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

BBG News

In the heart of the 1850s Gold Rush, just as numerous individuals did, Etienne Guittard, a craftsman from France specializing in chocolate, embarked on a voyage towards California, dreaming of striking it big.

Yet, it wasn’t long before he understood that his wealth was not hidden within the mines, but instead, stemmed from peddling the chocolates he carried from his uncle’s factory in Tournus, which he used as a means to acquire necessary mining equipment.

Business

Trump’s global tariffs are causing financial strain for various well-known toy manufacturers and clothing brands based in Los Angeles.

In the year 1868, following some time spent honing his abilities in France, he came back and launched a compact enterprise named E. Guittard & Co., situated along San Francisco’s shoreline. This venture not only produced chocolate but also dealt in tea, coffee, and various spices.

1. Over time, the business established itself firmly in the city, eventually evolving into one of the nation’s significant urban hubs.

2. Guittard, in its growth, became a preferred chocolate manufacturer for renowned chefs like Thomas Keller and esteemed restaurants such as Chez Panisse. Furthermore, it has been supplying iconic candy maker See’s Candies since the 1930s.

For more than a hundred years, this family-run business has persisted through numerous challenges to its survival. These have ranged from historic events like the 1906 San Francisco earthquake and the Great Depression, to economic fluctuations such as skyrocketing sugar prices in the 70s, the untimely demise of its president and successor in the late 80s, and fierce competition from artisan brands in the 2000s.

Now it is facing yet another crisis: the Trump administration’s global tariff war.

Gary Guittard, as the fifth-generation leader of Guittard Chocolate Company, stated that it was similar to a punch after a solid right hook.

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Gary Guittard, president and CEO of the fifth generation of Guittard Chocolate Company, described it as being like a jab after a strong right punch.

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Gary Guittard, head of the fifth generation of Guittard Chocolate Company, said that it was reminiscent of a hit following a powerful right swing.

Last year saw a staggering 180% rise in cocoa prices, following a 61% increase the year prior, due to shortages caused by climate-related issues and drought. Just as Guittard was reeling from this news, Trump announced in April that he intended to impose global tariffs, which would affect cocoa beans – a crucial component of chocolate production.

In various industries ranging from automobiles to toys, businesses are struggling with the fallout of recently implemented global tariffs. However, these tariffs have added an extra layer of chaos to an already volatile chocolate market by imposing retaliatory taxes on imports. For small, narrowly profitable companies like Guittard, the threat of increased prices due to tariffs could cause significant disruption, as it introduces fresh uncertainties for manufacturers who rely heavily on foreign materials.

Business

Business proprietors depending on imported items in Los Angeles are preparing for increased costs due to Trump’s implementation of significant tariffs on goods originating from various nations.

He explained that he couldn’t grasp the figures until he began dealing with them himself. Since the price of cocoa beans has skyrocketed over the past two years – from $3,261 per metric ton in 2023 to a staggering $12,931 now – Guittard mentioned that he’s faced with the necessity of increasing his business expenses by an additional 10%.

“I immediately thought, we have to raise our prices,” he said.

Unlike other manufacturers who might seek out substitutes to cushion the impact of tariffs, American chocolate makers are entirely dependent on imports. The essential component, cacao beans, which is unprocessed and used for making chocolate, can only be cultivated in tropical regions that lie within 20 degrees north and south of the equator.

A significant portion is cultivated primarily in West African countries like Ivory Coast and Ghana, while it’s also farmed in certain regions of Central South America and Southeastern Asia.

He mentioned that we’re having numerous talks about the best way to handle tariffs and if we can lessen their impact on our customers by taking on some of the costs ourselves. However, this decision would also impact our profit margins.

The company, currently located in Burlingame, California, which is south of San Francisco, obtains beans from various nations such as Ghana, Ivory Coast, and South America. These blends provide Guittard chocolate with distinctive flavor notes, yet they also act as a protective measure against the unpredictability of market conditions.

Guittard explained that our mix of beans is carefully crafted due to various occurrences such as political incidents, health issues, or any unexpected event.

Trump’s tariffs have added a fresh and intricate factor into these calculations. While America’s trade allies were granted a minimum tax of 10%, several cocoa-producing countries, among which Guittard sources its beans, faced higher taxes. For example, the Ivory Coast was hit with a 21% tax rate and Madagascar with a 45% import duty.

Guittard pointed out that mathematically it should be straightforward, but he warned that things get more complex when dealing with products that use blends of beans subject to varying tariffs. For example, the company’s stock contains non-tariffed beans and is anticipating incoming shipments from South America, which will have tariffs applied.

We’re exploring 10 distinct perspectives on this matter. Our goal is to determine the most suitable approach, considering both ours and our customers’ interests.

Guittard indicates that the business might shoulder some of the expenses. “We need to determine how much we can handle and for how long. It’s impossible for us to shoulder everything. After all, we’re a compact family-owned enterprise, not a vast multinational corporation.

Guittard, a company with approximately 240 employees, holds a modest position within the almost $30-billion American chocolate industry. Yearly, they generate around $100 million in revenue. Although they didn’t reveal their profits, they assert that they are profitable.

In contrast to large American companies such as Hershey and Mars, Guittard, being a smaller business, lacks the necessary resources and clout to secure an exception or soften the impending financial impact.

Hershey, a significant player in the chocolate industry with annual revenues of approximately $11.2 billion, is requesting a waiver from the U.S. government to offset around $20 million in tariff costs for this quarter.

According to the company’s CFO, Steve Voskuil, we are pulling out all stops to have those tariffs modified.

The Swiss company Lindt & Sprüngli, known for its ownership of Ghirardelli since 1998, declared that they would bypass the United States as a supplier to dodge tariffs.

A Lindt representative shared with Fox News Digital that they’re keeping a keen eye on the current situation and have come up with various strategies to minimize the impact of tariffs. One such strategy could involve shipping products to countries like Canada and Mexico from our factories in Europe.

The National Confectioners Association, which represents candy manufacturers, is carefully considering how best to handle the current circumstances for their member companies. As stated by Christopher Gindlesperger, their senior vice president for public affairs and communications, they are keeping a close eye on the situation.

Guittard emphasizes understanding the customer’s perspective, ensuring that any changes do not impact them negatively. He notes that many of their customers are also small family-owned businesses.

Currently, Guittard finds himself in a position where he can only adopt a watchful stance, awaiting further developments. A crucial element, according to him, is the response of consumers – specifically, whether they will decrease or discontinue their purchase of candy bars and baking chocolates.

As a devoted cinephile, I’m eager to share some behind-the-scenes insights: “This isn’t just about flipping a switch; it’s much more intricate than you might think. Transparency and honesty are my top priorities when discussing the nitty-gritty details of our processes, rather than resorting to tariffs as a cloak for price hikes – something I firmly oppose.

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2025-05-15 13:31

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