Industry Voices – Curtis Vreeland

A dynamic bean-to-bar market creates the ‘New American Chocolate’ – but is it a game for small players only?

By Curtis Vreeland

- Last updated on GMT

Bean-to-bar chocolate gains popularity in the US: Can multinationals join in or is it an artisan's game? Pictured: Dandelion Chocolate
Bean-to-bar chocolate gains popularity in the US: Can multinationals join in or is it an artisan's game? Pictured: Dandelion Chocolate
Confectionery consultant Curtis Vreeland assesses the growing US bean-to-bar chocolate market and asks several artisanal chocolatiers how and if they can co-exist with multinationals.

The chocolate bean-to-bar renaissance is part of a general movement within the food industry of consumers wanting to know more about the food they eat and of producers satisfying this need by crafting products that use locally-sourced and less processed ingredients. This trend follows other food product trends, such as craft beer, olive oil, cheese and coffee. 

But “due to the sourcing challenges and lack of small scale equipment, it took chocolate a little longer to start this transformation”,​ says Todd Masonis, co-founder of San Francisco-based Dandelion Chocolate.

Vreeland Photo
Curtis Vreeland, president of Vreeland & Associates, specializes in US confectionery market research and trend analysis

What’s the appeal of bean-to-bar chocolate?

“Since chocolate itself enjoys such a huge number of aficionados, learning to make chocolate from scratch will appeal to a large segment of those fans as a business, and to consumers who share these values,”​ says Pam Williams, whose chocolate school, Ecole Chocolat, has trained many aspiring chocolate makers.

Another supportive element of the trend was timing, since the US economic recovery gave consumers “the psychological security [and] disposable income to indulge in pricey bean-to-bar chocolate,” ​explains chocolate industry veteran Terry Wakefield.

Can artisan chocolatiers compete with the multinationals?  

A $100m market

Curtis Vreeland estimates the US bean-to-bar market is worth $75 million to $100 million​ per year for the approximately 100 full-time chocolate makers. That translates to 1,125 to 1,500 MT of beans. 

Are multinational manufacturers jousting for the same consumers or is this a different market segment?

“I think most small artisan chocolate makers don't consider themselves to be competing with multinationals. They are just trying to create a good product and educate people about how they are different,”​ adds Mr. Masonis.  

“Artisan chocolate makers have a completely different approach to flavor and production,”​ says Ms. Williams. And consumers are more supportive of “buying local and small businesses,”​ notes Melanie Boudar, owner/chocolate maker of Sweet Paradise Chocolatier.

Nestlé’s Cailler launch

Cailler brand

Nestlé estimates the premium chocolate market will grow at a compound annual growth rate of 8% in emerging markets and 8.4% in developed markets - faster than mainstream global chocolate, which is forecast to grow 5%. The company has launched its bean-to-bar ‘super-premium’ brand Cailler globally​ to capatilize.

But are bean-to-bar chocolate makers really on multinational companies’ acquisition radar?

According to Brad Kintzer, chief chocolate maker for Berkeley, CA-based TCHO, the craft chocolate world is not an easy space to dominate. “Relatively small volumes and small profit margins are current pinch points in the craft chocolate industry until more consumers are comfortable spending $5 or more for a bar of chocolate.”

Mr. Wakefield adds: “Most small bean-to-bar producers will never get big enough to be acquisition targets for any large company. The challenge for most artisan chocolate makers will be to effectively market their products to drive sales of over $500,000 per year.”

How strongly can a multinational compete in this space?

tcho1
California-based TCHO is a startup in the bean-to-bar chocolate space. The company is owned by Wired magazine founder Louis Rossetto

Dandelion Chocolate’s Todd Masonis argues it will be tough for multinational to compete long-term in the space.

“I think the larger companies will try to ride or co-opt some of the ideas - more certifications on the label, more photos of farmers on packaging, ‘artisan’ and ‘craft’ highlighted in advertisements, more flagship, experience-based stores. Ultimately, I think it will be challenging because a core part of this movement is a more personal connection and trust with the customer which is harder to pull off at scale.”

And when a mega-chocolate manufacturer acquires a craft chocolate maker, the parent seems to have a hard time maintaining its creativity, passion and loyal customer base. As cautionary examples, Mr. Wakefield points to Scharffen Berger, Dagoba and Joseph Schmidt, three companies that lost considerable craft brio under Hershey’s ownership and Green & Black’s under Kraft.

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Related topics: Markets, Industry Voices, Chocolate, Premium

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3 comments

Chocolate Sommelier

Posted by Sophia Rea,

Craft chocolate makers will influence the larger mass market chocolatiers much in the way the farmer's markets and local food movement has influenced the larger grocery stores to carry organic. It may take time but I really believe this will happen. Education is key. Why is that bean to bar chocolate $9 and another mass produced bar of chocolate $2? This needs to be shown through experiential learning much the way Shawn Askinosie and Dandelion Chocolate are doing. It hurts to see someone not think twice about paying $9 for chocolate at the movie theatre and it has so many fillers yet those same people will complain about a craft bar of chocolate! But the smaller chocolate makers are so passionate that they are dedicated to educating the public and ultimately I predict the larger chocolate companies will adjust to what they are doing! I decided to take another route to chocolate in creating accessories to chocolate. Why not? It existed before and I am reviving it. We have a chocolate humidor, a chocolate aroma kit and chocolate envelopes to store unopened bars of chocolate. Next year we will have 4 more products that we are working on right now. Tea, cigars, wine and coffee have their products and now we at Projet Chocolat are creating products that elevate the culture and enjoyment of chocolate.

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Gobbling Up Small Chocolatiers - Response

Posted by Curtis Vreeland,

Good question. There are some quality changes, as the larger manufacturers attempt to centralize manufacturing facilities for economies of scale purposes. But a more significant change is that the smaller firms' new product development activities quickly shrivel as the multi-national ramps up volume. It's the flow of creative and tasty new products that give a craft chocolate maker its marketplace gravitas.

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Gobbling Up Small Choclatiers

Posted by Philip Clark,

Curtis, thanks again for your usual interesting insight. You mention the loss of "craft brio" several respected small firms suffered after acquisition by immense multi-nationals but what is your take on the effect on quality of the products after the take-overs?

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