So… you want to start a Chocolate Business – Part 1

Lots of people want to start a chocolate business; it is one of the most frequent enquiries which come to my inbox. I can understand why, I’ve worked in chocolate most of my career and I’m still as entranced by it today as I was when I started.

So what do you start with? Anything from a really great idea that you are sure everyone will like, something you would like to offer customers in an existing outlet such as a coffee shop, a novel product for a special local output like a gift shop, a good quality basic chocolate in a market which has only poor quality locally produced products, or something else entirely.

The first question I usually ask people who come to me is not anything to do with the product or its manufacture, but “how are you going to get it in front of the (prospective) customer”.  This is actually the first difficult bit, and the next difficult bit is to get him or her to buy it more than once!

Of course you may already have a business, say a coffee shop, where you can offer the product, but that is only going to be a small quantity, but don’t worry, we’ll work out how to expand the market later, it is an important first foothold.

Alternatively, you have (hopefully) done some basic market research (walking around and talking to people is absolutely fine) and believe that some local shops such as newsagents or gift shops at local attractions will be interested in taking the product.  However you need a bit more than this, such as how much will they take, what they will they pay you (and when!), will it be a “sale or return” arrangement, how seasonal will it be and so on. And don’t forget that in order to display your product they will probably have to stop displaying someone else’s.  That company is a commercial competitor and is not going to stand by and let you displace them without a fight, so how are you going to win?

There are still places in the world where import restrictions and local affordability have restricted the quality of chocolate available both as a consumer product and a third party product for biscuit and ice cream coatings, etc.  This is potentially a big opportunity because as people become more prosperous (and perhaps travel more) they demand higher quality. Being first mover with a quality product, significantly better than the competition, can be a real commercial opportunity, particularly where third party sales to companies manufacturing products such as  biscuits or ice cream can increase volume without enabling competitors in the confectionery market.

The emergence of social media as an incredibly potent two way communications system has transformed what small and start-up businesses can achieve in virtually every country in the world.  It is now possible to communicate directly with potential and actual consumers, small shops and other places where products can be sold and to use the information to alter product and manufacturing plans, distribution, etc.  What is more, a business can collate and present the information from these sources into a credible marketing and business plan which is not only invaluable to the business itself, but will raise credibility and help enormously with selling and obtaining finance

Manufacturing chocolate is much more complicated and difficult than many people realise and if you want to start from cocoa beans doubly so because of the microbiological dangers inherent in raw bean. The equipment is expensive and requires a degree of skill to operate and extensive services. Consequently for many small scale operations the sensible answer is to buy in a good quality chocolate from one of the several suppliers in the business of producing chocolate in bulk and who can supply it in smallish quantities in a form which just has to be melted before use.  This allows the small producer to concentrate their resources on making and wrapping finished product and delivering it to the market place.

This article can only give the most basic of insights into the technology; if you are new to the industry then you really need to employ someone with plenty of knowledge and experience at an early stage to advise and guide you.

If there is a need to manufacture chocolate then the scale of operation becomes important (discussed below) and a key question is whether to buy cocoa mass and cocoa butter (both easily available from many sources) or to try to purchase and process cocoa beans, which will about double the capital outlay and significantly increase the complexity of the business.

My advice is always “keep it as simple as possible and concentrate on what you are good at”.  If you have a product idea then concentrate on that, not the difficult bits you know little about.

Unless you have a specific product in mind, the following list may be of help in deciding what to start with

It is important to realise when considering products and capacities that virtually all chocolate products are seasonal to some degree and some are extremely so. This may be due to the local climate (chocolate is not good in hot weather) or the product may be seen as a “holiday orientated” product (Christmas, Easter, Eid, Chinese New Year, etc.)  Places such as gift shops are often attached to seasonal attractions which have few visitors at some times and many at others. Strongly seasonal products need good (conditioned, clean, pest free) storage and can be very difficult for the planning and cash flow of a small company, so the range of products should seek to minimise the effects of this on the business. Again here social media can be a great help in trying to establish what products consumers are going to be looking for ahead of actually producing them.

In a subsequent article I will discuss some of the basic techniques associated with making various chocolate products.  In this article I will now explore the making and general factory technology required for chocolate making and handling

Recipes

Basic chocolate recipes are not difficult to construct, there are plenty of sources and with a bit of basic maths you can work out other people’s recipes from the ingredients and contents lists on their wrappers!  Higher cocoa solids in milk chocolate will always improve quality (assuming you use decent cocoa mass etc.). Some typical recipes are:-

Ingredients

In some ways ingredients are more important than recipes because poor quality ingredients will degrade even the best recipe. Use reputable suppliers, monitor the quality of ingredients as they arrive with you and ensure you store them well and rotate stocks as rapidly as you can.

Good quality cocoa mass and cocoa butter are key ingredients and it is well worth including a proportion of natural cocoa butter in the recipe in addition to the more normally used deodorised butter. Cocoa mass needs to be “nutty” and full flavoured, avoid anything with fruity, acidic or dull flavour.  Even if it comes hand-picked from the slopes of a holy mountain (claims I’ve seen on dreadful cocoa) don’t be seduced into paying a lot for cocoas which are claimed to have exotic flavour profiles or come from exotic sources – they are often faulty and will not impress the consumer once they have tasted them.  Cocoa butters also need care, as you need a bit of flavour but not too much and again a nice clean typical flavour. Very bland butters can taste quite “oily” and may indicate a poor quality original source.

Milk powder (for chocolate generally full cream powder) needs to be “high heat” and good quality and if you intend using butter oil be extremely careful, it will go rancid if not kept well and used quickly. Milk powder needs to be kept under good conditions, cool, dry and where there are no other products which might taint it.

Sugar is a pretty standard ingredient and it does not have to be first grade pure white sugar, industrial quality (which is slightly off white) is fine.  It does need to be dry and again, not contaminated by off flavours.

Sugar free chocolates can be made – but you have to replace the sugar with something else, generally a blend of polyols such as Isomalt and Maltitol.  These are much more expensive than sugar and more difficult to handle and refine, with the product also requiring the addition of intense sweeteners and a higher level of fat. These products are probably not a realistic opportunity for the small producer where the focus should be on quality and excellence.

Many commercial chocolates contain a small percentage (up to 5%) of a carefully formulated vegetable fat based on palm and other sources. This is not something I would recommend to the small producer as it increases complexity without significantly altering cost or functionality.

Virtually all chocolates use some emulsifier – natural or synthetic lecithin – in their formulation. Natural lecithin is generally from Soya or Sunflower and lecithins can be used up to about 0.5%.  Lecithin assists in coating the solid particles with fat and significantly reduces the viscosity of the chocolate at a given fat content.  Ice cream coatings generally have a secondary emulsifier – generically known as PGPR – added to reduce the problem of moisture contamination which can occur from the ice cream. Emulsiifier suppliers will offer good technical assistance to even small producers.

There are restrictions on the use of flavours in chocolate, but most chocolates contain a small amount of vanilla flavour and some European recipes contain other flavours such as hazelnut paste. By all means add a small amount of a flavour to establish an identity for your chocolate but do not detract from the basic chocolate flavour – that is what people really want.

Cocoa Processing

Unless there is some very powerful reason I would always council against small to medium scale producers processing cocoa bean themselves into cocoa mass and cocoa butter. There are a number of very simple reasons for this:-

• Processing equipment and facilities are very expensive to establish
• High quality cocoa products can be purchased easily from major processors
• Cocoa bean in its raw form is highly contaminated microbiologically and needs careful and isolated handling
• Purchasing and trading in raw been requires specific skills and structures

I am not going to discuss this further at this stage, but if it is essential for some reason to process cocoa in house, I can help you individually.

Chocolate Processing

The processes chosen for manufacturing chocolate depend heavily on the number of recipes required and the overall tonnage it is proposed to manufacture.

It is quite difficult to efficiently clean out most grinding and liquefying equipment so if white products are required it is best to have a dedicated production unit for these.  Milk/Dark and Dark/Milk change overs can be accomplished reasonably easily without the need to clean out machinery to an exceptional degree.

Below about 50 tonnes per year it is very doubtful that it will be viable to produce chocolate in house, the cost of equipment and low utilisation will outweigh any modest savings compared with buying in.

Up to about 1000 – 3000 tonnes per year or even higher I would suggest either the “Refiner Conche” from a company like MacIntyre or a batch bead mill system from a company such as Duyvis Wiener.  Both of these systems are simple to operate, require little routine or skilled maintenance and can produce good quality products. In addition both companies will give good technical assistance and support.  Materials are loaded directly into the systems, which are then run for a set period of time to grind and liquefy the chocolate with a few routine additions such as fats, flavours and emulsifiers. Both approaches are capable of producing high quality products if operated properly and loaded with good quality ingredients.  They have the additional advantage of being able to easily process a reasonable level of scrap and rework.  Reclaiming scrap is frequently forgotten, and whilst  every effort should be made to minimise scrap there will always be a small amount of material which can be reclaimed profitably rather than being disposed of.

Beyond about 5000 tonnes per year it is worth considering conventional roll refining and conching. The equipment and operation is much more complex and expensive, but has greater flexibility and more potential in terms of product characteristics and long term capacity.  Refiners in particular need a degree of skill to operate them and specialised maintenance skills as well as careful installation. For many companies the relative simplicity and robustness of refiner conche or bead mill systems are a better option even up to quite large outputs.

Storage of liquid chocolate requires controlled conditions and some chocolates do not store well in liquid form even for relatively short periods and should be made or melted to requirements.  Storage temperature needs to be carefully controlled to about 40°C and tanks should be gently agitated. Storage over a few days for milk and dark chocolates is not a problem in terms of quality, although milk chocolates do tend to increase in viscosity slightly.  White chocolate will thicken quite rapidly (in a day or so) and can be difficult to reliquify, so storage must be minimised.

If chocolate is purchased in solid form it needs to be melted to requirements and a minimum amount stored as liquid. Melting is best done in a stirred vessel with a water jacket at no more than about 50°C.  Excessive temperature during melting will cause grittiness in the chocolate and will spoil the flavour.

Before it can be used chocolate has to be tempered. Chocolate has complex crystallisation behaviour and the fats are able to crystallise in several different forms, only one of which is stable and compact and will give the right texture and appearance to the product.  The tempering process takes the chocolate through a precisely controlled temperature cycle which seeds it with the desired crystal form so that when it subsequently cools all the fats crystallise in that form.   It is possible to temper small quantities of chocolate by hand but it is more normal to use a machine for the purpose. Tempered chocolate is unstable (slightly too warm and it will quickly lose all its seed crystals, slightly too cool and it will start to thicken and set) and needs to be used as quickly as possible after tempering.

Once formed into finished products by moulding or enrobing the products have to be cooled in a controlled manner – typically in an airflow at no lower than 12°C for about 20 mins.  Many coolers allow chocolate to rise to about 16°C at the end of the cooling process to avoid any possibility of condensation on the product as it leaves the cooler.  If atmospheric conditions are such that the dew point is higher than this, handling and packing areas need to be air conditioned.

Particularly for moulded chocolate, the product should be stored for about 5 days at around 20°C to 22°C to allow crystallisation to complete and the chocolate to become firm and crisp.

Chocolate very easily absorbs undesired flavours and taints, so great care has to be taken to ensure:-

• Operators hands are clean and regularly washed – smokers hands are a particular problem
• Packing materials are odour resistant and do not have residual solvent or ink odours
• Warehouses are not shared with any product which has an odour
• Pallets and containers are dry and free from condensation and odours from previous use

Chocolate is a food product so its handling and processing must be carried out under clean, hygienic conditions, but it is also vulnerable to infestation by moths (particularly the tropical warehouse moth commonly known in the industry as the “cocoa moth”). This will appear seemingly from nowhere wherever chocolate or cocoa are processed and will lay its eggs on the product or any spillage.  It is therefore essential to strip down and clean all equipment, particularly chocolate coolers, regularly to avoid problems. Unwrapping a chocolate bar with moth grubs on it is certain to be the last time a consumer – and everyone they know – buys your product.

The quality and consistency of your product is foremost in establishing and maintaining the reputation and sales performance of your business. You have to have written, formal procedures for every step of the process so that there is no doubt about how to do every process in the factory from placing raw materials in a warehouse to despatching finished goods into transport. It is not acceptable to have the methods and processes in someone’s head; they must be formally recorded and followed to the letter.  There also needs to be a formal review and updating procedure for the protocols.

You must also have a formal raw material and product quality monitoring system based on both analysis and tasting. Trained tasting panels are useful but often only meet periodically and in a small business this can be difficult to arrange.  It can be good practice to require all managers to taste and report on every product being manufactured in the factory each day.  By doing this people become familiar with the products and you have a wide “net” with a rapid response to problems.

Whilst it may not be feasible to have full laboratory facilities in a small business, there should be a formal arrangement with a contract laboratory to ensure that ingredients are of the required quality (including bought in chocolate, which needs monitoring for viscosity at low and high shear rates, fat content and moisture as a minimum)and that finished products conform to your specification. Microbiological checks on raw materials and finished goods are also needed and can be subcontracted.

Setting up a chocolate business is not without its challenges, both technical and commercial but there are certainly opportunities, particularly if modern communications techniques are harnessed to bring certainty to product specifications and alert customers to the existence of both the product and the business.