Darrin Johnson's Weblog: Need for speed...

I find out recently that my favorite chocolate maker, Scharffen Berger, was purchased by the very commercial Hershey's and was stunned. Although it wasn't a life defining momment it did however give me pause to think about why Hershey's may have purchased a boutique chocolatier. Then I realized that many companies have been doing similiar acquisitions - beer companies buying up microbreweries, computer companies buying up gaming machine companies, soft drink vendors buying bottled water and specialized drink companies, etc. Unlike the trend with computer companies to provide customized solutions (e.g. configurations) as part of mass customization movement, this is more like "Mass Specialization".

Why would mass specialization be interesting? As is generally the answer it all has to do with money. People are willing to pay more for specialty products. In the case of Scharffen Berger people are willing to pay $4.00 to $7.00 a 3 oz. bar instead of $0.75 for a Hershey Almond Bar which likely means there is certainly better profit margin in the specialized bar. Then you factor in the economies of scale of Hersheys which can greater buying power, strong infrastructure, and infinitely better distribution channels. It is clear that the profit margin will only increase.

The most important question is ... "Will the quality suffer?" Only time will tell. However the large mass producing companies have a vested interest ensuring that the specialized product remains specialized to preserve their margin. I hope though that my $6.50 El Carmen Venezuela 75% Cacao Pure Dark Chocolate Limited Series Scharffen Berger chocolate bar will become slightly cheaper given the economies of scale. Unfortunately, or fortunately, I can't eat chocolate and hold my breath at the same time.