What Do Craft Chocolate Retailers Really Want?

If you crave high quality wine, you go to a wine store.

But what if you crave high quality chocolate?

Yes, there is something called a fine chocolate store.

Chocolate Covered store in San Francisco, CA.

In 2017, you no longer need to be a chocolate expert to know the meaning of words like "bean-to-bar" or "single origin". Even the most random chocolate consumer has heard these terms before. This is because of the success of craft chocolate.

Made starting from the cocoa beans, this chocolate is created from scratch by small/medium size companies who care about the flavor and the quality of their products. It is the result of a general dissatisfaction with big corporations like Hershey's, Mars, Nestlé and Mondelez.

Tired of all the questionable ingredients in industrial products, consumers started demanding chocolate with clean labels, made with ethical practices and a good share of artisanal passion and care. As demand grew, the craft chocolate brands available on the market triplicated in the past couple of years. Many people aspiring to become entrepreneurs decided to jump in the sweet business of chocolate and made a name for themselves.

The market is now saturated and companies have to fiercely compete to get the attention of picky consumers.

In this situation, those in a favorable position are craft chocolate retailers. Offering a shopping platform with many alternatives, these specialty stores get to choose the best brands to carry in their assortment and have a strong market power. They are adored by consumers who can get chocolate from all over the world in one single place.

But how do craft chocolate retailers think? And how do they decide the brands to carry or to drop from the inventory?

To understand what's behind their decision making process, here are Jack from Chocolate Covered (California), Matt and Yelena from Caputo's Market (Utah) and Zack and Steve from 2Beans (New York) answering intriguing questions on craft chocolate retailing.

What criteria do you follow when deciding the craft chocolate brands to carry in your store?

Caputo's Market: We first must determine if the company is using cacao beans of very good provenance and from respected/sustainable origins. We do this by asking them to confirm that they themselves make the chocolate in a factory owned by them (to determine bean to bar or not). Then we ask them where they source their beans. Country, province and which farm(s). If they cannot answer our questions clearly and proudly, we cannot carry their products. Then, since we cannot carry every brand, we ask for samples. We take the samples and put them in a blind taste test with other craft chocolates. While tasting the chocolate without knowing which brand it is, if we find something to love, we will likely buy it and offer it to our customers.

2Beans: We are very careful when selecting the chocolate brands we carry. The quality of the assortment is our number one criteria, from beans to manufacturing. We want to make sure we get the best of what is available on the market. We also make sure pricing is right in order to offer the best value. Another important goal of ours is to be global. We look for the best brands everywhere and carry chocolate bars from every region of the world.

Chocolate Covered: In the early days of bean-to-bar chocolate I bought everybody whom I heard of. That was when there was less than a dozen. Now that there are over 200 in this country alone (the U.S.), plus all the ones from around the world, I have to be more selective. I have to feel that you are competitive with the over 100 companies from 22 countries that I have now. Not only in the quality of the chocolate, but packaging as well. It also helps to be nice, sometimes I try a line because I like the people.

What are the biggest problematics that you have to face when dealing with craft chocolate makers as suppliers?

Caputo's Market: There are so many. We wish we could carry them all but it is impossible to set up relationships, meet minimums, do purchase orders from all of them. We carry over 50 brands of chocolate. Over 400 bars. If we had to purchase from each company individually, our buyers would not have time for anything else. It is just too much to manage, so our own bandwidth for purchasing is our biggest limitation.

2Beans: Local and craft chocolate makers are growing fast and getting bigger, which is making the market much more competitive. The international suppliers have a few challenges. One of the biggest issues would be understanding the FDA process as well as packaging requirements so that they can be sold in the USA.

Chocolate Covered: It doesn't always follow that a person who makes good chocolate is good at business as well. Communication is sometimes lacking. I understand that most don't have unlimited supplies of beans. Bars come and go, and it's always sad to lose a good seller.

How do you understand when it's time to stop carrying specific chocolate bars?

Caputo's Market: This happens for sure and we are often sad. We generally drop a chocolate if something makes us suspect negative changes. Primarily two (even though they don't always go hand in hand): changes in sourcing and changes in quality. If we suspect they began sourcing cacao of lesser quality from questionable sources, we will reevaluate. If taste declines, this is often an indicator of this. If we no longer like the taste, we will also reevaluate whether we should make room for something more wholesome and/or more delicious.

2Beans: We try to allow 6 months of sales before making a decision on whether to continue or stop carrying a brand. That being said, nothing is set in stone. There are times when a brand becomes a big hit with our customers really quickly and other times when it either takes time for a chocolate brand to sell, or we make a decision to pull it off the shelves quickly. We do a thorough analysis regularly in order to determine whether the cost per shelf space warrants carrying the brand or not.

Chocolate Covered: When more then a couple wind up in the monthly sale box at 1/2 price.

Are there any craft chocolate brands that you carry just for image or prestige, or do all of the chocolate bars have to make a profit?

Caputo's Market: We don't really carry any just for prestige. We stick by our decision making matrix described in brief above, but they don't all need to make money. There are plenty of brands on our shelves that we don't sell enough of and often go out of date and have to be put on sale. I would say there are at least 4 or 5 brands we lose money selling (if not more), but if we love what they do and believe in them, we will support them anyway. This is one benefit of not having to answer to investors who only care about profit and loss. Caputo's is about preserving foods we love.

2Beans: Beyond the profit margins and the business aspect of things, Chocolate is something we are serious and passionate about, which is why we work hard on sourcing the best products and try to do things right from every angle. Sometimes that means carrying an excellent chocolate brand that is expensive to import, sold at a low margin (in order for the price to be reasonable), yet worth carrying because at the end of the day it's about quality and passion for chocolate. We believe prestige and brand recognition is the result of careful, educated decisions that always prioritize the end customer and keep him in mind throughout the whole process.

Chocolate Covered: Occasionally I will take a smaller mark up on a bar but that is rare, every bar has to contribute. I got bills to pay too.

A big THANK YOU to Jack, Matt, Yelena, Zack and Steve for their precious insights!

What craft chocolate retailers do you shop at?