Rafi Mohammed

What's Wrong With $2,000 a Pound for Valentines Day Chocolate?!?! Value is in the Eye of the Beholder...

Posted on February 13th, 2007 (0 Comments)

Over the weekend, Damon Darlin wrote an article in the New York Times titled “Figuring Out Gift Giving in the Age of $2,000-a-Pound Chocolate.” Mr. Darlin wrote about the 10 part investigative blog series conducted by dallasfood.org on Noka chocolates. This investigative series has put the relatively obscure (until recently) food blog on the map, with over 750,000 page views since the blog was posted in December.

A little background on Noka chocolates. First off, the company sells very small chocolates – a 12 piece box contains 0.9 ounces of chocolate (it’s not 0.9 ounces per piece, that’s the TOTAL weight of 12 pieces). And Noka chocolates are expensive: prices range from $16 for a 4 piece box (containing 0.3 ounces of chocolate) to $140 for 96 pieces. This is definitely a different type of chocolate experience than I am used to. Noka has received wide spread favorable press coverage (e.g., Food & Wine write up) and reinforced its luxury brand by sponsoring the Golden Globe and Emmy Awards. In addition to being sold at its own stores, Noka is also available at the high-end retailer Neiman Marcus.

If you calculate the cost of Noka chocolates by the pound, the numbers are startling: depending on the box size, the cost per pound (calculated by summing the number of boxes it could take to equal one pound) range from $309 to $2,080 per pound. Just to keep things in perspective, I doubt that anyone would buy 53.3 four piece boxes (one pound) as a gift for one person. Intrigued by its price, dallasfood.org decided to investigate the ingredient costs of Noka chocolate. Employing seemingly meticulous research methods, dallasfood.org concluded the cost of chocolate used in a $16 four piece box is twenty three cents (a 6,956% mark up) and the chocolate cost of a $140 ninety-six piece box is $5.40 (a 2,592% mark up). Okay…now is the point when we all shake our heads in disbelief.

But who said that price is all about ingredient costs? In the 70’s, 10,000 pet rocks were being “manufactured” daily. Ticket stubs from last week’s Super Bowl are selling for $79.99 on eBay. Raw material costs are just one (and I’m beginning to realize in the chocolate industry, a small) component of a product’s value. For example, brand building and marketing are important to chocolate’s value. Someone has to pay for Godiva’s massive marketing campaigns and its annual Valentine’s Day million dollar diamond giveaway promotion - I’m sure Noka’s sponsorship of the Golden Globe and Emmy Awards did not come cheap. Presentation is important on two levels. While for me, once a box is opened chocolates rapidly disappear, other consumers value the “look” of artisan designed chocolates. Similarly, since chocolates are often given as gifts, overall presentation is important. Noka’s chocolates are beautifully boxed and look impressive. And finally, value comes from the unique taste of chocolates. While the dallasfood.org tasters may not have found Noka’s truffles exceptional tasting, others love their chocolates (Taste, a British food program rated Noka the #1 luxury chocolate on the world). When you take a moment to think about chocolates, it’s interesting how many components actually make up its value.

While “$2,000 a pound” is attention grabbing, I think the real contribution of dallasfood.org’s “expose” is highlighting an issue that we as consumers need to ask ourselves whenever we make a purchase…what do we value? For example, while I believe there are better champagnes for the price, I always bring a bottle of Veuve Cliquot as a gift to dinner parties in Los Angeles – it’s the “standard” luxury gift in the entertainment industry. Trust me, a bottle of orange labeled Veuve can bring a smile to even the most jaded movie studio executive. Similarly, what makes a product “the best?” A friend of mine swears by the Four Seasons hotel chain, “they’re the best Rafi” he chants with glee in his eyes. When I enquire how he has come to this determination, he regales me with stories about the hotel chain’s outstanding service. But for me, service is not really that important - I rarely interact with a hotel’s concierge or have special requests. So while it’s nice for hotel employees to address me by name when they see me in the hallways, it’s not worth an additional $150 a night to me. My friend’s and my ideas of “the best” differ.

My point is that much like beauty, value is truly in the eye of the beholder. Is Noka ripping off consumers? Of course not – the company never promised to mark up its ingredients by 25%. The chocolate maker offers a complex value proposition: solid ingredients, attractive presentation, and a luxury brand name. So while the writers at dallasfood.org may be turned off by the raw ingredients mark up, someone else may happily purchase Noka chocolates because they were featured at the Emmy awards…and there’s nothing wrong with that. As with any product, Noka chocolate is not for everyone…but that’s a choice we all can freely make based on what we value.

As for me, I’ll be first in line on February 15 for the annual 50% Valentines candy sale at my local Godiva store.

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