Hello and good day!
When I left off yesterday, I was in the middle of considering why we continue to make our base chocolates in Switzerland.
The impetus for this rumination were inquiries that I've received recently about whether it would be cheaper to manufacture our base chocolates in the United States or Peru.
Either of those options would save us a lot of time.
It takes roughly 5 months for us to ship cacao from Peru to Switzerland, make chocolate, and then ship it from Switzerland to the United States.
When you add those 5 months to the 3 months it takes us to buy and process enough cacao to fill up a shipping container, you are talking about an 8-month supply chain.
This means that your friends over here at Fortunato Chocolate, namely my dad, my brother, and I, float money out into the world that we don't see again for 8 months every time we decide to make more chocolate, which is something that we are doing all the time.
It's the whole point of our business after all.
As an aside, it shouldn't be forgotten that the true financiers of the supply chain are our wonderful customers.
We thank you for giving us the privilege of doing this work.
In addition to time, we'd save money on shipping costs by changing the location of our chocolate production.
Time and money are two very compelling arguments.
Although, as we will see shortly, the money argument is not as strong as it seems.
Arrayed against time and money is the question of quality.
The photo of my dad, above, was taken the first time he visited our chocolate making partner, Max Felchlin AG.
The Felchlin compound is located in Schwyz, Switzerland, in the Swiss Alps.
There are windows all over the factory looking out at picturesque mountain countryside, rolling green hills, snowcapped mountains in winter, happy cows with golden bells around their necks, goatherds, and if you look hard enough, you can see the Ricola guys out there blowing away on their long Alphorns.
My dad's first trip was in 2010 and he was hosted by a fellow named Sepp Schönbächler. Sepp has been in charge of chocolate production at Felchlin for going on 35 years.
He is still the person who oversees the manufacture of our chocolate to this very day.
A chocolate manufacturer who has been around for 110 years has two huge advantages.
The obvious one is experience.
We sent samples to Sepp in advance of my dad's first visit, and when my dad arrived, Sepp had already analyzed the cacao and had a good idea about how best to proceed.
Sepp told my dad that he hadn't seen such an exciting new origin of cacao in close to a decade.
He was impressed both by the genetic flavor profile and the post-harvest processing carried out by my brother and his team in campo.
Sepp is one of the top 3 or 4 most knowledgeable chocolate professionals in the entire world. He has seen all the best cacao available for the last 3 1/2 decades.
We were stone cold newbies, and it was an amazing honor to receive a compliment from Sepp. Sepp showed my dad all that goes into analyzing cacao and developing a recipe.
My dad saw the aroma room where Felchlin keeps vials filled with scents.
Professional tasters train their sense of smell in that room.
They smell the vials and look at the label so that they can precisely describe the flavors and aromas they perceive when tasting new origins of cacao.
A tasting panel of 8 trained tasters sits around a table and tastes the cacao together. While tasting, they talk and brainstorm and describe the flavor profile.
They debate the best way to do the roast.
They debate the proper cacao percentage for the chocolate.
All of this is done with the end goal of deliciousness and the panel gathers to analyze every new lot of cacao that we send.
My dad participated in our first flavor panel and was completely out of his league.
When Sepp asked my dad to describe what he was tasting, my poor dad answered, "I have no idea". He didn't have a trained palate and didn't know how to describe flavors.
After everybody expresses their opinions, Sepp retires with his notes from the discussion to create the recipe and production plans in the privacy of his office.
On that first trip, Sepp formulated our 68% dark chocolate, and we are still using the same recipe that Sepp designed for us back in 2010.
Had we attempted to do the manufacturing on our own, none of this would have happened.
Nowadays we know a thing or two, but we don't have a closet filled with scent vials in our production kitchen. Nor do we have the expertise required to curate a proper scent collection.
Our palates are still not trained up to a master level.
My brother Brian, our processing team, and our cacao farm partners are world class at cacao production, not chocolate manufacturing.
That is where there was a gap in the market and that is the problem that we solve.
Beyond experience, a company that has been around for 110 years has an additional advantage that accrues to time.
I'm talking about capital.
Felchlin has a factory with a mix of modern and vintage machinery that has taken them 110 years to build.
Their production lines are continuous flow.
This means that after all the knobs and dials are set for the recipe, you put cacao in one end and chocolate comes out the other.
Human beings monitor and taste throughout.
But it is continuous flow.
A whole bunch of machines are connected together, in a long, complex, and technologically advanced line.Technology brings the cost of production down.
If we were to set up a chocolate making factory in the United States or Peru, we'd have a 110-year deficit in chocolate making capital.
Our operation would be extremely labor intensive for a very long time.
In the beginning, we'd literally be hand carrying cacao and chocolate from one station to another.
What we lose in shipping costs, we make up by piggy backing on an efficient, precision, Swiss run facility.
This more than makes up for the shipping costs we incur.
By the way, I'm not speculating about all of this.
From 2013 - 2020 we sold raw cacao into a burgeoning worldwide small batch craft chocolate movement. There was, and still is, a whole industry dedicated to making chocolate in the United States using small scale equipment.
Many of these companies were our clients and I've seen a ton of their facilities.
I am of the opinion that American style small batch chocolate, even using our cacao, wasn't as good as Felchlin made chocolate.
There is an experience and expertise gap.
Also, when you watch these small-scale American companies operate, it is very easy to see how labor intensive the whole thing is.
And this shows up in pricing.
I just went online and looked at the catalogue of one of the better American small batch companies.
They sell a 2-ounce bar for $10. That comes out to $80 a pound.
Most of our products are around $20 a pound, even after paying 10 times FairTrade premiums to our cacao farm partners, shipping chocolate and cacao all over the world, and managing an eight-month supply chain.
I am running long now, so I will conclude with this.
There are many counterintuitive solutions in the world, and they are the options that are most likely to be overlooked or disregarded.
It is their very counter intuitiveness that gives an advantage to the people who stumble across and utilize them.
I believe that a very sound business strategy is to search for unobvious answers to problems, answers that look wrong on the surface but work out in the details.
Thank you so much for time today.
I hope that you have a truly blessed day!
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