Business: Haute Chocolate



WHEN TRACI GENTRY had to pick a name for Hershey’s new line of upscale chocolate, she found herself thinking about backyard grills. Backyard grills are hot these days. Some are no longer “grills” at all — that’s how hot. “They’re ‘outdoor kitchens,’” says Gentry, who particularly admires the GE Monogram line of “outdoor cooking centers”: their sleek frames, their stainless-steel finishes, their retail prices exceeding $3,500 for the deluxe 48-inch model, minus wheel cart.

An upscale chocolate bar is a lot cheaper than an outdoor cooking center, but it turns out that the kind of person who slides past aisle after aisle of perfectly good $300 grills and “trades up” to a deluxe outdoor cooking center is exactly the kind of person Traci Gentry needs to cajole, teach, tantalize, inspire. Yet her major strength — the firepower of the huge company she works for — is also her major handicap, because that firepower comes attached to a name, Hershey, that has never been associated with upscale anything. Hershey made its bones with the masses, the mob, with John Q. Public and Dick and Jane and GI Joe — the biggest and most iconic candy company in America, the one that makes those bags of miniature Krackels and Mr. Goodbars you keep in the fridge around Halloween. Hershey, A Brand You’ve Trusted Since You Were Breast-Feeding, But Only to Get Your Rocks Off, Sugar-Wise.

Gentry is the director of global chocolate innovation for Hershey. That’s really what she says her job title is. In addition to upscale chocolate, she’s involved in adapting “core” Hershey brands for emerging foreign markets: green-tea Kisses in China, coconut-flavored cereal bars in Brazil. On a Wednesday morning, I drive from Philly to Hershey to meet her at a bucolic corporate campus just a few miles from Milton Hershey’s original 1903 factory — the one everyone said he was crazy to build, plunking it down in the middle of a pasture and using the rocks from a nearby quarry to raise houses for his workers. The campus is called “Crystal A,” after the name Milton Hershey gave to his first successful candy. A guy from corporate PR greets me at the front desk and walks me down through the building’s airy cafeteria and into a beige dining room. Gentry is sitting at a table with a second PR guy. The first PR guy takes off.

Gentry, 40, is friendly, warm. Shoulder-length brown hair, plaid skirt. Very in control of her world. I start by comparing the plain old Hershey bars, which I’ll abbreviate hereafter as “POHBs,” to “mediocre coffee” — a mistake! She asks me, in a charmingly conspiratorial way, to “promise not to call Hershey bars mediocre or bad.” (Think about those commercials for Budweiser Select that have you thinking, Select? So what’s the other Bud made of — rejected crap?) Gentry says, “We call it ‘everyday’ or ‘original.’ We come up with different ways to say it. But I think there will always be a place in people’s lives for it.”

“Great American Chocolate Bar,” says Patrick, the PR guy, taking notes.

“Great American Chocolate Bar,” says Gentry.

But today isn’t about the GACB/POHB. It’s about the new upscale bars, which Gentry’s group decided to call “Cacao Reserve,” borrowing a term from the wine industry. Small squares of Cacao Reserve bars are spread in front of me, atop paper placemats. Full versions of the bars are laid out to my right. They don’t look anything like the POHBs I’ve been eating my whole life. Rather than a flimsy solid-color sleeve, the new bars come sheathed in thick card stock printed with jazzy colors. On the São Tomé Single-Origin, for instance, there’s a picture of palm trees and a boat, and, below that, “Rich and robust chocolate notes and hints of aromatic coffee.” The back says NATURAL SOURCE OF FLAVANOL ANTIOXIDANTS. The bar is longer, wider, and thinner than a POHB. The silver foil is shiny and tightly packed. A solid ingot.

Gentry starts me off with the Premium Milk. I take a rabbity nibble, let it melt on my tongue. Gentry points out a “caramel-y” note: the signature taste of European-style milk chocolate. American milk chocolate tastes of dairy, not caramel. Gentry hand-holds me through the Extra Dark (“bitter at first … more of a mellow finish”), the Java (“smoky”), the São Tomé (my favorite, because it tastes like coffee), and the Santo Domingo, which has “a little bit of spice, maybe. So, do you get any of the spice? Are you tasting the differences?”

“They taste different, yeah.”

“Different is good for me.”

They are surprisingly good, these bars. We might call them the New Great American Chocolate Bars, if the New Great American Chocolate Bars were in fact being made in America. But they’re not. They’re made in Germany, by German workers. Hershey is on an outsourcing kick, part of a global expansion plan unveiled in February. About 3,000 Hershey workers will be laid off or otherwise enticed to leave the company in the next three years, up to 900 in the town of Hershey alone. Some of those jobs will be outsourced to a new plant in Mexico. People in Hershey are pissed off about Mexico. I ask Gentry about it. PR guy intercepts. I had better ask corporate, he says.

TO MAKE CHOCOLATE, find a cacao tree. It’s big and leafy, hung with pods the size and shape of footballs. The pods’ seeds are cacao beans. Roast them, then isolate the inner hulls, called the “nibs.” Crush the nibs and separate the goo into cacao butter, a light-colored fat, and cacao liquor, a dark essence. Add sugar, vanilla, and an emulsifier. Voilà. If chocolate is “dark,” it contains more cacao butter and cacao liquor than usual. POHBs are 30 percent cacao. The Cacao Reserve bars are all 35 percent or higher. Three are made with a blend of beans from several West African countries; four are “single-origins.”

Until recently, it wasn’t easy to buy chocolate this complex and lingo-heavy from American companies. You had to buy from the Swiss, the Belgians, the Germans, the French — all of whom have rich chocolate traditions and view Americans with bewilderment because we eat POHBs, which strike the European palette as tasting like wax dipped in baby vomit. Collectively, our chocolate palette is about as sophisticated as our coffee palette circa 1980, before Starbucks. But our inferiority has been eroding for a few years now, thanks to artisanal producers and the foodies who lust after their truffles. Quality is climbing. So are prices. Christopher Curtin used to make chocolates for the royal family of Belgium, and now he owns Éclat Chocolate, a retail storefront and experimental kitchen in West Chester. His chocolates sell for $1.50 each, $17.50 per dozen. “When I opened Éclat a few years ago,” says Curtin, “people said, why does it cost this much? Now they say, why isn’t it more?” At a Dallas store called Noka, chocolate said to be “in its rarest and purest form” — no vanilla, no emulsifiers — costs as much as $2,000 per pound.

In 2005, Hershey bought two Bay Area companies that thrive in this end of the market. Scharffen Berger makes artisanal bars; Joseph Schmidt Confections makes gift boxes of truffles. Hershey also bought an Oregon company, Dagoba, that makes organic chocolates. All three continue to sell under their own brands, to foodies. Meanwhile, demand is spreading beyond foodies for the first time. Health reports about antioxidants — cacao is full of them — helped boost U.S. sales of dark chocolate by 40 percent last year. Book-club moms are buying it. Grandmas. Fat dudes in ironic t-shirts. The real money isn’t in super-premium. It’s a few ticks left on the curve, in the Starbuckian sweet spot of “mass-premium.”

Cacao Reserve is a mass-premium brand. It’s not for the bleeding edge. It’s for people who want to “dig a little deeper into chocolate in much the same way that Americans have started to explore wine and even coffee,” yet are freaked out by the aggressive cacao hit of super-premium extra-dark, says Gentry. “Not everyone’s ready for that yet, just like you’re not ready for a Big Bordeaux. … I think ‘approachable’ is a good word for Cacao Reserve.” Everything has been designed for approachability, from the tasting notes on the wrappers (“We’re not telling you what to taste, but we’re giving you a hint”) to the multiple entry points (bars, truffles, drinking cocoa, foil packages of tasting squares) to the print ads (one, in Wine Spectator, reads, “Like a fine wine, each comes with its own set of adjectives”) and even to the chocolate blends themselves. Compared with Hershey’s own mass-market dark bars, Special Dark and Extra Dark, Cacao Reserve uses better ingredients; and compared with super-premium bars of the same cacao content, the Cacao Reserve bars use beans roasted for longer times at lower temperatures, to give them “a more mellow profile.”

The brand’s first TV ad pitches the truffles, not the bars. To me, the truffles, which are molded by machine, look like globs of fake poo and only taste so-so, especially compared to a real handmade artisanal truffle like the one Christopher Curtin gave me, the one that left a fine coating of brown dust on my fingers and was so delicious that it sent a tremor down my neck and up the back of my skull. But I’m not the target demo. The TV ad features a cartoon of a hot, elegant woman with a Cacao Reserve tin in her purse, strolling the streets of some Euro capital and pausing to eat a truffle by a picturesque bridge. The woman is seemingly made of brown ribbon. The female voice-over says, “Smooth, rich, indulgent. Find your truffle paradise!” Gentry says the ad is pitched to women because women are the brand’s key “influencers” (it’s a little weird to hear candy talked about in these terms, like listening to Dora the Explorer discuss her 401K), and the women in Gentry’s focus groups really liked the tins, telling her things like, “Oh, those are perfect! I would put those in … [Insert hiding place here: in my drawer, in my purse]. At three o’clock I need a moment to myself, and that’s perfect.”

At first glance, it seems that Starbucks is the template for Cacao Reserve, but the model really is broader and wider, a whole marketing philosophy laid out in a book Gentry has been reading lately, 2003’s Trading Up: The New American Luxury, by Michael J. Silverstein and Neil Fiske. Trading Up is a description of a certain kind of consumer, the kind who pays $7,000 for a Sub-Zero fridge but argues with the checkout woman at Acme over a super-saver deal on generic cornflakes. The authors write that New Luxury consumers “are complex creatures” who “spend liberally on themselves, but they also believe they should do right for the world. … They love objects, but they don’t believe in conspicuous consumption.” Basically, Trading Up is a manual that shows marketers how to take advantage of American middle-class schizophrenia — our narcissism and egotism, our half-rational guilt as rich Westerners in a world full of sad Darfurians and awesome dinners at the local BYOB, our incompatible desires for novelty and comfort. If Angelina Jolie weren’t so rich, she’d be a consummate New Luxury gal: wants to do good, wants to feel good and look good while doing good, trades up in boyfriends and kids and professions, actress to U.N. ambassador to global avatar of suffering.

Cacao Reserve is a dutiful student of Trading Up, up to and including the authors’ suggestion to “customize … value chains to deliver on the benefit ladder.” The truffles are made in Canada, but not the bars, which are made in a German factory by a German company. Why Germany? According to Gentry, Germany was easier and quicker. (Hershey is a little late to the game; the premium chocolate trend is several years old now.) German assembly lines impart that signature European flavor Hershey was looking for and pack the bars with that tight, ingot-like foil. Cost, speed, quality, convenience. With Cacao Reserve, a huge company is impersonating an artisan by piggybacking on existing processes, then pumping the savings into its real work product, which isn’t the chocolate but the marketing.

In the larger world of mass-premium, there’s nothing unusual about this strategy. According to Silverstein and Fiske, the whole reason mass-premium brands are successful is that they combine the benefits of mass production and globalization (reach, flexibility, efficiency) with the benefits of artisanal production (“emotional engagement” in the consumer). Panera Bread, Sam Adams beer and the American Girl doll company are a few of the authors’ examples. The sourdough bread at each Panera is made according to a single company-wide recipe; the eyeballs in each American Girl doll are made in China; Sam Adams contracts out half of its beer production and doesn’t own a hops farm. Still, at least with Panera and Sam Adams and even Starbucks, it’s not all marketing — Panera really does bake its bread fresh every day, Sam Adams really does have its beer brewed in small batches, and Starbucks really does roast its own beans. All three were pioneers in bringing certain quality products to huge new swaths of people. All three created American jobs in the process. Even compared to other mass-premium brands, Cacao Reserve is an imposter.

A FEW YEARS AGO, there were rumors that the old chocolate factory in Hershey would be converted to a museum. It didn’t happen. It may as well have. There used to be about 4,000 workers there. By the time Hershey finishes with the layoffs and cuts, there will be about 1,600. (According to a report by two Penn State employees, every candy job in Dauphin County creates 1.08 additional jobs, so when we lose 900 local people, we’re actually losing more than twice that.) Bruce Hummel, business agent of Chocolate Workers Local 464, says that you could easily play an NBA game on the factory floor, there’s so much unused space. Factories are also closing in Canada (more than 1,000 workers), California (575), Connecticut (220) and Reading (260). Hummel wasn’t surprised to hear about Cacao Reserve bars being made in Germany. “They’re going to these little chocolate places and getting their candies done here and there and everywhere else,” he says. “You don’t know anymore. You really, honestly don’t know.” At a stock-analyst meeting in February, CEO Rick Lenny said of the plant closings, “Ah, for those of you who have never had to make decisions like this, you’re lucky… gut-wrenchingly difficult. … What we’re doing is what’s in the best long-term interest of the business.” But outside of the business press, which loves the plan — BusinessWeek has Hershey “predicting a sweet future” — the media has sympathized with the workers, perhaps because Hershey’s balance sheet is beyond healthy, with a $12 billion market cap and $4.9 billion in yearly sales. A popular yard sign in town reads SAVE MR. HERSHEY’S DREAM.

Still, anger over the Mexico plant is nothing compared to the townwide uprising in 2002, which began when the union went on strike after being forced to bear additional health-care costs. Strikers compared their CEO to Osama bin Laden. A few months later, the company put itself up for sale, but was forced by public outrage to withdraw. The current corporate story line is so broadly familiar that it’s hard for the Hershey natives to get too worked up, even if global expansion means that more jobs in town will shift from high-paying factory work to lesser-paid service-employee work at Hershey Entertainment & Resorts, the offshoot that runs the branded roller coasters, hotel, golf course and spa. The Sweetest Place on Earth is becoming a marketing core, a place we tourists go to hear rosy stories about Hershey’s industrial past — stories that color our feelings about the globalized future — and also maybe to think about the trade-offs of our trading up.

THE BEST PLACE TO SEE this dynamic at work is Chocolate World. Chocolate World is a tourist attraction, a combination theme park/mall. If you live in southeastern Pennsylvania, you probably went to Chocolate World when you were a kid. At the Chocolate World store, you can buy any Hershey product in any quantity you like. You can take a 10-minute museum tour of the company’s history, or duck into a theater to catch the “Really Big 3-D Show,” in which airborne Hershey’s Kisses circle in slow orbits around your head, and animated Reese’s cups, Ice Breakers Gum packs and POHBs sing about “The Sweet, Sweet World of Chocolate.” The symbolic heart of Chocolate World is the area called the Factory Works, where you can make your own package of Hershey Kisses on a mocked-up production line supervised by a college kid in a hard hat who’d holding a wireless mike and leading groups of kids in factory-style calisthenics, like jumping jacks. For $9.95, you get an ID badge on a lanyard that says “Official Product Tester,” along with a gear-shaped plastic box filled with Kisses. The production lines at the actual factories may go to mothballs, but the Factory Works has a real future.

The Factory Works is where I end up on the afternoon I visit — specifically, in a little cafeteria nook toward the back, where I’m taking part in a $9.95 chocolate tasting with 17 other Chocolate World tourists. Our leader is Kurt. Kurt has a Kiss pin on the collar of his navy polo and a name tag that says “Sr. Coordinator.” He’s 50-ish, paunchy, and seriously amped. He says, “Any Star Wars fans? Time to go to the Dark Side.” My tablemates are two nice ladies from the South: Sharon Privett, a nurse anesthetist, and her mother, Miriam Hodges. They’re visiting Chocolate World on vacation. Miriam has a bright floral shirt and a freckled face. She leans in and tells me, “I’ve been drinking wine at night” — for the health benefits — “so now I eat the chocolate, too.” She jokes that her son-in-law has been stealing bites of her bars.

To date, Miriam has only tried the mass-market Hershey’s Extra Dark. (“A bar a day,” she says. “No, not a bar a day,” says daughter Sharon. “She nibbles.”) Kurt will change that. He is thorough. He gives us each a bean and asks us to break it open, smell it. He spoons some raw nibs onto our napkins. We drink the Mayan-blend hot cocoa: “Add two ounces of cream, and Starbucks, WATCH OUT!” He shows us how to examine the break lines on the bars. Are they coarse? What sound do they make? A thud? A smack? Do the bars taste nutty, woodsy, earthy? Remember, there are no wrong answers. “Swirl it around the roof of your mouth and go, Oh Yeah Baby, UNH-HUH!”

And as Kurt shepherds us through that smooth, many-branded gradation from POHB to Scharffen Berger’s 70 Percent Bittersweet Dark, he drops a crumb trail of facts about history’s famous chocolate lovers, connecting us to what Traci Gentry calls “the romance of chocolate.” (Again, shades of Starbucks, and its philosophy of “romancing the bean.”) The Aztecs. The Olmecs. Hernán Cortés. The Swiss. And Milton Hershey, of course — Milton Hershey, with his Wonka-like mix of iconoclasm, populism and paternalism. Did we know that during the Depression, Milton Hershey created his own New Deal in the town of Hershey, just to make sure his people had jobs? This one time, Kurt tells us, “His foreman came to him, said I’ve got a machine can replace 40 men. He said, get rid of the machine, bring back the men.”

A woman at another table smiles wryly and asks Kurt if that’s still the case.

Kurt rocks his neck back and forth. “Ah, the new millennium, ah” — he smiles, a smile we all take to mean that he can’t really go there, and we reward him with laughter — “the world is what it is today. … From my standpoint here, yes, it is the same way.”

Kurt’s tone says Let’s get going, but at my table, Miriam pipes up: Can people still get jobs at the factory, if they want to?

“The factory’s always hiring people,” Kurt says, adding that sometimes factories open, sometimes they close. “There’s a lot of things going on with the company now, but it’s all in a positive direction. Okay.” He brightens. “Now, moving on to the land of artisan chocolate. Okay, what is artisan chocolate?”

Jason Fagone wrote about Inquirer publisher Brian Tierney in April. E-MAIL: [email protected]
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