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Book Review: The Emperors of Chocolate

March 13, 2014
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Barel Karsan

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A great deal of press is devoted to business rivalries. Coke vs Pepsi, the auto manufacturers, Amazon vs The World etc. But on one subject, the press is remarkably silent. The battle for chocolate supremacy is undoubtedly a topic dear to the hearts of many consumers, but it is one so shrouded in secrecy that there just isn't enough available on which to report. Joel Brenner put his investigative boots on and appears to have uncovered more about these secret companies (especially the privately-held Mars) than they are comfortable with. He reports his findings in The Emperors of Chocolate.

Brenner covers the history of the chocolate industry, from the first known era of its consumption (which was by the Incas, Aztecs and Mayans) to today. Most of the focus is on the last several decades, however, as it is during this time that a number of innovations pioneered by a few remarkable people (including Milton Hershey and Forrest Mars, whose names have endured in the products you love) changed the way chocolate is consumed.

In the early part of the last century, chocolate was manufactured everywhere in the US. It had to be; the industry had not figured out how to keep it from melting during transportation, particularly in the summer. But thanks to a need for nutritious (!) meals for soldiers during war, the successful chocolate manufacturers were able to solve this problem and thus do away with the regional competition. These companies became national behemoths, and to this day they use their scale to push out the smaller manufacturers.

But this did not occur before regions had developed certain tastes, tastes which have stuck. As such, chocolate that generates sales in one region may not necessarily do so in another! (Is this part of See's moat?)

If I have one quibble with the book, it is that the author uses market share as his score card of which company found itself doing well at a particular point in time. Market share can be obtained by lowering prices, offering incentives and/or by just plain buying the competition. While Hershey has done a lot of the latter, often times diluting its share count in the process, Mars has preferred to grow geographically and by copying rather than buying, which is likely a big reason it has been able to remain privately held.

Want to increase your circle of competence into consumer confectionery? The Emperors of Chocolate is a great place to start.

About the author:

Barel Karsan
GuruFocus - Stock Picks and Market Insight of Gurus

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