Examining a Mast Brothers Assertion

I rarely take a public position when it comes to chocolate companies, but a recent statement in a BusinessInsider.com video brought me up short. Before I go on, I do have to say that what Rick and Mike - and everyone involved - have done is phenomenal. They were in the right place at the right time with the right product with the right ethos, capturing the cultural zeitgeist perfectly - guiding and riding it expertly.

But I have never been a huge fan of the chocolate they make, or more properly, their skills as chocolate makers. I don't mind vintaging in wine where the differences in a particular bottle occur from year to year. My issue with the Mast Brothers stems from the fact that I never know what I am going to get from batch to batch of what is ostensibly the same chocolate. If I find a decent bar and go back several weeks later to get another of the same, it will be different. Sometimes very different. And sometimes difficult to recognize as being the same chocolate. Yeah, I know, small batch variability and all that. When the Mast Brothers are on, they turn out good chocolate - but too often I am left wondering what all the fuss is about. I've even had bars with rancid nuts, purchased fresh from the factory store.

Going back to the video: At just after 3:00 minutes in, Rick claims that they've paid up to 10x the average price for commodity beans (and 3x-5x market price more generally).

Last Friday's spot closing price was $2352.94 per MT (metric ton, 1000kg), down from over $2800/MT in November, 2011. If what Rick is saying is true, then at some point in the last six months they paid between $23,000 and $28,000/MT for beans. 18 months ago, 10x market would have been nearly $40,000/MT.

Really? I'd like to see the paperwork supporting those claims.

If it's true, and the farmer actually received 10x market for their beans, then that's good news and I will be the first out the gate to let people know about it.

But - if it's not true - what are the implications and potential ramifications for the craft chocolate industry? Not just for the Mast Brothers, but for every craft chocolate maker who is trying hard to improve the lives and livelihoods of the cacao farmers they source from.

Your Thoughts?

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Do some math. Is it possible to pay $25,000/MT for beans and make a 2.5 oz (71gr) bar of chocolate that can be sold (profitably) for $7?

At $25,000/MT raw, whole beans in multi–ton quantities cost about $11.35 per pound. By implication in the video, that money is paid to the farmer and therefore would not include customs, insurance, freight, and other costs, so the calculation understates the actual landed price of the beans and therefore the following cost basis is low.

Assume an 80% yield on those beans (i.e., every 100 lbs of beans yields 80 lbs of usable nib after roasting and winnowing - this is generous) raises the price per pound of nib to about $14.15. Assuming a 70% cocoa content chocolate, that means that the cost of just the cocoa nib component of a pound of chocolate is north of $9.90 - also assuming zero loss in the process of making the finished product.