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The Economics of Chocolate
Here's a scathing investigative report of the most expensive chocolate in the world, up to $2000 a pound. Lots of interesting side-notes about the industry. I like this bit:
...the folks at Noka said, "Ever since the ancient Mayans discovered the exotic flavors of the cacao bean in 250 to 900 AD, mankind has experimented and transformed this marvelous wonder into innumerable chocolate concoctions. But how many of us today have savored the flavor of real chocolate--as pure, rare, and flavorful as the ancient Mayans once relished?"
The question was rhetorical and the expected answer was "none" (or at least not many). But what the ancient Mayans relished was not solid chocolate as we now know it. Rather, it was a thick, gritty, generally unsweetened frothy beverage composed of ground cacao beans, water, and other spices and flavorings, frequently including vanilla, ground mamey pits, ear flower, chiles, and/or nixtamalized maize (i.e., masa). I'll grant that not many of us have savored anything like that. If we did, we'd probably spit it all over the front of our shirts, just like the Spaniards did when they first encountered the concoction.
Hat tip to Boing Boing Blog.
Posted by Alex Tabarrok on December 29, 2006 at 07:21 AM in Food and Drink | Permalink
Comments
That sounds much less appealing than a bar of Hershey's dark chocolate. ;-)
Posted by: Chris Meisenzahl at Dec 29, 2006 7:45:15 AM
Isn't this a textbook case of getting people to buy something because of its high price? It's expensive, so it must be good!
Tyler, have you tried any of the new Hershey's Extra Dark and Cacao chocolates?
Posted by: Hei Lun Chan at Dec 29, 2006 8:17:36 AM
I've read the "scathing investigative report" and found it full of zeal for exposing the alleged fraud being perpetrated by luxury chocolatier NoKa, whose rather mundane mass-produced chocolate is being repackaged and marketed at prices (ranging from $309/lb to $2080/lb depending on specific product) exceeding those of foie gras ($50/lb), sterling silver ($175/lb) domestic caviar ($275/lb), Kobe beef($300/lb)or even a fat stack of dollar bills ($454/lb).
Unfortunately, when the author concludes "Are Noka's chocolates worth the prices they charge? They are not.", he misses one critical element of economics. Subjective value.
He's absolutely correct in concluding that they're not worth the price to him, but they may be well worth the price to someone who wishes to demonstrate his/her ability to afford the world's most expensive luxury products, at any price. Hence, Wyclef Jean drives a $1 million McLaren F1 supercar, while Jay-Z and Diddy suck back gallons of Louis Roederer Cristal champagne ($350/bottle).
This characteristic makes such products "Veblen goods", for which demand increases with the good's price (at least within a narrow target market).
That said, the author presents as strong, well-researched case that NoKa may be misrepresenting the origin of their chocolate, but that's a legal issue, not necessarily an economic one.
Posted by: Russ R at Dec 29, 2006 11:43:12 AM
Russ R,
You need to keep up with the rap game. I don't think Jay-Z is sucking back gallons of Cristal anymore.
I get your point, though.
http://www.msnbc.msn.com/id/13350034/
Posted by: Steve at Dec 29, 2006 12:18:48 PM
The economic question for me is: what was in it for the blogger?
He put together an excellent and thorough piece of chocolate research at no small cost in time or dollars. Yet it's a free site, with no visible ads.
What was his motivation?
Posted by: carpundit at Dec 29, 2006 2:35:37 PM
"What was his motivation?"
Externality reduction?
Posted by: Bill at Dec 29, 2006 2:55:41 PM
Wowza. This expose' may have been one of the most riveting and informative (about single-origin chocolates, couverture makers, and which chocolatiers use which couvertures) articles I read all year. Thanks, Alex, for the link -- although I was expecting it to be one of Tyler's! I guess chocophiles hang together. =)
I really want to try some of the Amedei chocolates he waxed so rhapsodic about....
Posted by: Michelle at Dec 29, 2006 4:12:52 PM
Wow, I learned a lot about making chocolate too. Thank you very much. www.chocosphere.com, well, I'll be spending some money there.
Posted by: Peter at Dec 29, 2006 7:57:41 PM
"Rather, it was a thick, gritty, generally unsweetened frothy beverage composed of ground cacao beans, water, and other spices and flavorings"
I drank it when I spent the night in the jungle with a BriBri family in Costa Rica. It was actually pretty good, don't know if she added a little sweetner or if I'm just used to the flavor of bitter and semi-sweet chocolate.
Posted by: Jacqueline at Dec 29, 2006 9:08:54 PM
I tried NoKA last year and thought it was good, though a bit gritty. The article was unbelievably verbose, however. The writer needs an editor.
Posted by: projectshave at Dec 30, 2006 12:58:39 AM
It's possible to buy chocolate that is 99%. It kind of tastes like soap. ;-)
Posted by: invcit at Dec 30, 2006 5:17:57 AM
We love gourmet chocolate, so we take it very seriously when our company and its products are scrutinized. We welcome the opportunity to talk about our chocolate.
NOKA Chocolate has never intended to suggest that the Company makes chocolate from "bean to bar" (roasting, grinding and otherwise processing cacao into couverture). We will review all our communications to make sure that this is entirely clear. We are a chocolatier, and we are proud of it.
However, we strongly stand behind the statement that this is "our chocolate." NOKA's couverture is made to our strict specifications. We specify the source ingredients, the region from which the ingredients are sourced and the process by which the couverture is made. The quality and purity of our chocolates and truffles are above reproach, which is why NOKA Chocolate was the top ranked luxury chocolate in the world by the food editors of TASTE.
A gift of NOKA Chocolate is a gift of the NOKA Chocolate Experience. The NOKA Chocolate Experience ensures that magical moments and memories can be enjoyed by both the person who gives the gift of NOKA Chocolate and by the person who receives the gift. Each NOKA Chocolate gift is an experience that begins with the unique and elegantly designed packaging and encourages an appreciation by all the senses including the look, aroma, flavor and texture of our chocolates and truffles. The Optimal Tasting Guide and vividly descriptive Flavor Profiles included with each gift provide each gift recipient with the tools to enjoy his or her own chocolate tasting whether it be alone or a special event.
NOKA Chocolate is proud of our unique place in the market -- providing people with another choice when selecting a special gift for themselves or for someone else. A pound-for-pound comparison that fails to consider the totality of the NOKA Chocolate experience will never accurately reflect the true value of our products.
Posted by: NOKA Chocolate at Dec 30, 2006 6:47:55 PM
The Ocumare bar mentioned in the article is available at Trader Joe's for $1.99.
I've never tried it; might have to now.
Posted by: kate q at Dec 30, 2006 8:02:26 PM
Nice damage control, NoKa. So why didn't you tell the nice reporter when you were on the phone with them? That arch mysterious air might become a palm reader, but not someone who deals in food.
Posted by: speedwell at Dec 30, 2006 11:11:52 PM
"Magical moments and memories"? Can't you people come up with at least good bullshit?
Posted by: Hei Lun Chan at Dec 31, 2006 1:52:11 AM
They strongly stand behind their statement that it is "their chocolate." Except someone else makes it.
"Who makes it?" Never you mind.
"Is it Bonnat?" Breathe deeply, center your chi, and focus on the totality of the NOKA Chocolate experience.
All they can say is "Trust us." But when other chocolatiers on the market are open about the chocolate they use and when NOKA charges many times more than the brands that are regarded as the best in the world, blind faith is hard to muster.
There may be some consumers that are willing to pay for the privilege of having "the most expensive x in the world" *regardless* of its uniqueness or inherent quality. If there are very many of them, NOKA should be as happy as clams that this story is circulating so widely, since the guy goes on at great length about how ridiculous NOKA's prices are compared to others on the market.
On the other hand, if NOKA's typical customers are buying based on the belief that NOKA offers chocolate that is unique and of the highest quality, the revelation that it *isn't* truly unique or of the highest quality could be damaging to sales. I think that explains NOKA's reticence about their supplier.
Sam
Posted by: Samuel at Dec 31, 2006 2:06:24 AM
>>A gift of NOKA Chocolate is a gift of the NOKA Chocolate Experience.<<
What bunk! Is that really from NOKA, or is someone spoofing them? I hope Alex T. will take a minute to check the IP address of that commenter.
BTW, if it's really a response from NOKA, all they said was "Buy our chocolate because of the nice box."
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