Tariffs give 157-year-old chocolate maker Guittard a bitter taste

During the Gold Rush of the mid-1850s, Etienne Guittard, a French chocolatier, sailed to California similar galore others, hoping to onslaught it rich.

However, helium soon realized his fortunes laic not successful the mines but successful selling the chocolates helium brought with him from his uncle’s Tournus mill to commercialized for mining supplies.

In 1868, aft a stint refining his skills backmost successful France, helium returned and started a tiny business, E. Guittard & Co., connected San Francisco’s waterfront. In summation to making chocolate, helium sold tea, java and spices.

The concern became a fixture successful the metropolis arsenic it grew into 1 of the country’s large metropolitan centers. Guittard became the cocoa shaper of prime for apical chefs similar Thomas Keller and restaurants specified arsenic Chez Panisse, and supplier to iconic confectioner See’s Candies since the 1930s.

Over the past century, the family-owned concern has survived galore threats to its existence, including the 1906 San Francisco earthquake, the Great Depression, monolithic sweetener terms hikes successful the 1970s and the unexpected deaths of the company’s president and successor successful the precocious 1980s, not to notation contention from artisanal brands successful the 2000s.

Now it is facing yet different crisis: the Trump administration’s planetary tariff war.

“It was similar a jab aft a bully hard right,” said Gary Guittard, the fifth-generation president and main enforcement of Guittard Chocolate Company.

Guittard had conscionable absorbed the daze of past year’s 180% spike successful cocoa prices (on apical of the 61% summation the twelvemonth before), the effect of shortages owed to clime impacts and drought, erstwhile Trump announced successful April that helium was implementing planetary tariffs that would see cocoa beans, chocolate’s cardinal ingredient.

While businesses from autos to toys are grappling with the effects of caller planetary tariffs, the imposition of retaliatory levies connected imports has injected caller turmoil into the already turbulent cocoa market. For a small, slim borderline concern similar Guittard, tariffs person the imaginable to wreak havoc, arsenic prices are expected to emergence adjacent more, creating caller uncertainties for manufacturers that beryllium connected materials from abroad.

“I didn’t recognize the numbers until I started playing the numbers,” helium said. With the terms of cocoa beans tripling successful the past 2 years to $12,931 per metric ton from $3,261 successful 2023, Guittard said helium was present having to look astatine adding different 10% into the outgo of doing business.

“I instantly thought, we person to rise our prices,” helium said.

While different manufacturers whitethorn crook to alternatives to assistance soften the tariff blow, American cocoa makers are wholly reliant connected imports. Cacao beans, the earthy unprocessed constituent utilized to marque chocolate, tin lone turn successful tropical regions that are 20 degrees northbound and southbound of the equator.

The bulk is produced successful the West African nations of Ivory Coast and Ghana; it is besides grown successful parts of Central South America and Southeast Asia.

“We are truly having a batch of discussions connected however we privation to attack the tariffs and whether we tin spend to mitigate the effect connected our customers by absorbing immoderate of the effects connected cost. But that, of course, volition impact our bottommost enactment arsenic well,” helium said.

The company, present based successful Burlingame, Calif., southbound of San Francisco, sources beans from aggregate countries including Ghana, Ivory Coast and South America. The blends person fixed Guittard cocoa unsocial spirit profiles, but it has besides served arsenic a hedge against the vagaries of the market.

“We person a blend of beans, purely and precisely due to the fact that of these kinds of events: governmental events oregon diseases oregon thing that tin happen,” Guittard said.

Chocolate makers since 1868, Guittard began supplying See’s Candies successful the 1930s.

(Paul Kuroda / For The Times)

Trump’s tariffs person injected a caller and analyzable adaptable into that calculation. While America’s trading partners were fixed a minimum baseline 10% duty, a fig of the cacao producing nations, wherever Guittard purchases its beans, were slapped with higher tariffs. For instance, the Ivory Coast was fixed 21% and Madagascar a 45% duty.

“I deliberation mathematically you tin fig that out,” said Guittard, but noted that the representation becomes progressively analyzable erstwhile you effort to find prices erstwhile a peculiar merchandise uses legume blends that person antithetic tariffs. For instance, the company’s inventory presently has pre-tariffed beans and is expecting shipments to travel successful from South America that volition beryllium tariffed.

“There’s 10 antithetic ways to look astatine it. So we’re conscionable trying to fig retired what’s the champion mode for america and our customers.”

Guittard says the institution is leaning toward absorbing a information of the cost. “We person to determine however overmuch we tin sorb and for however long. We surely can’t sorb it all. We’re a tiny household company, not a ample multinational conglomerate.”

Guittard, which employs astir 240 people, is simply a tiny subordinate successful the astir $30-billion U.S.-based cocoa market, generating astir $100 cardinal annually. The institution did not disclose net says it’s profitable.

Unlike the large U.S. manufacturers specified arsenic Hershey and Mars, Guittard, similar astir tiny businesses, doesn’t person the benignant of resources oregon power to get a carve retired oregon cushion the coming fiscal blow.

Chocolate elephantine Hershey, which earned $11.2 cardinal successful gross past year, is seeking an exemption from the national authorities to assistance blunt an estimated $20 cardinal successful tariff expenses this quarter.

The company’s main fiscal serviceman Steve Voskuil said that it was “using each lever astatine our disposal to get those tariffs changed.”

Swiss cocoa conglomerate Lindt & Sprüngli, which acquired Ghirardelli successful 1998, announced that it volition sidestep the U.S. arsenic a supplier successful bid to debar tariffs.

“We are monitoring the concern precise intimately and person identified antithetic ways to mitigate the effect of tariffs,” a Lindt spokesperson told Fox News Digital. “These see the anticipation of supplying countries similar Canada and Mexico from our European accumulation facilities.”

The National Confectioners Association, an advocacy commercialized enactment for candy makers, is besides seeing however to navigate the concern connected behalf of its members. “We’re watching this closely,” said Christopher Gindlesperger, the NCA’s elder vice president of nationalist affairs and communications.

“We’re trying to look astatine it done our customer’s eyes. We don’t privation it to impact them,” said Guittard. “A batch of our customers are household businesses arsenic well.”

Under the Trump administration’s caller planetary tariff policy, these Madagascar cacao beans are taxable to a 45% duty.

(Paul Kuroda / For The Times)

For now, Guittard says helium volition person to play the waiting crippled and spot however it unfolds. A cardinal factor, helium says, is however consumers respond and whether they volition bounds oregon halt buying candy bars and baking chocolate.

“This is simply a batch much analyzable to instrumentality than meets the eye, and we privation to beryllium transparent and honorable astir however we bash it alternatively than utilizing [tariffs] arsenic an excuse to rise prices, which is not what I privation to do,” helium said.