During the gold fever of the mid -1850s, Etienne Guitard, a French chocolate maker, sailed to California as many others, hoping to hit him rich.
However, he soon realized that his fortune was not in the mines, but in the sale of the chocolates he brought with him from the Tournus factory of his uncle to trade with mining supplies.
In 1868, after a period that refines his skills in France, he returned and began a small business, E. Guitard & Co., on the coast of San Francisco. In addition to making chocolate, he sold tea, coffee and spices.
The business became a fixed element in the city as it grew in one of the country's main metropolitan centers. Guittard became the chocolate manufacturer chosen for the best chefs such as Thomas Keller and restaurants such as Chez Panisse, and supplier of the sweets of the ICONIC SEE preparations since the 1930s.
During the last century, the family business has survived numerous threats to its existence, including the San Francisco earthquake of 1906, the great depression, the massive increases in sugar prices in the 1970s and the unexpected deaths of the president and successor of the company in the late 1980s, not to mention the competition of artisanal brands in the decade of 2000.
Now faces another crisis: the global tariff war of the Trump administration.
“It was like a soap after a good hard right,” said Gary Guitard, president of the fourth generation and executive director of Guitard Chocolate Company.
Guitard had just absorbed the shock of the 180% increase last year in cocoa prices (in addition to the 61% increase in the previous year), the result of the shortage due to the climatic impacts and the drought, when Trump announced in April that he was implementing global tariffs that would include cocoa grains, the key chocolate ingredient.
While companies from cars to toys are dealing with the effects of new global tariffs, the imposition of retaliation levies into imports has injected new agitation in the already turbulent chocolate market. For a small and thin margin business such as Guitard, tariffs have the potential to wreak havoc, since prices are expected to increase even more, creating new uncertainties for manufacturers that depend on the materials abroad.
“I didn't understand the numbers until I started playing the numbers,” he said. With the price of cocoa grains, tripling in the last two years to $ 12,931 per metric ton of $ 3,261 in 2023, Guitard said he now had to consider adding another 10% to the cost of doing business.
“I immediately thought we have to increase our prices,” he said.
While other manufacturers can resort to alternatives to help soften the tariff coup, American chocolate manufacturers depend completely on imports. Cocoa beans, the unprocessed raw ingredient that is used to make chocolate, can only grow in tropical regions that are 20 degrees north and south of Ecuador.
Most occur in the nations of Western Africa of Ivory and Ghana coast; It is also cultivated in parts of the center of South America and Southeast Asia.
“We are really having many discussions about how we want to address the rates and if we can give ourselves the luxury of mitigating the effect on our clients by absorbing some of the effects on the cost. But that, of course, will also affect our results,” he said.
The company, now based in Burlingame, California, south of San Francisco, obtains beans from multiple countries such as Ghana, Ivory Coast and South America. The mixtures have given unique flavor profiles to Guittard Chocolate, but has also served as coverage against market whims.
“We have a mixture of beans, purely and precisely due to this type of event: political events or diseases or anything that may happen,” Guitard said.
Chocolate manufacturers since 1868, Guitard began to supply the sweets See in the 1930s.
(Paul Kuroda / For the Times)
Trump tariffs have injected a new and complex variable into that calculation. While the United States commercial partners received a minimum duty of 10%, several cocoa nations, where Guitard buys their beans, received a higher rate. For example, the Ivory Coast received 21% and Madagascar a duty of 45%.
“I think you can solve that mathematically,” Guitard said, but pointed out that the image becomes increasingly complicated when you try to determine prices when a particular product uses beans mixtures that have different rates. For example, the company's inventory currently has beans prior to prayer and expects shipments to come from South America that will be argued.
“There are 10 different ways of seeing it. So we are trying to discover what is the best way for us and our clients.”
Guitard says that the company leans towards the absorption of a part of the cost. “We have to decide how much we can absorb and how long. We can certainly absorb everything. We are a small family business, not a great multinational conglomerate.”
Guitard, which uses about 240 people, is a small player in the United States chocolate market of almost $ 30 billion, generating approximately $ 100 million annually. The company did not reveal the profits, he says it is profitable.
Unlike the main US manufacturers such as Hershey and Mars, Guitard, such as most small businesses, they do not have the type of resources or influence to obtain a size or cushion the coming financial coup.
The chocolate giant Hershey, who won $ 11.2 billion in revenue last year, is looking for a federal government exemption to help clarify approximately $ 20 million in tariff expenses this quarter.
The company's financial director, Steve Voskuil, said he was “using each lever at our disposal to change those rates.”
The Swiss chocolate conglomerate Lindt & Sprüngli, which Ghirardelli acquired in 1998, announced that he will avoid the United States as a supplier to avoid rates.
“We are monitoring the situation very closely and we have identified different ways of mitigating the effect of tariffs,” said a Lindt spokesman for Fox News Digital. “These include the possibility of supplying countries such as Canada and Mexico from our European production facilities.”
The National Association of Confections, a commercial defense organization for sweet manufacturers, is also seeing how to navigate the situation on behalf of its members. “We are seeing this closely,” said Christopher Gindlesperger, senior vice president of Public Affairs and Communications of the NCA.
“We are trying to look at it through the eyes of our customers. We do not want it to affect them,” Guitard said. “Many of our clients are also family businesses.”
Under the new global tariff policy of the Trump Administration, these Madagascar cocoa beans are subject to a duty of 45%.
(Paul Kuroda / For the Times)
For now, Guitard says he will have to play the waiting game and see how he develops. A key factor, he says, is how consumers react and if they will limit or stop buying caramel bars and baking chocolate.
“This is much more complicated to implement what it seems, and we want to be transparent and honest about how we do it instead of using [tariffs] As an excuse to increase prices, which is not what I want to do, ”he said.
