Chocolate season is approaching soon and I’ve already started some work for it. With travel coming up in late September (to the world’s largest tropical wetlands in Brazil), I need to get a head start on things.
The fun part is that I’ve already designed and cut the stencils for the first two collections of the season. And I must say, the process was so much more efficient after investing in better technology for cutting the dozens of stencils I use for each collection.
No more frustration over a blade cutter that doesn’t perform the way I want. My new best friend is a laser cutter. It’s faster and essentially error-free. Plus, the level of detail possible is my dream come true. I hope you notice it in your upcoming chocolates!
The less fun part of preparing for the season is confronting the rising cost of cacao. That’s been an issue for the past two years, due to increasing demand and lower crop yields in the largest cacao producing nations. I wrote about this last year and the same factors are in play, plus one big new one – more on that in a moment.
Here’s an example: seven months ago, I bought a supply of the fine Swiss-made couverture I use for enrobing your chocolates at $22.70/kg. Last week, the same chocolate was at $30.00/kg. Today, it is at $34.14/kg. That’s 50% increase in a pretty short time.
But, about that new factor – tariffs. We’ve all heard a lot about tariffs this year and now they are beginning to take effect. These are taxes that companies and consumers pay the US government on products imported into the US.
For five decades from 1975 to earlier this year, the average tariff for goods coming into the US was less than 5% and only 2.5% in recent years. See the fascinating historical chart here
Starting this week, the baseline tariff rate will be 10%, with higher rates applied to products from many countries.
What does that have to do with chocolate?
Cacao is a tropical tree. The only place it is grown in the US is Hawaii. While there is excellent Hawaiian cacao, the production only represents 0.0001% of global supply. The US will never be able to grow domestic cacao to meet anywhere close to our own demand. Nor can any one country or location produce the variety of flavor profiles which make chocolate so special. So we have to source cacao from the nations where it's grown.
It turns out that cacao imported from most of the cacao-growing countries in the world will be subject to an even higher tariff rate than the new 10% baseline. Absurdly, cacao (and coffee) imports from Brazil (the world’s 7th largest cacao producer), will be taxed at 50%. See the long chart below for a list.
Note that chocolate from Switzerland, a country which does not grow cacao, but has some of the world's most well-know chocolate makers (including Felchlin which I have used for my enrobing couverture for the last several years), is subject to a 39% tariff.
Tariffs have been typically used to protect domestic industries from foreign competition. But with cacao, there is no significant domestic industry to protect. So the tariffs are essentially a national sales tax on cacao.
Some chocolate makers and chocolatiers have been absorbing some of the increased costs rather than passing them on to consumers. But on top of already rising cacao prices there’s only so far that can go. Now even “big chocolate”—companies like Hershey’s and Lindt—have announced plans to raise prices to cover increased costs. And small chocolate makers and chocolatiers have much less leeway and have to do the same to survive. For a good explanation on this, see this great article in Reason.
Uncertainty over the tariff chaos and its ramifications will likely continue, as they seem to change day by day. Plus, there are several court cases challenging the President’s use of “emergency authority” under the International Emergency Economic Powers Act (IEEPA) to impose the new tariffs as unlawful. There’s a helpful explanation of the current status of these cases in a story from Thomson Reuters. It’s all likely to end up at the Supreme Court.
Enough with the bad news. Despite the above, there are going to be some great chocolates coming up. I’ve placed an order with my friends at Dancing Lion Chocolate for a range of exceptional couvertures. They make the chocolate couverture from cacao beans with unique flavor profiles sourced from small farms in various countries. It will all find its way into ganaches, giandujas, and more in the coming season.
Preordering for the first collection of the fall will begin in mid-September with the chocolates being shipped out by late October. But I’ll share more on that next month.
In the meantime, I need to get busy with these stencils and start spraying all the cocoa butter for the designs to come! As you can see below, I have a lot of work to do!