffee was an industrial product produced almost exclusively in factories, with little consideration for quality. The main goal was simply to sell as much as possible at the lowest price possible. Sound familiar?

The specialty coffee movement completely transformed this model. I was part of the second wave off coffee, and when we started selling gourmet coffee and espresso beverages in the 70s and 80s people were, to put it mildly, skeptical. The idea that there even was such a thing as gourmet coffee seemed ridiculous to many people. It was like claiming you had gourmet milk. Coffee was a commodity, and commodities were, by definition, the opposite of gourmet.

Nearly every day we had to explain to customers why they should pay so much more for our coffee drinks. After all, it was just coffee. Also, people thought our coffee was too strong, and would often ask is to water it down so that it tasted normal. Again, does this sound familiar?

But heres the thing: over the course of less than five years people stopped questioning our pricing, and they also quit asking us to water down our coffee. We stopped being a rare (and odd) treat and instead turned into a necessary part of the daily routine. And this, by the way, was all before Starbucks. Starbucks, despite all of their legitimate shortcomings, turned a racecar into a rocket ship.

Now, across the country, the specialty coffee business remains nearly entirely non price-sensitive. Paying $3-$5 for a coffee drink is the new normal, and even including inflation, the average price of retail coffee beans has probably gone up by 20%-30%.

More interestingly, the top tier of coffee beans has gone up considerably. These days there are numerous specialty coffees that cost $50-$80 a pound, and the high end can go much higher. For example in June of this year Stumptown Coffee paid over $12,000 for a mere 150 pounds of a varietal of green beans from Guatemala. Thats over $80 a pound, which means that once roasted this coffee will almost certainly sell for a minimum of $250 a pound. Probably more. And I doubt that they will have much trouble finding willing buyers.

This is what the coffee industry has done in only several decades. And in my opinion, if you want to see $100 chocolate bars some day this is the path to follow. In less than 25 years the American specialty coffee industry went from nothing to a multi-billion dollar juggernaut. And in the same period of time coffee went from a cheap commodity to a respected and profitable gourmet product. Everything that the new wave of chocolate makers want has been accomplished by the specialty coffee industry. Why arent we paying more attention to that?

When I was at the Northwest Chocolate Festival a few weeks ago there was a seminar in which exactly this question was put to a panel of industry insiders: how can we get chocolate priced along more of a spectrum, like wine? Of course like wine. Always like wine. And of course everyone proceeded to talk about how great it was that wine could sell for $10 or for $5,000 and how chocolate needed to be and deserved to be more like this. Which led to the inescapable (and in my opinion completely erroneous) view that the business model for chocolate had to be more like the one used for wine. Nobody of course had any idea how to make that happen, but it seemed as if everyone agreed that this was the goal.

But in my view this is not going to happen, because wine has a unique culture that cannot be and will not be replicated by chocolate. Thats the bad news. The good news is that there is already a business model that could serve as a nearly perfect blueprint for how to move the chocolate industry forward, and it CAN be replicated by the chocolate industry.

You want a way forward? You want a business model that will yield a profitable industry along with customers who will spend up to $50/ounce for chocolate? Quit thinking wine. Start thinking coffee.

Tom
@tom
11/04/12 09:13:27PM
205 posts

I think coffee is an equally reasonable business model to follow, I have observed both closely as a guide in planning a business model, in fact I see a hybrid of the two being successful as chocolate is more versatile with a bigger potential consumer base than both wine and coffee. However I do think that a culture of appreciating fine chocolate that resembles that of wine would be replicated, in fact it already exists, the website www.seventypercent.com is just one clear example. In fact it would be one to really build and capitalise on because it is not age restricted. Don't forget that the connoisseurship of chocolate can be linked with that of wine through chocolate and wine pairing as some of the wineries around here are discovering is quite lucrative. Essentially you have a market segment that you can directly tap in the fashion that you are claiming chocolate cannot achieve.

Tom
@tom
11/04/12 09:28:47PM
205 posts

Oh and by the way the parrallels I draw from the wine industry concern mainly the manufacture and flavour development steps not the marketing and promotion, chocolate is its own beast in that respect.


updated by @tom: 09/16/15 07:21:42AM
ChocoFiles
@chocofiles
11/04/12 09:50:07PM
251 posts

My reply was a weak attempt at a bit of levity. Without tone of voice I'm not sure it came across that way.

There is a lesson that marketing often trumps quality, though.

Plus another lesson: wealthy yet uninformed people will sometimes buy something based on the assumption "it's expensive so it must be good". (I can think of at least one other chocolate maker that uses this strategy to sell LOTS of chocolate for higher prices than the quality justifies. [Still only in the $9/bar range, though.])

Brad Churchill
@brad-churchill
11/04/12 11:55:55PM
527 posts

That gave me a good chuckle Clay. You know I was just having fun too!

Cheers

Brad.

Sebastian
@sebastian
11/05/12 06:25:36AM
754 posts

who says the world of chocolate's not a cut-throat, competitive business? 8-)

Sebastian
@sebastian
11/05/12 06:31:44AM
754 posts

It was tongue in cheek. however i suppose i could do bars based off of extra-ordinarily rare trees (most people don't have access to germplasm databases), or crossed with things like theobroma grandiflorum.

However, uniqueness of raw materials and skill/knowledge of the preparer aren't going to be sufficient to justify/sustain an elevated price. There will need to be something less directly product related to accompany it.

Clay Gordon
@clay
11/05/12 01:01:03PM
1,680 posts

Melanie:

You also need to start thinking about a PDO system. Coffee has Kona all sewn up and probably won't like the application to cacao. Place names are going to be very important to elevating awareness.

Many people know Chuao, and there are many names associated with cacao but they are used confusingly. Ocumare is a place? And a varietal? What about Rio Caribe? Can you get true criollos from Rio Caribe? Maralumi? Place or made up name?

Knowing what you have (and don't) and communicating it properly will be important in getting better prices.

Hawaii can lead the way on this; the community is small, the industry is still really nascent, and there are knowledgeable people. Getting the legislature to recognize the potential economic advantage (making the connection to Kona) could get them to act.




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clay - http://www.thechocolatelife.com/clay/
Clay Gordon
@clay
11/05/12 01:29:24PM
1,680 posts

Michael:

You are not wrong in your pointing to coffee, not wine, as a potential model for chocolate to follow.

But (naturally) I think there's a lot of nuance and difference in the markets. I can appreciate the SCAA's work in growing the coffee market - which included increased respect for roasters and baristas - but the differences in production between coffee and chocolate do not (I think) translate into chocolate being able to take the same path. One reason is the immediacy of coffee. I can walk into a coffee shop with a roaster and talk to the people who roast the beans and pull the shots (might even be the same person). I can then endlessly customize the form of the delivery and consumption: method of brewing, cortado, macchiato, espresso, Americano, cappuccino, doppio, lungo, ristretto, type of milk, flavoring, size, foam or no foam or in-between foam.

While there are some new chocolate factories opening up in retail-friendly places that invite interaction between the roaster/barista/consumer, the level of meaningful customization in chocolate is just not there.

One question I do have for you is where you think the chocolate equivalent of Starbucks will come from. Starbucks (irrespective of what we think of their beverages) is in large part responsible for the growth of interest in coffee, moving it from a simple beverage purchase with very limited options to a lifestyle choice. They can take beans that retail for $9/lb (and cost less than $2) and when they sell it as a beverage can reap gross margins of thousands of percents. SO, the economics do work in that respect. The question for chocolate is where the marketing $$ is going to come from. It's not coming from Hershey/Nestl/Mars/Kraft - in the gourmet sector, though it could, I suppose. Mars likes to try to innovate in this respect, witness Ethel M and Pure Dark. But they are fundamentally a mass market consumer organization and face the same issues Hershey had in trying to create a credible gourmet brand image.

Another thing to consider is that the chocolate industry does not have a magazine of its own. Coffee has many. Why?

So - I don't think the business models directly translate but there are parallels that can be used for guidance.

And, I say again that a cocoa version of the Cup of Excellence would be a good idea. The organizers of the Salon du Chocolat have a Cocoa Excellence awards but it is missing, entirely, any idea of how a winner of one of the awards can monetize it. The same is true, I fear, of the FCIA's Heirloom Cacao Project. I was at the meeting in DC in the summer when they announced it, acknowledging that it was still in the early stages, but the lack of attention to recognizing any increase in economic value of a cacao deemed worthy of being designated heirloom was a glaring omission, in my opinion.

All this said, I think your points are an excellent starting point for continued discussion, and I look forward to it. A lot.




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clay - http://www.thechocolatelife.com/clay/
Brad Churchill
@brad-churchill
11/05/12 02:17:14PM
527 posts

Clay;

You have very clearly touched on several aspects of my exact business model, identifying holes I found in the indusry 7 years ago when I first started researching it. There are many stigmas attached to the chocolate industry which have in the past and will continue to stifle growth as it applies to product quality.

BIG ONE: Romance. There is an aire of romance that women have associated with chocolate -an aire that has been played upon by large companies and chocolatiers alikefor years. Chocolate is a unique product in that it can be molded and shaped and made to look beautiful. Coffee can't. it comes in a cup. That's it. As a result, artisans have and always will continue to forget that we may buy once with our eyes, we'll certainly only buy subsequent times with our pallates! (A discussion in an earlier thread). People will continue to forego quality for beauty, and as a result willnullify the concept of a $100 chocolate bar. Now.... Having said that, a $100 or $200, or even $1500 chocolate sculpture is not out of the question, as it can easily be tied to the skill of the artisan. Again, we're back to the aesthetic beauty and time required to create it,not the taste.

Because of the image of chocolate being a woman's "treat", the chocolate industry loses money 9 months of the year, and almost 30% of it's revenue is centered around Valentine's Day, and Christmas, whereas millions of people "need" their coffee fix every morning, and often mid afternoon to pick them up.

Coffee is a daily thing. Chocolate is a "treat". In fact many consumers think of chocolate bars and think of things like Coffee Crisp, or Kit Kats, or other "candy bars", rather than thinking of just straight eating chocolate.

Don't forget that coffee also contains a drug/stimulant (caffiene), whereas chocolate doesn't have the same effect on people.

I'm not even going to bother jumping on the "beautiful packaging" soap box.....

Large companies have tried to address thebig spikes in consumption trendsby capitalizing on the "health benefits" of dark chocolate, in an attempt to make chocolate a daily part of our diet, rahter than the occasional seasonal "treat", but come on! Really?? How many people are going to buy into a "healthy" product that is on average 65% fat and sugar?? Duh....

I believe that when artisans start focusing on flavour and consumer preferences and less on aesthetics, only THEN will trends change. My business "Choklat" is an exact prototype of what I've mentioned here, and is hammering our competition without my presence, because our focus IS 100% on taste, is based on recipes that are tried tested and true, and utilizes skills that require only basic staff training and not the skill of a master chocolatier. Our focus IS the customer, and it is doing very very well.

Cheers.

Brad

Thomas Forbes
@thomas-forbes
11/05/12 04:59:22PM
102 posts

How might some of this high price chocolate relate to price growers would get for dry cacao beans. From what I learned last summer in the Dominican Republic, the basic earnings for fermented quality cacao is around US $.90 - $1.00/lb. The summer before it was more than .50lb. Certified organic and/or fair trade will take it up another .15-20lb. I was able to find two cases where up to US$2.00 was being paid for cacao which is harvested, fermented and dried exceptionally. I met a number of people who have nurseries and are growing a number of genetic varieties for different characteristics. The larger producers have been improving genetic quality on some farms for some time and some of the smaller producers have started to convert small parts of their farms to these new varieties.

Is it unreasonable to think a farmer could get US$3-5/lb for dry cacao from select genetics and everything else done to precision? What do people pay for the best Criollo coming out of Venezuela or Nacional out of Equador or Peru? I know what it costs me to buy beans or liquor from the DR in the US. How much would a $100 bar of chocolate relate to an increase in price for the cacao?

I know of three people who are making a farm to bar chocolate from the DR. SpagnVola, the Rizeks, and Diana Munne. It will be interesting to watch the quality and diversity of each improve and develop over time.

Clay Gordon
@clay
11/05/12 06:23:07PM
1,680 posts

Thomas:

The commodities market price for (robusta) coffee right now is about $1.05/lb, or about $2350/MT. The price for commodity cocoa is about $2470, for comparison purposes.

These markets are called the "formal markets," which means the transactions are recorded and the prices are known. Thus it's possible for a buyer to pick up a phone to a seller and purchase cocoa according to standard terms and conditions, and according to established grading standards using standardized contract terms.

Coffee and cocoa are also traded on what is called the "informal market," where transactions are not recorded and each sale is negotiated on a personal basis. One kind of informal market is Direct Trade, where the buyer buys directly from the grower. Prices are negotiated in private and may vary from contract to contract which may embody non-standard (with respect to industry norms) terms and conditions.

There are informal markets in coffee that are very public, and the best known of these are the ones associated with the Cup of Excellence Awards. While commodity coffee hovers between US$1 - $2/lb, prices paid for select lots at CoE auctions routinely fetch US$20+/lb. One lot of Guatemalan coffee fetched $80.20 - per pound - in 2008. You do have to calculate in the auctioneer's fees (typically 15%), but the prices paid at the CoE auctions are the gross amount paid to the farmer. A normal 60kg bag of robusta would fetch $138 on the commodity market. The farmer is probably only getting 70% of that. On the other hand, in the CoE, that 60kg bag would fetch over $5000 at $50/lb even after auction fees are deducted. If a farmer has seven bags of coffee that fetches even $20/lb, they are doing very well indeed.

But even those prices are nowhere near the upper limit on coffee prices: there are exotic coffeesthat retail for as much as $1300/lb, according to the article on Kopi Luwak coffee on Wikipedia.

I spoke with Stephane Bonnat in 2010 when I was last at the Salon du Chocolat, and he said he was paying farmers 6000/mt for some of his beans. That's about US$3.50/lb at today's exchange rate. If I recall correctly, there are cocoa beans that command higher prices, still. Earlier, I reported that the Mast Bros had indicated that they'd paid as much as US$20,000/ton ($10/lb) for beans. (It was not clear what this price referred to - the farm gate price or the delivered price, though the likelihood is that it was the delivered price and the farmers received considerably less.)

At $20,000/ton delivered, the cost of the cocoa in a 100gr, 80% bar is about $2.20. Assume manufacturing doubles that cost in one-ton quantities. Throw in $1/unit for packaging and you have a cost of goods (very naively) of about $5.40. A retail price of $30 for such a bar is not an unreasonable lower bound, assuming the bar is made to be eaten right away, and accounting for a three-tier (broker (15%), distributor (20%), retailer (100%)) distribution system where the chocolate maker enjoys a 50% gross margin.

Doubling the delivered price of cocoa (to $40,000/ton with the farmer getting at least 75% of that), doubling the cost of packaging to $2/unit, allowing $40k/ton for manufacturing, aging, and other processing, and setting the gross margin to the chocolate maker at 70% gets the retail price of the bar around the $100 price point - and there is now over $35 per baravailable for marketing and other activities on a 100gr bar that costs over $10 each to manufacture. In other words, there's a lot of money in the system to pay for experts whose job it is to educate people about the merits of this $100 bar.

It would require a substantial change in mindset for this to happen, but if it did happen, the entire chocolate industry would benefit tremendously.

Still the questions remain, what are more of the characteristics that define this $100 bar? There have been some good suggestions already but I am sure we can come up with more.




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clay - http://www.thechocolatelife.com/clay/
dsfg
@lane-wigley
11/06/12 12:08:06AM
31 posts

If we look at this from the demand side, let's think about who is going to pay for a $100 bar and why? Although people for whom the difference between $10 and $100 doesn't matter may be a major part of this market and enough to sustain smaller makers, let's think about how to create that value for people for whom it represents a real buying decision (perhaps defined as needing to work more than 2 hours to afford this $100/100gram pinnacle of chocolate).

Starting with some differences between wine and chocolate. Wine has vintages which are influenced by weather and which receive ratings and reviews. I don't think many people really appreciate the difference, but they are told to by the experts so they do. Is cacao as sensitive to yearly weather variations (I don't know)?.

Wine is a social experience. While it's fun to have a chocolate tasting, I've never heard of a group of people ordering a chocolate bar at a restaurant or a bar; a chocolate menu would be cool! Wine is defined by the appellation, vineyard, and winemaker. I'm a chocolate nut and couldn't tell you the name of a single farmer, although I've seen blogs about lots of them. In wine, people pay for cachet, that's hard to do without extremely fine segmentation (think about number of wines vs. number of chocolates). I collect boxes so I could say with some confidence that I've tried about 300 different bars. I suspect there are another 300 out there if we really got into each bean for the top 20 producers. I suspect that number is at least 5000 for wines.A bottle of wine also provides a good serving for 6 people. I'm not sure 1/6 of a chocolate bar is going to cut it, although the 40g packaging might help here. I think the biggest thing is that people drink wine because it's an expected part of the dinner ritual. There's no social event that calls for chocolate (except perhaps coming over to my house)

I think you'd obviously need to expand the number of people who appreciate fine chocolate. If you don't appreciate the difference among Amano/Mast/Amedei/Cluizel/Valrhona/Pralus and the variations within their offerings then you aren't going to chase something "special". Developing a memory of what Chuao tastes like, describing that in words, and then talking about the difference between what Cecilia, Art, Pierre, and Francois do with it takes a lot of experience. Oh, we need to invent chocolate name dropping too! I recently tried the Marcolini and Amedei bars back to back and Chuao "clicked" for me. I always enjoyed it but now I can recognize it. I now have amassed 6 different Chuaos for an upcoming chocolate making party. Perhaps we should encourage that sort of tasting to enhance the focus on the origins, which can drive preferences, which can drive demand.

Another challenge is the taste bud issue. As the world converges towards an American diet, we're losing the ability to distinguish anything other than salt, sugar, fat, texture, and temperature. This may be less among the upper class we're aiming for, but it's still a problem.

Unlike wine and Scotch and caviar, chocolate is something you can make by yourself with pretty good results. I think having a friend who makes chocolate is a great way to get people into the game. I just started and for a $1000 investment and a bit of web surfing (thx Alchemy John) in equipment you can get some good results very quickly. Now if I could just find out how to get my hands on 20lb of Porcelana...

Clay Gordon
@clay
11/06/12 11:29:09AM
1,680 posts

Lane:

There's a new boutique bean broker in Portland, Meridian Cacao. They don't have any Porcelana (now), but if I recall correctly they are waiting to receive a container of Gran Couva from Trinidad ... and they are going to be selling in small quantities, e.g., 10-20lb minimums.




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clay - http://www.thechocolatelife.com/clay/
dsfg
@lane-wigley
11/06/12 01:01:46PM
31 posts

Cool. My first experience with high end beans was getting some nibs from Amano. I went straight from the Cuisinart to the Santha, added some vanilla and it was incredibly fruity and great all around. thanks for the link, I'll check them out.

Gap
@gap
11/08/12 07:29:54PM
182 posts

I think a few people have touched on this in various ways, but an important part of the whole wine/chocolate thing is: a bottle of wine is (usually) to be shared whereas a bar of chocolate is (usually) for an individual.

Maybe a bar is not the best vehicle for delivering 75-100g of $100 chocolate? Maybe tasting squares that can be eaten like a cheese platter would be a better format to share the chocolate? Extending the cheese platter analogy, you could have various origins for different tastes. Just throwing it out there . . .

mda@umgdirectresponse.com
@michael-arnovitz
11/08/12 10:59:09PM
59 posts

Clay:

I have been thinking about these types of questions for some time now. Here are my thoughts.

In regard to who is going to be the Starbucks of chocolate my answer is that I dont know, nor do I know if there even will be a Starbucks of chocolate. Personally I hope not. And also I dont think its necessary. Yes, Starbucks helped accelerate the rise of specialty coffee in this country. But all Starbucks did was speed up the process; it would have happened anyway. It was happening anyway. Remember, Starbucks was around for nearly 20 years before they really even started expanding.

Also, over time Starbucks did a lot of damage to the national perception of specialty coffee. Indeed, a large part of the motivation for the third wave of coffee was a reaction to Starbucks and its ilk. In this regard large corporations tend to be a double-edged sword. On the one hand they typically have the financial resources to market aggressively on a national level. That can be helpful for not only them for others in their industry. On the other hand large corporations nearly always concentrate far more on revenue streams, cost control and process than they do on craft and product quality.

When I suggest emulating the coffee industry model Im not talking about Starbucks, Im talking about the thousands of independent cafs that formed in cities across the country. Many if not most of these coffee houses started small and just figured out how to do it. And they served a regional customer base, not a national one.

After a while people in nearly any decent-sized city could suddenly go to a local caf and get coffee products that were far superior to anything they had experienced. And because this was happening all over the country, it became part of the national conversation. Consumer expectations rose, along with their perception of the product and their willingness to pay substantially more for that product. It was a ground-up, grass roots kind of thing. Not a top-down, big corporate Starbucks thing. Starbucks deserves some credit, to be sure. But having been there, I think they get more credit than they actually deserve for building the industry, and less blame than they deserve for damaging it.

Anyway, would this be difficult to do with chocolate? Perhaps. But if you had told any random person in the 1960s that someday there would be thousands of cafs across the country that concentrated only on coffee and espresso drinks, and where the average cost for one of those coffee drinks was $3-$4, they would have told you that you were crazy. And then 20 years later it was true.

Now you point out, and rightly so, that the immediacy and variety available in the modern coffee house has no current equivalent in the chocolate industry. But your observation appears to carry with it the suggestion that this is simply the nature of the beast. I dont think this is the case, and quite frankly Im soon going to be putting that to the test with an upcoming project! Not only do I think this it is entirely possible, I absolutely think that this is the best way forward.

Clay Gordon
@clay
11/09/12 10:01:19AM
1,680 posts

Gap -

A good observation and one that is being hinted at in other responses. For example, Starbucks costs as much as it does not because it's such good coffee (objectively, it's not), people are paying for the experience, buying into the brand's lifestyle. Most people don't know this, but the two ingredients that comprise most of what Starbucks consumes are water and milk. Actual coffee is #3.

That said, is the presentation of the chocolate curated and moderated? Is there someone with expertise who's making the selection, providing the information, and more? Or, are the tastings unguided?

:: Clay




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clay - http://www.thechocolatelife.com/clay/
Clay Gordon
@clay
11/09/12 10:17:13AM
1,680 posts

Michael -

Many times over the past few years I've floated the idea that any market that is large enough to support a craft brewery is large enough to support a craft chocolate maker. So, I agree with you about many of your points.

Was Starbucks necessary? Maybe. I do think they accelerated the development of the specialty coffee market. In the town where I live Starbucks moved right across the street from the local coffee shop, which also roasts. People predicted the decline of the local shop but I am happy to say that it has thrived and consistently produces a better cup - at a lower price.

Nonetheless, Starbucks helped fuel the differentiation of coffee and drive the prices up. You're right, 20 years ago most people would not pay $3 for a cup of coffee outside of an upscale restaurant or hotel. Now it's accepted. Starbucks was able to effect this change, relatively quickly (and this is after Howard Schultz stepped in), by recognizing they weren't selling coffee, customers were buying being associated with a lifestyle choice that went far beyond "regular, light, dark, and black." Half-caf, skinny ... the endless personalization of the drink helped fuel what had, up to then, been undifferentiated.

In part, the specialty coffee market has grown as a reaction to corporate coffee. There are big companies (and smaller ones) who have tried to do something similar in chocolate, but those efforts have failed ... so far. Not that it can't be done, just that no-one has hit upon the winning formula, yet.

I do think that the immediacy and personalization available in coffee (and that accounts for Coldstone Creamery's longevity) doesn't really have an equivalent in the chocolate market. That's not strictly true I realize as I write it. There are some on-line retailers that do customized chocolate bars and I know you can go into the Ritter Museum in Germany and order customized bars and wait for them.

I look forward to learning more about your project and following its progress. I don't think it's the nature of the beast, just that it's going to take someone to challenge the existing models in ways that have long-term appeal to consumers.And I don't think it will be one thing, it will be a confluence of things. The $100 bar is just one.




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clay - http://www.thechocolatelife.com/clay/
dsfg
@lane-wigley
11/09/12 10:24:07AM
31 posts

It might be useful in this pursuit to have a some well presented place(s) on the Internet where consumers can learn about the chocolate world in ways that they understand the wine world. I'm not sure what the best one is today. Perhaps it could be a joint effort of this group, but it needs to be a consistent format.

- Detailed history and style of chocolate makers, bios, videos and interviews

- Detailed information about chocolate appellations (a world map would be good). I think single origin is the only way to get the prices up.

Again, the idea being to allow customers to begin to go deeper in a way that enables them to build preferences, for which they may pay more.

peter mengler
@peter-mengler
11/10/12 06:30:36AM
2 posts

i have followed some of this discussion and you all make valid points on this discussion. I can talk only from an Australian point of view. My family has been in wine starting with vineyards in the Barossa Valley around 1830, though i grewup in wine and worked in the industry for many years my main work is speciality tea and chocolate .

Wine got to where it is by evolving over hundreds of years by making the public more knowledgeable about wine. Every major media has columns devoted to this topic every week. Craft beer is following the same path.

The type of discussion you are having is happening in speciality tea as well, many of Clay's opening comments and thoughts have appeared in speciality teas pages.

Cafes are my industry and i've watched the rise and rise of coffee, again in Australia its evolved naturally, not by some grand master plan. Sure COE coffees can fetch hundreds of dollars per kilo but could be awhile before your local cafe has $50 cups of coffee . Here most speciality cafes offer origin coffee as an option to the main blend, at an extra cost of $1-2/cup, this is for coffee beans which cost double the house blend = breakeven at best. real price should be $10 based on standard 18g double shot ristretto.

If your going to aim for a $100 bar (a rising tide lifts all boats) it'll be through media, public awareness, tastings. If you look at wine its tastings tastings tastings- from corner bottle shop, wine cellar, restaurant hosting dinners, lets not forget wine clubs,

Wine prices are also influenced by collectors, i was only reading tonight that the stocks of very old wines 1900-1940 have all but disappeared, so stocks of 50-80's are more valuable.

Anyone got a 1952 Cruizel or Pralus chocolate ???

origin chocolate is the start lets just get out there and let people taste it the rest will follow

The big thing chocolate has (tea hasn't) is that emotional connection just like wine & coffee

ChocoFiles
@chocofiles
11/11/12 01:07:11AM
251 posts

A couple of points:

1) For this discussion there needs to be a standard weight for the bar. I suggest 100 grams. Obviously, a 50 g bar for $100 is much more expensive per gram than a 500 g bar at the same cost. Or perhaps more realistically, you get twice as much chocolate for a 100 g bar than you do for a 50 g bar. For sake of argument, and just to be consistent, can we just say we're talking about a 100 g bar?

2) The most expensive 100 g of chocolate that I've seen so far is $50 for 100 g of Oialla at Caputo's Market. It's still listed, but no longer for sale. Oialla might be a bar worth discussing because it is way overpriced and the chocolate is not very memorable. I'm guessing that in this case paying a PR firm for marketing andindividuallywrapping each 5g piece are at least 2 factors that drove up the price. Apparently Caputo's also agreed that there is better chocolate for a lower price. They said, "Be sure to check out the "Beni Bar" from Original Beans. It is made with the same beans from the same area and is a fraction of the price. While it is not in super fancy packaging like Oialla, we feel the chocolate is tastier."

3) I guess that the question of this thread presupposes $100 bar that is actually worth the price.

ChocoFiles
@chocofiles
11/11/12 01:15:07AM
251 posts

Well, I should have looked closer. Caputo's also still has listed a 50g box of Oialla for $30. Thus, per gram, it would be even more expensive than the 100g box since it is $60 for 100 g, and proves my point of the need for a standardized weight for this discussion.


updated by @chocofiles: 09/07/15 11:08:40PM
Clay Gordon
@clay
11/11/12 02:22:12PM
1,680 posts

I was thinking the chocolate equivalent of the classic 750ml wine bottle.So 100gr was what I was using as a benchmark.

What weight do you propose? Smaller quantities get a premium as packaging and labor take up a relatively higher percentage of the COGS.

The Oialla box is what - 10, 5gr squares? Personally, I think the ratio of packaging to product is way too high. I cringe when I think about it.

Domori is selling in 25gr bars of four squares. Their 100% Criollo is well under 10 for that quantity.




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clay - http://www.thechocolatelife.com/clay/
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