Slave Labor, the Mast Brothers, and the Looming Crisis of Cheap Chocolate

As seen in VICE News

Last spring, a food writer named Megan Giller began contacting sources for a story about small-batch chocolate. Her plan was to write about how terroir — the characteristics imbued in a crop based on the environment in which it’s grown — affects cacao in much the same way it affects wine grapes.

But when she contacted sources, they were far more interested in discussing how much they hated Rick and Michael Mast, two bearded siblings known for their beautifully packaged $10 chocolate bars.

“To the point where all my interviews were getting totally off-track,” Giller says.

The industry experts to whom she spoke said that Mast Brothers chocolate contained “defects,” and described the flavor of the brothers’ wildly popular chocolate, made in Brooklyn, New York, as variously “chalky,” “moldy,” and “bad.” The Masts, who employ a staff of 50 people, do not release financial information, but they have a factory and retail store in Brooklyn, another store in London, and a third store opening in Los Angeles.

That kind of growth and success is effectively unheard of in the high-end chocolate world.

Giller’s sources insisted many of the Masts’ early bars were not “bean-to-bar” creations as the Masts claimed, but actually made from a re-melted commercial chocolate base, or couverture. The resulting article, which ran on Slate, was the first to publicly expose the industry’s widespread disdain for Mast Brothers. But no one felt they had enough evidence about the Masts’ alleged deception to be quoted on the record.

Then, last month, Dallas food blogger Scott Craig published a four-part investigative series titled “Mast Brothers: What Lies Behind the Beards.” In it, Craig methodically dismantled the Masts’ claims of being strictly bean-to-bar chocolate makers, and over the course of several thousand words, labeled them frauds.

Mast Brothers co-founder and CEO Rick Mast, who declined VICE News’ repeated interview requests through a PR representative, responded to Craig’s “misleading, unsubstantiated” investigation in a statement posted online.

“Mast Brothers is a 100% bean to bar chocolate maker,” Mast wrote. “Every chocolate bar made by our company that you have lovingly purchased since we opened our first factory… was made ‘bean to bar.’ Any claim or insinuation otherwise is simply false…. [W]hile we never claimed to make all our chocolate exclusively from bean to bar in those early days, we did describe ourselves as a bean-to-bar chocolate maker. Since we were in fact making chocolate from bean to bar, we honestly thought we could say as much.”

Nevertheless, there was backlash. “Are you a sucker if you like Mast Brothers chocolate?”asked an NPR story. Grub Street reported that people were returning bars to retailers in light of the controversy, and that sales at those retailers dipped by up to 66 percent — though Mast Brothers said overall sales had actually gone up.

But the true controversy surrounding premium chocolate is bigger than the Mast Brothers. It concerns the price of chocolate throughout the industry, because a high-end chocolate bar shouldn’t cost $10.

It should cost far more.

* * *

In 2007, there were fewer than 10 craft chocolate makers in the United States. Today, the number is closer to 200, with as many as 60 of those identifying themselves as bean-to-bar.

Craft chocolate is a completely different animal than the mass-produced kind. According to the US Food and Drug Administration, chocolate must contain at least 10 percent cacao. Hershey’s milk chocolate can contain as little as 11 percent. Craft chocolate typically contains 60 percent and up.

And among academics and industry experts, there’s a general sense that cacao is underpriced by at least half.

“We’re still conducting our research, but I would say that even $10 is probably not a sustainable price point for a lot of chocolate,” Professor Carla Martin, a Harvard University ethnographer who runs the nonprofit Fine Cacao and Chocolate Institute, tells VICE News. She says that cacao farmers in West Africa, where about two-thirds of the world’s cacao is grown, “are only making a quarter or a third of what they should be, subsisting at the poverty level, at best.”

Most of them aren’t even doing that well. The World Bank’s Global Poverty Line is set at $2 a day. According to Make Chocolate Fair, a Berlin-based NGO, cacao farmers in Côte d’Ivoire earn as little as 50 cents a day; those in Ghana as little as 84 cents a day. In September, Owusu Afriyie Akoto, the ranking MP on the Food, Agriculture & Cocoa Affairs in the Ghanaian parliament, called for a doubling of prices paid to farmers for the next crop season.

Although big chocolate manufacturers have very publicly announced corporate social responsibility initiatives to improve the lives of cacao farmers, things have actually gotten worse over time. In the 1980s, cacao farmers received 16 percent of the retail price consumers paid for chocolate. Since then, the confectionery industry has consolidated and commodities markets have gotten increasingly volatile, while the influence of cacao farmers has dropped. Today, they receive between 3 percent and 6 percent of the retail price consumers pay for chocolate. This means, as Make Chocolate Fair states, “chocolate needs to become more expensive.”

Up until the middle of the 19th century, chocolate consumption was limited to the ultra elite. Aristocrats obtained chocolate from monks and conquistadors traveling back and forth between the African and South American colonies and Europe. The rise of industrialization made chocolate affordable for the masses, and as demand grew, Martin says, “millions of Africans were enslaved to meet it.”

This “free” labor set artificial pricing expectations at levels that have been too low since the first commercial shipment of cacao sailed from Tenochtitlán (today’s Mexico City) to Seville in 1585.

The “mechanism of value and price is broken [and] must be fixed,” said the 2015 Cocoa Barometer, a yearly industry review published by a consortium of European NGOs. In practical terms, this means “the consumer is buying chocolate at prices that do not reflect the true cost of producing chocolate.”

Child slavery continues to persist on many cacao farms — farmers in West Africa can buy a child laborer for about $250, according to Slave Free Chocolate, an American NGO. The Prime Minister of Côte d’Ivoire, which borders Ghana to the west, said recently that cacao prices would have to rise by a factor of 10 for forced labor to be eradicated from the industry.

“Our whole system is built around getting things for cheap, without understanding where that product came from, and who made it,” says Sunita de Tourreil, CEO and founder of The Chocolate Garage, a Palo Alto tasting room and incubator. “Meanwhile, the child labor problem is only getting worse.”

In 2001, then–US Senator Tom Harkin and Representative Eliot Engel introduced legislation in an attempt to curtail child slavery in cacao-producing nations. The chocolate industry enthusiastically threw its support behind the plan, known as the Harkin-Engel Protocol, vowing to eradicate the “worst forms of child labor” in cacao by 2005.

“We need to be permanently concerned with where cocoa comes from, the impact of cocoa on the environment, and how the workers are treated,” Larry Graham of the Chocolate Manufacturers Association said at the time. “That’s where the industry has changed, permanently and forever.”

Since 2001, however, the use of child labor on cacao farms has increased by 18 percent, according to a July 2015 report from the Tulane University School of Public Health and Tropical Medicine that was financed by the US Department of Labor.

At the same time, adult cacao farmers are aging out of the business. The average age of a Côte d’Ivoire cacao farmer is 51. According to the World Health Organization, the average life expectancy for a male in the country is 52.5. There don’t appear to be enough younger farmers taking their place, which could lead to future shortages, higher levels of slave labor, or both.

* * *

Colin Gasko has been making craft chocolate from bean-to-bar since 2007, and is widely considered to be among the best, if not the best, bean-to-bar chocolate maker in the world. His Massachusetts company, Rogue, doesn’t have any employees, though his girlfriend helps out as much as she can.

The price of cacao is only one component of a multifaceted problem, says the 30-year-old Gasko, who won Gold/Best in Competition at the 2015 International Chocolate Awards. Although he agrees that prices should be “much, much higher than they are,” he isn’t sure the solution is that simple.

Guaranteed prices would ensure stable incomes, but Gasko fears that the change could lead to undesirable crops. Meanwhile, industrial chocolate giants insist that higher-yielding varieties of cacao are the answer to many of the industry’s problems.

“The big industrial guys think all they have to do is create super high-yielding, disease-resistant varieties, but we need to consider flavor more,” Gasko says. “We also need to develop better ways to preserve cacao’s genetic diversity. The problem right now is we don’t necessarily know what to preserve.”

Chocolate makers who take those things into consideration often “make little to no money,” de Tourreil says. Even though Rogue’s Porcelana 80 percent bars sell for $18 apiece, the company is not profitable. Gasko barely pays himself enough to get by; he and his girlfriend, along with their baby daughter, live with his parents.

“Calculated to hourly wages, between the two of us, we probably average about $4 an hour, given that we work usually six to seven days a week,” Gasko says.

Sourcing high-quality raw materials at a micro level can be exceedingly difficult. A bean-to-bar maker of Gasko’s size buys about one or two metric tons at a time, while most cacao is purchased by the container load, or at least 12.5 metric tons. Shipping a smaller load can add 30 percent to a small maker’s cost, and Gasko is already paying ultra-premium prices for his beans.

When he has been able to get his hands on Porcelana cacao — a coveted, genetically pure strain of the Criollo bean grown just south of Venezuela’s Lake Maracaibo — it has cost upward of $12,000 a metric ton (2,200 pounds), plus up to $4,000 to fly it back to the US. (The price for industrial cacao on global commodities markets is a little over $3,200 a metric ton.)

Gasko doesn’t necessarily want to be, or stay, small, but he never courted investors because it would mean having a “fiduciary responsibility to maximize profits, and I would basically have a legal obligation to cut corners.” To expand, he’s instead considering taking out a personal loan.

“It sounds very attractive to do things on an incredibly small scale,” Gasko says. “But at some point, someone will have to figure out what the actual appropriate scale necessary to get by is.”

* * *

If making good chocolate from ready-made couverture is hard — and it takes a great deal of effort and skill to do well — making great chocolate from bean-to-bar is ludicrously painstaking.

Alan McClure, a 37-year-old Missourian who trained in France, sold his first chocolate bar in 2007. His company, Patric Chocolate, in Columbia, Missouri, has a reputation for bean-to-bar creations that rival Gasko’s, having won 12 National Good Food Awards over the past five years.

McClure’s process comprises dozens of discrete, time-consuming steps. On the industrial level, these tasks are subcontracted out to large processors that do them by the metric ton. In McClure’s case, he and his wife — and sole current employee — do it all.

First, the raw cacao beans are sifted and sorted by hand, to remove dust, silt, bean fragments, shell pieces, damaged beans, beans that are stuck together, germinated beans that didn’t ferment soon enough after harvest, flat beans, beans that are too small, and leaves and twigs.

Next, McClure roasts the cacao beans in small batches, paying close attention to the time and temperature curve of the oven, airflow, aroma, appearance, and even the sound of the cacao as it heats up. When this is done, the cacao is cracked, classified by size, and “winnowed,” which removes the cacao’s outer shell, or testa, using controlled airflow. The bitter cacao germ, or radicle, is also removed at this time, leaving behind only pure cacao — the nut, or, “nib,” of the cocoa bean.

The nibs are then ready to be ground to a paste, which McClure does in a custom-made granite-based refiner. Pure cane sugar is added, and the friction, combined with external heat, slowly turns the mixture into a silken liquid. The next step is called conching, which is a four-to-five-day-long mixing process in which the particles of sugar and cacao are coated in a layer of their own cocoa butter. Harsh flavor compounds, like acetic acid, evaporate during conching, mellowing the cacao.

The chocolate is dried and aged in blocks, giving the flavors additional time to develop. It is then melted, tempered (a controlled crystallization that gives the chocolate the proper texture), and finally molded into bars. Each one is then hand-wrapped, and, ideally, sold at a profit.

McClure has struggled to make bean-to-bar chocolate into a viable business. He spent his first six years chasing growth at all costs “because the idea that growing/expanding/scaling is a necessity is something everyone repeats over and over.”

After almost a decade of trying, McClure has finally been able to scratch out a small profit. But he did it by getting smaller, not bigger.

In 2014, McClure decided to go back to school to pursue a graduate degree in flavor science. As his eight employees left to pursue other jobs or retire, he didn’t hire replacements, and in two years he was down to a staff of zero. He also cut production from 2,782 bars a week — 400 pounds of chocolate — to fewer than 700 bars a week. Instead of 12 kinds of bars always being available, he now has a rotating menu of three different bars each month. McClure also raised his retail prices about 30 percent, to $14, and started selling about 75 percent more product online. He stopped offering distributor discounts, which can be as high as 25 percent.

It’s working. For now.

“I hope that with the small amount of chocolate we do make, that there’ll at least be a small number of people who appreciate it,” he says. “I don’t need everyone… but I’m counting on those people that my chocolate speaks to in some way.”

Seneca Klassen, the 46-year-old founder of Lonohana Estate Chocolate, a “tree-to-bar” maker in Oahu, Hawaii, says the only way to truly know exactly what is happening at every single step along the supply chain is for him to control the entire process, including the growing. Klassen is one of the only American chocolate maker who grows his own cacao.

Klassen, who maintains 14 acres of trees he planted as seedlings in 2009, says chocolate is “still historically underpriced.” Despite bars that retail for $14, Lonohana has not yet turned a profit, and Klassen doesn’t anticipate making money “for some chunk of the future.”

While he has a hard time putting his finger on a figure that would create a sustainable system for cacao growers, he estimates it would have to be at least $10,000 a metric ton, or more than three times the current commodity price. Klassen’s current break-even cost per metric ton of cacao is about $25,000, or nearly eight times the basic commodity market price.

“All the chocolate that I like to eat is made by companies that are either out of business, on the brink of going out of business, or are destined to go out of business,” one industry insider says. “None of them are successful.”

* * *

The Masts don’t appear to be struggling at all. When reviewers pan their chocolate, many complain it tastes commercially made. However, this flavor profile, derided as middle-of-the-road by chocolate connoisseurs, clearly appeals to large segments of the population. Appreciating fine dark chocolate can be something like appreciating extremely peaty scotch, and someone who grew up eating Hershey bars might prefer — not unreasonably — a taste that an expert would criticize for its blandness.

In addition, a large part of the Masts’ success has also been attributed to their packaging; even their harshest critics typically concede that the wrapper is beautifully designed.

The key to making things work for both cacao farmers and craft chocolate makers is “an educated and caring audience of customers,” de Tourreil says. Once people understand what goes into chocolate, consumers can begin to make more thoughtful decisions about what they buy.

There is no roadmap for making this happen. But Carla Martin points to another industry that managed to change its own exceptionally problematic production history of extreme inequality and violence.

“When it comes to labor abuses, the tobacco industry has actually done a really good job in figuring out how to address them,” she says. “Who would have thought?”