The Best Little Chocolate Bar You’ve Never Heard of: Why the American Craft Chocolate Industry May Not be Sustainable

There’s a certain kind of charm in “craft foods”. Not “Kraft” with a K, big industrial foods, but products created by small businesses in basements, backyards, and family kitchens by people that are so passionate about their craft that they make small batches, perfecting each one before selling them at extraordinary prices. There’s a very healthy craft beer industry in the US, craft cheese as well, but in the last few decades, the American-made craft chocolate bar has appeared. With the American history of chocolate being a cheap indulgence sold at check-out counters across the country, it’s hard to imagine the place that an $8 “craft” chocolate bar with 76% Malagasy cacao beans has in the American consumer’s lexicon. That very high price point, as well as the increased scrutiny customers willing to hit that price level give to their products, may mean that the American craft chocolate industry isn’t wholly sustainable. Looking at the trajectories of three different craft chocolate makers, Patric, Potomac, and Mast Brothers, serve as examples of the fine line that craft chocolate makers must walk to maintain their already precarious position in the American food economy.

Before discussing the specifics of these brands, it is important to lay out first why exactly these bars are so expensive. There are two prongs of this problem that need to be addressed: the cost of production and the inevitable mark-up by retailers that will carry craft chocolate bars. The cost of production for small batch chocolate bars is fundamentally different from “Big Chocolate” in the very first step of chocolate making: sourcing the cacao. These 3 chocolate makers, like many in the craft chocolate realm, are “bean-to-bar” chocolate makers, simply meaning that the chocolate makers themselves do all of the processing of the cacao in-house. These makers pride themselves on this fact in addition to using often only ethically sourced, fair-trade cacao beans. The cost to do this is significant, as fair-trade products carry with them a hefty price, and the price of buying fair trade certified bean added on to the cost of processing those beans in the same facility must be passed on to consumers. The second prong of the craft chocolate price tag being so high is that the stores that would carry said chocolate bars, the Whole Foods and luxury wine and cheese shops of metropolitan areas, know that they can make their profit with a large markup on items that they may buy for $2-3 wholesale and, as such, the price jumps from $3 to $8 (Martin “Haute Patisserie, Artisan Chocolate, and Food Justice”) . The combination of these two factors leads to the average American consumer getting sticker shock when picking up a fine bar of Potomac chocolate — the average consumer will only spend up to $3.99 on a chocolate bar (Martin “Haute Patisserie, Artisan Chocolate, and Food Justice”). So why then, have the following brands been able to become successful? Let’s investigate.

The first of these brands is arguably one of the most successful, having won national acclaim every year since 2011 (http://patric-chocolate.com/about/). Patric Chocolate is a bean-to-bar chocolate making outfit out of Columbia, Missouri run by a man named Alan McClure. McClure spent years tasting European chocolate in his 20s only to return to the US determined to make a better American chocolate bar in the style of the gourmet chocolate industry in France. The American chocolate industry really gained steam about 20 years after the revolutionization of the French haute chocolate industry (Terrio 14), and McClure began investigating chocolate just as the US was in the process of gaining the industrial and culinary knowledge necessary start a craft chocolate making industry in the style of Valhrona and Bernachon. The beginning of every Patric chocolate bar is the beans; Patric first sourced all of their cacao beans from Madagascar, launching the high percentage Malagasy cacao chocolate bars in 2007, and later moved on to blended bars with beans from the Caribbean and Central America. Patric chocolate boasts Fair Trade (or higher) prices paid for cacao in addition to all organic and non-GMO certified ingredients to flavor their unique bars like “PBJ OMG” and “MINT Crunch” with the very best fruit, nuts and peppermint essential oil. The fantastic ingredients of Patric chocolate bars shine through in the rich and creative tastes that melt perfectly on the tongue. Those ingredients shine through in the price tag as well: one 2.3 ounce bar of the 75% Madagascar chocolate is $14.00. 

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One single Patric bar is 7x more expensive than a Hershey’s XL bar from Walmart. And on top of that, customers that purchase online have to hit a 5 bar minimum for shipping. That’s a minimum of $70 to get your chocolate if you don’t live near a retailer. 

 

Where Patric succeeds more than many craft chocolate brands is its exclusivity. Patric only makes it to a few very pricey specialty stores and is sold online in monthly “batches” of creative flavors on the Patric website. This helps to maintain Patric’s profit margins without compromising their ingredients or hands on production process. This is key to sustaining its business and continuing to bolster both cacao and organic farmers by paying above market prices for what they deem the very best.

Potomac Chocolate, like Patric, is a small bean-to-bar chocolate maker in Woodbridge, Virginia. Founded after Patric, in 2010, Potomac has a very similar business model as that of Patric but where Potomac really excels is their single origin bars. These bars are high-percentage cacao dark chocolate bars where all of the beans are sourced from one location, estate, country. This gives each of these bars a beautiful and distinctive flavor based on the terroir of the region; for example, the Duarte Bar, with beans sourced from an estate in the Dominican Republic, has hints of tropical and citrus fruit reflecting the tropical location the beans were grown in. These nuances, however, are really something only a consumer with a deep interest in chocolate or a very refined palate would notice. With that in mind, it make sense that these bars are sold in expensive groceries like Whole Foods and specialty shops.

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The Potomac packaging doesn’t boast all the labels some craft foods do (Fair Trade, Organic etc.) but has instead built a reputation for ethically sourced ingredients that encourages it purchase among the “Whole Foods Shopper” demographic 

Potomac sells their bars to these retailers at a price of only $2-3, leaving the additional $6 markup to the seller themselves. This obviously proves a challenge to Ben Rasmussen, proprietor of Potomac, to source good beans and make so little profit. Without the exclusivity and “limited edition” specialty releases of Patric, Potomac relies on these sellers to market their products to demographics that are interested or might be; where I can find Potomac at Whole Foods and a handful of other specialty shops in the Boston area, I have never seen a Patric bar for sale next to it. The cost of selling at these stores, however, means that Rasmussen must keep a day job and craft his chocolate at night. Even though Rasmussen and the company are young, it seems clear that the market for Potomac won’t sustain a chocolate maker like Potomac indefinitely. And that’s assuming that they can keep their already small consumer base intact!

Our final case study in the American craft chocolate industry is Mast Brothers. Founded in 2006 and incorporated in 2007, Mast Brothers was a rising star in the craft chocolate making industry. In one weekend in 2008, their brick and mortar store in Brooklyn made $28,000 (Person). Instead of taking a look at their business principles and sustainability, Mast Brothers is presented here as an example of what a misstep can mean for a company that works in a realm of consumers with discriminating tastes and standards. In December 2015, a food blog called Dallas Food published a 4 part expose, with it’s final piece effectively accusing the Mast Brothers of defrauding consumers since their inception by buying chocolate, not cacao, to make their chocolate bars. The distinction here is, unlike our previous two chocolate makers, the Mast Brothers were not in fact bean-to bar makers. The aftermath of the fiasco is still playing out but it’s undeniable that this, coupled with the fact that even early in 2015 the chocolate community at large was skeptical of quality and taste of Mast Brothers (Giller), has hurt the company’s credibility and limited their reach — being unable to sell in the specialty shops that cater to the finest chocolate consumers means that the average customer seeing their $10 bar is certainly less inclined to pull the trigger and purchase. Their evasiveness in answering questions on top of their fundamental lack of creativity sets the Mast Brothers apart from chocolate makers like Patric and Potomac, whose creative flavors and dedication to sourcing the best beans and ingredients make their small consumer base very loyal. The Mast Brothers should serve as a cautionary tale and poignant anecdote representing the fragility and importance of brand in an industry as small as American craft chocolate making.

As these three case studies show, the American luxury chocolate industry is unsustainable from a pure market point of view. While there will likely always be a small sector of the population, the true chocolate connoisseurs, that’s willing to pay up for their bean-to-bar indulgence, the growth outlook for a company that boasts the finest and most expensive chocolate ingredients is not very positive. Considering that the industry hinges on these very expensive ingredients and the assurance the a consumer is getting all the chocolate for their dollar, there is also not a great way to pivot to market to a broader US audience without losing their loyal customer base. Ben Rasmussen, of Potomac chocolate, is doing what he loves at night, but it seems unlikely that he’ll be able to quit his day job any time soon; the craft chocolate industry is simply not sustainable for Rasmussen and many makers like him.

Works Cited

Giller, Megan. “The High-End Chocolate World Hates Mast Brothers .” Slate Magazine. 2015. Web. 04 May 2016.

Martin, Carla. “Haute Patisserie, Artisan Chocolate, and Food Justice”” Harvard University. 27 Apr. 2016.

Person, Deena Shanker, and Http://qz.com/author/dshankerqz. “How the Mast Brothers Fooled the World into Paying $10 a Bar for Crappy Hipster Chocolate.” Quartz. 2015. Web. 04 May 2016.

Terrio, Susan J. Crafting the Culture and History of French Chocolate. Berkeley: U of California, 2000. Print.

Williams, Pam, and Jim Eber. Raising the Bar: The Future of Fine Chocolate. Vancouver: Wilmor Pub., 2012. Print.

“Mast Brothers: What Lies Behind the Beards (Part 4, Confessions).” DallasFood. Web. 04 May 2016.

“Patric Chocolate Handcrafted American Chocolate Online Store.” Patric Chocolate RSS2. Web. 04 May 2016.

“Welcome to Potomac Chocolate.” Potomac Chocolate. Web. 04 May 2016.

Images

http://www.potomacchocolate.com/wp-content/uploads/2015/12/upala_70_sq1-300×300.jpg

https://cdn.shopify.com/s/files/1/0972/7116/products/hershey_s-special-dark-xl-chocolate-bar-12ct-case8.png?v=1459344563

https://chocolateclass.files.wordpress.com/2016/05/9bf1c-patric-piuradrkmilkbarpkg-5-16-15-600.jpg

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