OUGD401 - The cost of a chocolate bar

Cocoa butter (19%) = 3.4p
Whole milk powder (19%) = 2.8p
Sugar (49%) = 1.4p
Whey powder (2%) = 0.08p
Cocoa liquor (12%) = 1.5p

That adds up to just 9.1p for a 45g bar of chocolate.

Of course, while the price has stayed broadly the same the same over the last few years, the typical size of a chocolate bar has shrunk by as much as 10%. This has been blamed on rising production costs by manufacturers - but what’s the true story?

Given the ingredients of a typical bar only cost 9.1p, they would need to rise by 55% to add just 5p to the cost of a bar (or justify a 10% reduction in size). They haven’t. In the past year they have risen an average of 18% each, Mintec found, adding just 2.6p to the cost of an average bar (once adjusted for quantities).

So if ingredients make up just 9.1p of the cost of a bar, where does the remaining 40.9p go?

Tax

Straight off the top, 10p of your 50p goes to the exchequer in VAT – more than goes into the chocolate.

Shop profit

You can buy chocolate bars for around 43p each from a British wholesaler, making a 7p margin on each bar for the shop.

The manufacturer

A major manufacturer we looked into made about 17% profit on their confectionary sales, on a 50p bar that would be around 7p again. Production of the chocolate bar eats up approximately 4p, distribution at the firm takes up around 9% of sales revenue (so 4p of final price), marketing 20% (9p), while about half the sales price goes on producing the goods sold.

The breakdown for 'posh' chocolate

Of course, if we want something with better chocolate we tend to go to smaller manufacturers – which changes the picture dramatically.

Seed and Bean - a small ethical, organic and fairtrade chocolate brand founded by British entrepreneur Stephen Rudkin – was the only chocolate firm we contacted who was willing to share an exact breakdown of the cost of its chocolate bars.

Here it is:

Retail price for 85g bar: £2.29

Ingredients of a high quality chocolate bar:

• Couverture (the high quality raw chocolate that Seed and Bean turns into chocolate bars): 22% of retail price. Cost: 51p
• Manufacturing and packaging: 6% of retail price.
• Warehousing and shipping: 3.5% of retail price.
• Large national retailers or smaller retailers and their wholesalers’ cut: 42% of retail price.
• Marketing: less than 0.5% of retail price.
• Staff and profit: 9% of retail price.
• VAT: 20% of the total cost price.

Straight away you can see that more of your money is going on the ingredients you’re ultimately eating (22% of the final price rather than 18% for a major firm) and a lot less on marketing.

Couple that with the fact smaller manufacturers don’t get the economies of scale a major manufacturer has and you can see that, while you might pay more for better chocolate, you get more too.

From:

https://uk.finance.yahoo.com/news/the-real-cost-of----a-chocolate-bar-115659540.html