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I am a bit of a mad scientist, experimenting with recipes and generally trying to make my own versions of things at home (ice cream, cold drinks, etc.).

I have long been interested in chocolate. I absolutely love the stuff, and want to try and make some. I realize that (at home) you won't ever make silky smooth "shop bought" chocolate, but the basic idea should still resemble chocolate.

Taking basic ingredients into account, cocoa butter, cocoa powder and usgar, the math just does not work for me. The cost for the amounts that would be yielded, works out to be drastically more per gram than even some of the expensive store bought options. I am not attempting to make chocolate at home to "save money". I am curious and would like to choose my own ingredients.

The math: (in my Currency: ZAR - South African Rand)

  • 100g Cocoa Butter : R100
  • Cocoa Powder : R50
  • Sugar: R10

Lets say the above would yield about 150-200grams of chocolate. Let's call it R160 for 200g home made chocolate.(R80/100grams)

Lindt sells for R40/100grams?

I understand that big industry can buy ingredients cheaper, but by this big a margin. They still have to produce, package and re-sell it through various middlemen to get to R40. What do they actually sell it for before retail and handling... R20? R25?

Other milk chocolate producers obviously add milk, to up the volume with cheaper ingredients, but the math still does not compute for me, as those bars are a fraction of the cost.

What am I missing?

moscafj
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Louis van Tonder
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    They don't buy the ingredients. They own them. They have their own plantations for raw resources, their own printing houses for packaging. Plus you don't include the energy bill that will be needed to mix, cool, and create fina product. Big companies can use their own byproducts to lower that cost. – SZCZERZO KŁY Nov 27 '19 at 09:52
  • So, in essence. I am not missing some crucial ingredient somewhere to "fill" the recipe? It's purely expensive buying the single ingredients.? – Louis van Tonder Nov 27 '19 at 09:59
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    There are some thing you're missing (like fat and milk) There is also order of ingredients. In Lindt the cocoa is said to be 31% of the content (so cocoa powder and butter) but they are third and fourth on the ingredients list. Sugar is first. So by the amount of fat and carbs in Butter and powder you can calculate how much sugar you should add an fat. and then you notice that those 100g of cocabutter could be enough for 400 grams of final product. – SZCZERZO KŁY Nov 27 '19 at 10:25
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    Never underestimate cost benefit/saving of large scale industrial food processes. – Max Nov 27 '19 at 10:27
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    I'm voting to close this question as off-topic because it is about economics, not about cooking technique – rumtscho Nov 27 '19 at 12:24
  • Consider building your own car by buying individual parts. I've seen various estimates that the parts would cost between 5 and 20 times what a new car would cost, and that's not counting your labour. – Ray Butterworth Nov 27 '19 at 15:40

1 Answers1

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The cost of food, even ingredients, is often dominated not by the cost of production, but by the costs of transport, storage, waste, and sales.

Sugar is a cheap commodity - you pay a typical bulk foodstuff markup compared to what they pay, because essentially everyone buys it, and there are economies of scale at all stages.

Cocoa powder is still common but less so: there's less price pressure (and less competition), so retail profit margins can be higher. There are still economies of scale but less so (e.g. a supermarket will get a box of packs of cocoa powder, but a pallet of sugar, cheaper and easier to handle. Lindt will get it by the truckload, as with sugar. It's also sold by chocolate manufacturers in many cases.

Cocoa butter is a niche product. You can't just go to any supermarket for it, but need a specialist. Margins are high for you - but chocolate manufacturers still benefit from economies of scale.

Chocolate, even decent mass-market chocolate, is on a par with cocoa - popular, but not as major a food as sugar. And it even happens to be close in price to cocoa - partially coincidence of course.

Chris H
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  • I'm pretty sure Lindt buys raw cooca beans which contain both the butter and what later on becomes the cocoa powder, and that by the container (or maybe even shipload). To give some numbers for the economy of scale involved: the price for raw cocoa beans is currrently quite high (+30 % compared to mid of August), at ≈ 2650 US$/ton, or ≈0.45 - 0.50 US$ (≈7R) for the 150 g of cocoa butter + cocoa powder (including loss for shells drying). Transport will probably not be negligible, but I'd also not expect it to be above the cocoa price for shipping whole containers. – cbeleites unhappy with SX Nov 27 '19 at 17:55
  • This (German language) post https://orange.handelsblatt.com/artikel/53847 estimates that about 30 % of the Lindt chocolate price is raw materials and production costs (in the narrower sense), that would be 12R if that proportion also holds for South Africa. – cbeleites unhappy with SX Nov 27 '19 at 17:56
  • @cbeleites that would indeed slightly reduce their costs with respect to the OP's supermarket. Those figures sound reasonable, and I think you've got another answer there, a more specific one while mine is more general – Chris H Nov 27 '19 at 20:55