What Is the Profit Margin Expected on Chocolate?

As a chocolate entrepreneur, you may have wondered what sort of profit margin to anticipate from sales of your chocolate products. Gross profit margin as an equation depicts, over a certain time interval, sales adjusted for costs, divided by total revenues. Higher margins are generally better, signaling greater efficiency of operations. Smaller chocolate vendors face fewer expenses than larger conglomerates and should have higher profit margins.

Heavy hitters in the chocolate world, such as Hershey's and Kraft, are going to have profit margins that reflect the higher costs of their larger scale of operations. As of September 2012, Hershey's, which has a 24-hour automatic production system, had a three-year net profit margin averaging 9.19 percent. Kraft, which in addition to Cadbury and Milka brands of chocolate, manufactures many other types of foods, had a comparable three-year net profit margin of 7.55 percent.

On the retail front, small-business chocolate store owners such as chocolate franchises produce relatively smaller batches of chocolate for specialty markets. Rocky Mountain Chocolate Factory, as of November 2012, posted gross profit margins of 39.48 percent. Gross profit margins for the company have been as high as 48.23 percent in 2010, and as low as 35.49 percent in 2009.

Small can be good when it comes to profit margins for chocolate enterprises. In its company assessment from 2010, artisan chocolate company Cowgirl Chocolates says it strives to attain an average gross profit margin of 65 percent in its retail business, after ingredients and packaging. The company specializes in truffles in assorted flavors and box sizes, chocolate bars and dessert sauces. Different products by Cowgirl range between 58 percent and 72 percent gross profit margin.

Cowgirl Chocolate notes that its profit margins vary depending on whether they sell wholesale or retail. Margins are higher for retail, where their Spicy Chocolate Truffle Bars yield 61 percent gross margins, compared with 23 percent gross profit margins for the same product sold wholesale. On the wholesale side, Cowgirl makes between 23 percent and 47 percent.