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New US Chocolate Maker Trying to Break Into World Market

  • Monaliza Noormohammadi

A worker makes final preparations before a square of Tcho chocolates are separated and wrapped, Dec 2011

A worker makes final preparations before a square of Tcho chocolates are separated and wrapped, Dec 2011

While many American industries took a hit during the economic recession, one seemed to thrive. According to the National Confectioners Association, the U.S. chocolate industry in 2009 scored a record $16.9 billion in sales. One new American company is trying to break into the lucrative market, but for the California-based connoisseurs, the gold is in the flavor.

Located on the eastern waterfront of San Francisco's embarcadero, Tcho Chocolate is as traditional as it is cutting edge. As the only chocolate manufacturer in the city, Tcho's premium dark chocolates are carefully crafted at the 2,800-square-meter factory - from selecting the right beans, to labeling and packaging.

The emphasis is on flavor, with categories like "nutty" and "fruity" aimed at helping consumers rethink the way chocolate can be experienced. Louis Rossetto is Chief Executive Officer and Chief Creative Officer of Tcho. His partner, Jane Metcalfe is the company's president. He said, "The world doesn't need another chocolate company per se, but it needs people who are trying to innovate, to try to make things better."

While Tcho only started selling chocolate in the United States in 2009, it is already expanding its global reach. The company's chocolate is now available in select stores through Britain, Ireland, and most recently, Japan.

"We aspire to considering the entire world …a potential market for Tcho," said Metcalfe. With global demand for chocolate on the rise, Metcalfe said there are big opportunities in emerging chocolate-consuming markets like India and China.

For Tcho, premium chocolate starts with the coco bean. "Like wine, chocolate expresses the flavor of the fruit that's being used to make the final product," said Rossetto.

To get those distinct flavors, Tcho employees scour the world in search of the top three percent to five percent of premium cocoa beans, importing them from Peru, Ecuador, Madagascar, and Ghana.

Then, through countless laboratory tests, chocolate makers analyze different variations of beans, fermentation and roasting. Creating one chocolate bar that meets the desired flavor criteria can take as many as 300 to 400 tests.

Brad Kintzer is Tcho's chief chocolate maker. He said there are as many as 900 flavor compounds in a single piece of chocolate. "That's something that … inspires us here, is to try to bring that diversity and that complexity and that excitement to the consumer."

With capacity to produce millions of bars of chocolate a year, the factory is traditional in its setup, but also full of technological innovations, a reflection of Rossetto and Metcalfe's background as founders of the tech-centric magazine, Wired.

For example, an i-Phone application allows Tcho workers to monitor factory controls, from heating temperatures to light switches.

The use of "virtual factory visualization" is in the works and will allow for direct oversight of the factory and employees.

Technology and the Internet also are utilized to engage cocoa farmers, many of whom have never even tasted the final product. The idea is to provide farmers with training, so they, in turn, will be able to produce premium, higher value beans.

And while the cost may be higher, Metcalfe said consumers are willing to pay. "It comes from a genuine desire on the part of developed countries to pay a fair price, and to enable people to have the fruits of their labor get them out of poverty."

"Our intention isn't to put a particular price on what we do, it's to make something that delights consumers, and then price it fairly," said Rosetto.

So far that philosophy seems to be working.

"Our sales are growing at a very rapid pace, especially considering the current economy," said Rob Kopf, director of sales at Tcho, noting that it typically takes between two and three years to break even in a market as crowded as the one for chocolate.

"We're not looking to necessarily take over the chocolate universe, but at the same extent we don't want to stay as a tiny little local player," said Kopf.

So far, Tcho has West Coast distribution networks covered and is working to secure distribution throughout other major metropolitan areas.

With its new-age 21st-century look and ethical sourcing concerns, Tcho seems equipped to provide for the rising number of eco-conscious consumers. But when it comes to selling a product, how much success depends on the branding?

"If it doesn't give you that sort of, 'Oh my God that's so good, you've got to try this!' you know then, then all the branding money and the packaging in the world isn't going to help sell your chocolate, in the end it is about the chocolate, it is about what it tastes like," said Metcalfe.

And while some argue that American chocolate can not stand up to the global competition, Rossetto recalls how American wine surprised skeptics, and said American chocolate can do the same.

"Today, American chocolate can stand up to any in the world and be among the very best," said Rosetto.

For the 30 employees at Tcho, being obsessed with chocolate is just part of the job.

For Metcalfe and Rossetto it is a way to interact directly with customers and farmers and with the world - making a positive impact that leaves a sweet taste.

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