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Unwrapping The Chocolate Wars

It’s hard to underestimate the confusion that afflicts journalists when their journeys take them to any place where wealth intersects with politics. Even otherwise sharp writers can find themselves befuddled. A typical response is to retreat into a storied morality tale in which the “workers” or some small business—typically, a business that makes things the smart-set likes—fights against bigger businesses attempts to warp the political machinery in their favor.
A great demonstration of this befuddlement and retreat to orthodoxy can be seen in the latest issue of Portfolio. And don't worry, we're not going to write another three-thousand word dissection of the entire magazine. We've decided that even Portfolio deserves a chance to grow into its potential. So we'll wait at least until the next issue before doing that again. (Probably.)
In “Chocolate Wars,” writer Alexandra Wolfe—the daughter of author Tom Wolfe—tells the tale of a struggle between the mass producers of chocolate—think Hershey or Nestle—and boutique makers of higher-quality chocolate. It’s a fine enough story, certainly worth telling. In fact, it was the first thing we read when the new issue came out. And Wolfe is a more than capable writer, drawing the lines of battle and the reasons for it quite well. But it’s also quite obvious that she never gets beyond the orthodox morality tale to see what’s really happening.
[Things get messy after the jump.]

The recent troubles began when the cost of making chocolate began to grow. Wolfe tells this part of the story very well.

For as long as chocolate has been made, it’s been smoothed out with the elixir called cocoa butter, an emulsified form of cacao that gives the finished product its silky texture. In the United States, the F.D.A. mandates that a product can’t legally be labeled as chocolate unless cocoa butter is part of the formula. But because of a drought and political violence in Ivory Coast, a major source for cacao beans, the price of cocoa butter has skyrocketed. This has prompted some of the major chocolate makers, Hershey among them, to lobby the F.D.A. by way of a trade-group petition for a change that would let them substitute such cheaper ingredients as vegetable oil and dried milk for cocoa butter and still call their products chocolate.

It’s a bit obvious from this that Wolfe is suspicious of the chocolate revolutionaries at Hershey and other members of the Big Chocolate cabal. Elsewhere she writes that the dustup is “over whether the traditional standards for making chocolate in the United States ought to be changed.” But it’s a bit mysterious why anyone would oppose innovations that might help keep chocolate cheap. It’s hard to imagine anyone would oppose ethanol-imbued fuel on similar traditional grounds—describing the fight over fuel-components as “a dustup over whether the traditional standards for making auto-fuel in the United States ought to be changed.”
So who opposes cheap, innovative chocolate making techniques? Warren Buffett, that’s who. Berkshire Hathaway has been in the chocolate business since 1972, when it bought San Francisco Area chocolate maker See’s. To be fair, Wolfe admits that Buffet’s interest in the chocolate war is “pecuniary” but she doesn’t seem to grasp why cheaper chocolate manufacturing is such a threat to makers of higher-end chocolate.
In fact, Wolfe seems to subscribe entirely for the line smaller chocolate makers line. “But many of the smaller chocolate makers see the effort to replace cocoa butter as a ploy that would allow the major companies to cut costs without risking their reputation—or sales. And that, the smaller companies argue, would not only mislead consumers but also give mass chocolate makers an unfair advantage,” she writes.
She seems blind to the paternalism of the smaller chocolate makers. Surely everyone already knows the ingredients are right there on the label, so that chocolate made with something other than cocoa butter will be disclosed immediately to consumers. What’s more, if the non-cocoa butter chocolate is really such a disastrous alternative , surely consumers would notice this too. In short, if the alternative recipe chocolate that Hershey wants to make is really so bad, shouldn’t this help the smaller makers who stick to their guns?
What the smaller chocolate makers really fear is that chocolate consumers won’t care enough to pay a premium for cocoa butter chocolate. When the price of making cocoa-butter chocolate increases, it decreases the price differential between the smaller makers and the big players. What the smaller makers are doing is trying to preserve the competitive advantage higher cocoa butter prices combined with the FDA requirements give them.
To put it another way, what’s really motivating the smaller chocolate makers is not an adherence to some Platonic ideal of chocolate. And that’s certainly not what’s got Warren Buffett fretting. What they fear is that the new recipe will be too good, and that chocolate consumers will flee the higher-priced cocoa chocolate for the lower priced, but still yummy, stuff that Big Chocolate wants to churn out.
We suppose that Wolfe is entitled to take the side of fancy, more expensive chocolate made in a traditional way. But by ignoring—or, worse, not noticing—at least half of the underlying real economic and politics dynamics behind the chocolate wars, she renders her article far less useful to readers. And since ignoring that part of the war makes her article read like just another version of the orthodox morality tale, she also makes her article a lot more boring.
But what she not entitled to do is take cheap shots at Hershey by expressing amazement that they regard her as unsympathetic. She ends her article by complaining that Hershey’s press office cancelled an invitation to tour a chocolate plant they own. But when you’re taking the official line of the traditionalists, you can’t really complain that revolutionaries don’t want to invite you over.
Chocolate Wars [Portfolio]



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