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

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.])

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 05:21:42

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.

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.

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.

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.

Brad:

You ship now? To New York?

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

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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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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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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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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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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.

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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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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Sebastian;

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

...and free shipping.

Haha!

Brad.

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-)

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.

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

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

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

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.

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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updated by @clay: 04/09/15 09:51:24