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Chuao Chocolatier

Over nine years, this innovative chocolate maker has created a successful brand through launching its own cafés, focusing on high-quality ingredients and regularly taking risks on unusual flavor combinations.

by Nicole Potenza Denis

Venezuelan brothers Michael and Richard Antonorsi let their passion drive their business. These serial entrepreneurs, with a family history in chocolate, became pioneers of premium fusion chocolate in 2002 with the debut of Chuao Chocolatier in California, where they attended school. Not only did they introduce Californians to sweet and savory bonbon confections made with a signature blend of Latin American cacaos (the core of which hails from a mix of beans including the prized Venezuelan criollo), they did so with truly distinctive flavors.

As with any company there have been branding obstacles that have helped shape the way Chuao has grown. But what has been key all along is Michael’s culinary approach to chocolate and the belief that there needs to be a bit of discovery in each of his creations.

Cacao in their Blood

Growing up in Caracas, Michael and Richard were exposed to the rich flavors of pure chocolate. Their ancestors were cacao farmers and owned Aguasanta, a legendary small farm and leading force in the criollo cacao plantation industry in Venezuela. When government focus turned from one black gold (cacao) to another more abundant and profitable variety (oil), the family farm was sold in the first half of the 1900s. Still, through their heritage, the brothers “had the opportunity to be around the best chocolate,” notes Brooke Feldman, Chuao’s director of marketing communications. Yet they didn’t jump into the chocolate industry immediately. Michael became an engineer, and both brothers earned MBAs from the University of California, San Diego.
The pair eventually moved back to Venezuela to form a telecommunications firm, but when Michael was in his mid-30s, he could no longer keep his culinary passion at bay. He moved his family from Venezuela to Paris to study at the École Supérieure de Cuisine Française Ferrandi where he gained certification as a French Chef with specialized training in pastry and chocolaterie from the École Lenotre. “Soon, he began creating little meals inside a chocolate bonbon shell,” Feldman says.

This marked the foundation of Chuao Chocolatier, named for the legendary cacao-growing region of Chuao, Venezuela, a mountainous village surrounded by rainforests known for the prized criollo cacao beans. “Chocolate connoisseurs know that Chuao is a reference to high-quality, sought-after cacao,” Michael Antonorsi says. But the average customer was challenged by the pronunciation. “People would call us chiwawa, chewy, chia,” he recalled in his acceptance speech for the 2011 Outstanding Hot Beverage sofi Award. It wasn’t until an article was written about the company with the following explanation: “You chew and then you say WOW ... Chew-WOW!” that people started to get the name right. “We were grateful and happily adapted this reporter’s version of the pronunciation,” Antonorsi says.

In 2002, Antonorsi and his brother, who joined as a strategic business partner, made San Diego their new home and began their culinary approach to chocolate.

The Chocolate Cafés

With limited funding, three marble tables, a chocolate wheel and family members lending a hand boxing up and sampling bonbons, the flagship Chuao Chocolatier Chocolate Café opened in Encinitas, Calif. “It was a learning experience from day one,” Antonorsi says, adding, “We had no previous retail experience. Our initial goal was to make everyone happy with our artisan creations and sell as much chocolate as we could.” He admits they didn’t even know how to operate the cash register. “We hired a teenage girl from a shop next door to teach us,” he recalls.

Initial offerings included chocolate bars, bonbons (the first flavor of which was Picante, a Cabernet wine caramel with pasilla chile and cayenne pepper), truffles and hot chocolate in the now-signature Spicy Maya, a modern twist on an ancient Mayan hot-chocolate recipe with pasilla chile and cayenne pepper. In a typical European style, customers could watch the confections being made in the back. Today, the line has grown to 120 SKUs.

Chuao quickly expanded and, over the next six years, the brothers opened five more Chocolate Cafés, throughout Southern California and one in Florida. “It all moved fast,” Antonorsi says. “We took retail opportunities as they came and learned about demographics and real estate as we went along, not always sure what to expect.” Missteps included launching stores too close together and choosing locations that weren’t optimal, which ultimately led them to adjust to three stores in total.

“We were driven by our passions and not a formal business plan,” Antonorsi says. “It was an enlightening experience.”

Chuao Brand Time Line

2002 - Chuao launches; opens first store in Encinitas, Calif; debuts website; begins rolling out Chocolate Cafés
2004 - Introduces wholesale line
2007 - Begins social-media outreach
2008 - Rolls out product innovations such as ChocoPod single serve chocolate and Firecracker
2009 - Reduces Chocolate Café locations to three, wins its first NASFT sofi™ Silver Awards for Outstanding Chocolate with Firecracker CocoPod and Outstanding Hot Beverage with Abuela Hot Cocoa; introduces Panko bar
2010 - Expands line with Brownie mixes
2011 - Launches Potato Chips in chocolate bar; Wins sofi™ Gold Award for Outstanding Hot Beverage with Spicy Maya Hot Chocolate

Product Development

Chuao’s signature blend is a 60 percent mix of Latin American cacaos with the core hailing from Venezuela. “Venezuela produces a wide array of unique criollo, trinitario and forastero beans,” Antonorsi explains. And it is the terroir that has the greatest influence in the flavor profile. “Our chocolate has a balance of fruit and a light acidity with all three types of beans incorporated into the company’s premium house blend,” he adds.

Although Venezuela is known for its volatile cacao trade, Antonorsi says he has never had a lack of supply but sometimes is forced to make larger purchases. “Just-in-time delivery is preferred but at times it is necessary to buy in larger quantities to ensure availability,” he concedes.

Antonorsi strives to deliver unique sweet and savory creations to his customers. In the early days, he worked without a filter, making confections with chocolate and spices and wondering how he could “stretch the limit” with combinations. Early product misses included a rosemary buttercream with garlic caramel and a saffron buttercream with sesame. “When you start offering a new product, sometimes it is difficult to find a balance between what you might think is great and what the customer really wants. It is important to find that balance,” Antonorsi notes.

To keep creativity flowing, the company introduced a carefree approach to product development with the “Dare to Be Different” program at its cafés in 2005. Each month for three years, Antonorsi created a unique bonbon flavor using leftover ingredients and his imagination. After a year, he would survey his stores to see which creations customers would want to see return permanently. Current best-sellers Firecracker (caramel fudge with chipotle in dark chocolate and topped with popping candy) and Panko (dark chocolate with toasted panko breadcrumbs) were born out of this program. “Firecracker was so popular it rolled straight into our catalog after only being out for a week,” he says.

Wholesale Launch

Chuao’s wholesale business began in 2004 with Whole Foods Markets in the San Diego region as its premier client. On offer were five bars (Spicy Maya, Chinita Nibs, Earl Gray, Caracas Milk and Caracas Dark) and two hot chocolates (Spicy Maya and Abuela). Today, Chuao’s products are sold at more than 5,000 national and regional retailers, such as Crate & Barrel and Dean & Deluca.

Not every creation will make it to a major retailer, however. “If we can’t sustain a successful product we will say no to an offer,” Antonorsi says. A good example is Chuao’s Cinco de Mayo bonbon, which contains a house-made preserved lemon that takes four weeks to make. Rather than let the integrity of the product suffer by offering something subpar, this flavor won’t be going wholesale.

With the wholesale side of its business growing, Chuao has stopped the Dare to Be Different program and is focusing on creating comforting, satisfying flavors, such as those that address salty-sweet cravings. The Panko bar and the new Potato Chips in Chocolate bar, which combines kettle-cooked potato chips with milk chocolate, are two such popular items.

Antonorsi continually evaluates his bonbon product line to phase out flavors that customers are not passionate about. A formal marketing program, versus the more ”organic” process of earlier years, now helps act as a flavor filter for his creations.

Professional Assessment: What You Can Learn from Chuao Chocolatier

Food and beverage brand marketing expert Tammy Katz of Katz Marketing Solutions in Columbus, Ohio evaluates some of Chuao Chocolatier's strategies and discusses ways other companies can strengthen their own brands.

Build an Authentic Brand: Chuao is a distinctive premium fusion chocolate; those are not merely words on a label. It is a meaningful brand that connotes the Venezuelan Sourcing. Plus, top-quality ingredients and inspired flavor combinations deliver a superior taste experience. Continuous innovation and improvements keep the brand exceptional and appealing to consumers.
What You Should Do: Define your brand's distinct and superior promise and ensure that everyone in your company understands it. Get feedback to ensure your distinctive and superior attributes matter to consumers, not just company insiders. Make sure that your product line (names, formulations, taste and sensory experience), pricing strategy, communications and promotions and distribution (channels, accounts and placement within accounts) reinforce your brand promise.

Stretch On-Strategy Marketing Investments: Chuao has carefully selected promotions that are consistent with its marketing strategy and reinforce its brand image. It has invested in public relations, which has built trade credibility and consumer awareness. Chuao has also effectively used social media to drive awareness, brand sampling and innovation feedback.
What You Should Do: Clarify your brand and growth strategy before spending anything on marketing. Then ensure that each of your programs and investments is consistent with that strategy. Consider public relations, sampling ,joint promotions, display incentives, retailer tie-ins and social media.

Food and beverage brand marketing expert, Tammy Katz is CEO of Katz Marketing Solutions. She has led numerous Fortune 500 and specialty food brands and launched mor than 100 n ew products with cumulative sales of $2 billion. Katz serves on the board of directors of several food companies and is adjunct instructor of brand management at the Fisher College of Business MBA at The Ohio State University.

Year-Round Challenges

Bonbons and other chocolates are popular gift items, but sales are slower in the summers and post-holiday season. To address this, Chuao has expanded product offerings in its cafés to include gelato and cold drinks such as frappés. To further this tactic, the company took popular long-time flavors such as Spicy Maya sipping cocoa, the 2011 sofi Gold Award Winner for Outstanding Hot Beverage, and extended it to a gelato, bonbon and a brownie mix sold wholesale. The move helps consumers enjoy a favorite flavor throughout the year while maintaining brand awareness in the off-season.

Other logistical challenges to selling chocolate in every season include managing consumer expectations in delivery-cost shifts. During warmer months or when sending to warmer destinations, deliveries must be made overnight to keep the product from melting. This gets expensive for customers who would have to buy large quantities to compensate for the expedited shipping costs.

Social Media Efforts

The chocolatier relies on social media to rally the Chuao brand. “Our goal is to turn people on to the brand but not turn them off with overly aggressive social-media tactics,” explains Feldman, who was initially hired four years ago to help with sales and public relations. Today, Feldman is Chuao’s director of marketing communications, a department that manages advertising, special events, promotions, corporate identity, public relations and packaging. The company also recently hired Echo Media Group, a PR firm that supports its internal marketing-communications team with local and national media relations and special events such as a recent scotch-and-chocolate tasting with Antonorsi for select members of the media.

To communicate the Chuao message accurately, Feldman leverages and learns from the fans. Chuao’s Facebook page, for example, lets followers know when the company is going to have an R&D meeting. “We get anywhere from 50 to 75 responses from fans on what they would like to see; that is encouraging and gives us an idea of what flavor combinations people are looking for,” she says.

Chuao has even engaged customers through videos on YouTube. A recent clip giving a behind-the-scenes look at the making of Chuao’s latest creation, the Potato Chips in Chocolate bar, has garnered more than 3,000 views.

While it’s difficult to measure sales through social media, it’s worth the effort, Feldman notes. “Social media takes time but it is worth it to have that captive audience,” she says. “People let you know whether their experiences are good or bad. The bad can be useful so you can analyze and make improvements.”

Newest Products

-Potato Chips in Chocolate Bar
-Honeycomb Bar

Best-Sellers

-Spicy Maya, Firecracker and Caracas Bar
-Passion Fruit Caramel Bonbon
-Caramel ChocoPod

Future Leadership

Last May, Chuao announced that former chief operating officer Sergio Alvarez will lead the company as chief executive officer, succeeding Richard Antonorsi, who will become chairman of the board. “With Sergio on board and more than nine years of experience behind us, we believe we can move forward and create a business plan that really measures up,” Antonorsi says. He adds that Alvarez’s keen ability to balance future strategy with daily cost management will help maintain consistent pricing despite dramatic increases in the cost of raw materials.

Helping to grow the company are its 50 employees working in the three stores, company headquarters and a 9,000-square-foot production facility in San Diego. Future initiatives include increasing retail opportunities, streamlining processes and strengthening brand presence through progressive marketing campaigns.

Currently, Chuao is in talks with nationally recognized companies in the confectionery, fashion and entertainment industries to coordinate cross-promotions for next year. It is also in the midst of a strategy realignment that seeks to increase six-fold over the next 12 months the number of people who experience and purchase Chuao chocolates for the first time.

Chuao’s philosophy is to offer its customers a bit of discovery in each of its creations. “People’s expectations have changed when it comes to chocolate—they want a more elevated experience,” Antonorsi says. “Our high-quality culinary approach to chocolate is how we intend to keep our customers brand loyal.”

Whether for a new and exciting flavor or an old standby, Chuao is ready to defy expectations, Antonorsi continues. “If we are going to offer something that is familiar, we are going to make sure that that experience is going to be the best you’ve ever had.”