Conscientious consumerism in the chocolate sphere

It’s a foregone conclusion that consumption of chocolate products has profound implications for many people, both up and down the supply chain. For one, our consumption habits have a direct effect on the economic livelihood of workers upstream. In addition, consumption of any good in a market economy operates as a feedback loop of sorts: the extent and way that we consume informs future consumption patterns.

The popularity of socially responsible consumerism has perceptibly blossomed over the past decade or so, and the particularly astute firms—including those operating in the chocolate sector—have certainly leveraged this new type of consumer demand, oftentimes by coupling the “socially responsible” component with a notion of the “artisanal” product. This type of savvy marketing, when successful, creates a mythos around the product in such a way that enables the supplier to extract significant value out of the consumer by way of an ample price premium. The Mast Brothers are certainly one of the more visible firms in the chocolate business to have taken advantage of this model, and public awareness of their brand has only ratcheted up in light of the recent controversy regarding the Brothers’ potentially disingenuous history. In spite of this negative press, their products have been indubitably successful: Mast Brothers have recently launched a chocolate “subscription” platform, where customers can elect to have a sampling of 12 chocolate bars delivered to their doorstep four times a year.

Untitled
(Credit: http://www.mastbrothers.com)

Each quarterly shipment, however, will run the chocolate club member $100, for about two pounds of chocolate by weight. For comparison, the USDA guideline on a weekly grocery budget for an entire family of four’s meals is pegged at less than $150 on the thrifty end. Clearly, Mast Brothers’ target market segment is the upscale American consumer. Surprisingly, evidence points to firms increasingly marketing niche products and services to the wealthier segment—even as income inequality rises in America.[1]

So the logical question necessarily becomes: what kind of chocolate does the average middle class American consume? One way to make a reasonable inference on this question is to look into what options in shopping the typical middle class American has. The average American eats 4 “commercially prepared” (sit-down restaurant, fast food, food truck, etc.) meals a week, which, though high, still leaves 17 meals a week where the food is presumptively prepared at home. The natural place to shop in preparation of cooking at home would be a grocery store, so it would be reasonable to assume that the most accessible route to chocolate for the average American would be in a grocery store aisle. As a baseline premise, we establish that our hypothetical American consumer does not shop at a specialty food or health food store à la Trader Joe’s or Whole Foods. Though there are regional cost of living differences that might make one of the former stores only nominally more expensive than a regular chain grocery store (Cambridge, MA has exorbitantly high cost of living, for example), a specialty grocery store has a more upscale price point, on average, across the country.

 

Untitled
These aren’t the chocolates you’ll find in your average grocery store (Credit: http://www.shescribes.com

Star Market is a chain of supermarkets across the New England region, operating as a wholly-owned subsidiary under Albertsons, which has more of a presence in the West Coast. As alluded to above, because of Boston’s high cost of living, Star Market is not cheaper than a Trader Joe’s by a wide margin. However, for our purposes, it’s appropriate as an example of a prototypical supermarket that the middle class segment of the population would frequent.

Surprisingly, after an extensive search, Star Market did not have a dedicated section down their aisles for chocolate, or even a candy aisle. The most analogous thing was a section of an aisle reserved for cookies.

Untitled

It would indeed be difficult to put Chips Ahoy chocolate chip cookies and Oreos dusted with cocoa powder into the “chocolate” bucket. Star Market did have, however, a limited selection of chocolate bars, albeit marketed as being for baking—the bars were found alongside packages of chocolate chips in the baking aisle.

Untitled

To be fair, eating baking chocolate bars—particularly the semisweet variety—is not unheard of.[2] However, it’s certainly atypical; it would be fair to posit that most people would not purchase a baking bar for the express purpose of direct consumption, even if it were a recognizable chocolate brand like Ghirardelli. So just where is all the chocolate at a grocery store?

Untitled

The only real chocolate that could be found across the entire store was scattered amongst the candy bars at the checkout line. To be fair, most of the candy bars shown above have some kind of chocolate element to them, but it could be argued that the purely “chocolate bar” products—even when being generous with nomenclature—are categorically restricted down to the Hershey products, M&Ms, Crunch bars, Mr. Goodbars, Rolos, and the three-packs of Ferrero Rocher. If we were to further isolate our selection down to the products most similar to the premium artisanal chocolate bars found elsewhere—say, by ranking the products by cacao content—the most viable competitor would be the Hershey’s Special Dark chocolate bar near the bottom of the rack, which has a 45% cacao content. Unsurprisingly, our limited chocolate selection above represents four of the five companies that together make up Big Chocolate, none of whom are particularly known for their corporate social responsibility. Hershey, for example, has consistently been in the news for their exploitative use of illegal child labor upstream.[3] In review, it seems that the average American’s immediate accessibility to chocolate is neither robust by way of selection, nor socially responsible.

But what this American does have access to is a comparatively cheap, mass produced chocolate product. The Hershey’s Special Dark bar’s retail price, as seen in the picture, is $1.09 for a 1.45 ounce bar: a fraction of the price of a Mast Brothers bar.

So what precludes entry of more niche, socially responsible chocolate makers and chocolatiers into this market segment? In a free market system, a potential entrant will move into the marketplace so long as it makes economic sense to do so. Is it purely a pricing consideration that prevents these smaller chocolate firms from existing in this space?

Each American spends an average of $57 on chocolate every year.[4] For our purposes, we’ll assume that one of those premium Whole Foods-branded chocolate bars above come in at $4 per 3.5 ounce bar—roughly twice as expensive as a common Hershey’s bar, but more affordable than a super premium $10 Mast Brothers bar. In this sense, our middle class American consumer is able to purchase roughly twice as much common, Big 5 chocolate, as they are able to purchase more premium chocolate products. Not so unreasonable.

The lack of entry might speak to differences in marketing between the two tiers of chocolate products, as opposed to a hardline pricing issue. Though the price for premium chocolate is markedly more expensive, it’s not prohibitively so; even a middle class consumer would be able to purchase premium chocolate—just less of it. Chocolate is anything but a staple food. However, the reality is that it’s certainly marketed as if it were a staple food; over time, chocolate has turned into a high volume, affordable, and easily accessible commodity in the West, on par and often indistinguishable from candy or other “junk foods.” Note, how, in the photo above of the chocolate bars at Star Market, that the Hershey’s Special Dark bar (which implies a certain premium quality) is positioned at the very bottom of the aisle, out of the immediate line of sight. The most visible products, for both kids and adults alike, also happen to be the most sugar-laden milk chocolate varieties.

Conversely, the artisanal sector of the chocolate business advertises its products as a sort of positional good, with a certain cachet derived out of its exclusivity. This marketing strategy has arguably adversely impacted potential market penetration in the middle class customer sector. The issue has to do with framing: many ordinary consumers currently premise their chocolate consumption on the notion that chocolate, as a food item, is no big deal from an accessibility and cost standpoint. Moving forward, if chocolate were instead marketed, successfully, as a “once in a while” product that’s supposed to be more expensive than your run-of-the-mill Snickers bar, sales in the premium chocolate sector might foreseeably rise. We certainly see things trending this way recently; white chocolate sales (bars with the lowest cacao content) are down, whereas dark chocolate sales (bars with the highest cacao content) are up.[5]

Penetrating the middle class market with premium chocolate that has an element of fair trade and corporate accountability attached is by no means a solution to the exploitative practices up the supply chain. At best, it serves as a form of harm reduction. It’s fair to say that chocolate products at a Whole Foods generally carry the presumption of being in some shape or form fair trade. However, as evidence makes abundantly clear, slapping a fair trade label on a chocolate bar is seldom enough to effect tangible change. There is, however, the hope that a fundamental shift in the market’s expectation as to what chocolate as a consumer product means will spur more meaningful change moving forward. Recently, the documentary film Blackfish had immediate and stark effects on SeaWorld’s attendance, and therefore its income, to such an extent that SeaWorld has announced an eventual end to its formerly famous—and now infamous—orca shows. Perhaps, by incentivizing sparser consumption overall, but from more reputable brands of chocolate, a similar type of positive outcome could be fostered in the chocolate space as well.

Citations

[1] Nelson D. Schwartz, In an Age of Privilege, Not Everyone Is in the Same Boat, New York Times, April 23, 2016, http://www.nytimes.com/2016/04/24/business/economy/velvet-rope-economy.html/.

[2] Carly Schuna, Baking Chocolate vs. Chocolate Bars, Livestrong, January 28, 2015, http://www.livestrong.com/article/430248-baking-chocolate-vs-chocolate-bars/.

[3] Eleanor Bloxham, Chocolate and child labor: A hurdle for Hershey, Fortune, November 16, 2012, http://fortune.com/2012/11/16/chocolate-and-child-labor-a-hurdle-for-hershey/.

[4] I should cocoa: which country spends the most on chocolate?, The Guardian, July 19, 2015, http://www.theguardian.com/news/datablog/2015/jul/19/which-country-spends-the-most-on-chocolate-bars/.

[5] Leslie Josephs and Neena Rai, Chocolate Prices Soar in Dark Turn, Wall Street Journal, September 22, 2013, http://www.wsj.com/articles/SB10001424052702303983904579091120112729130/.

Martin, Carla. “Lecture 9: Race, Ethnicity, Gender, and Class in Chocolate Advertisements.” AFAM 119X. CGIS South, Tsai Auditorium S010, Cambridge. Lecture.

Coe, Sophie D., and Michael D. Coe. The True History of Chocolate. London: Thames & Hudson, 2013. Print.

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s