Your Money: Figuring Out Gift Giving In The Age Of $2,000-a-Pound Chocolate

If you are still seeking the perfect gift for Valentine’s Day, have you considered a box of Noka chocolates?

Noah Houghton and his wife, Katrina Merrem, started Noka in a one-bedroom apartment in Plano, Tex.

Both you and the recipient may be in for a surprise. A 12-piece box costs $39 before tax and shipping. And for that you will get 0.9 ounce of chocolate. Not 0.9 ounce a piece, but 0.9 ounce in the entire black and silver box.

Do the math and that comes to $693 a pound. Buy just four pieces in the Signature stainless steel box and you are paying more than $2,000 a pound, making the Noka chocolate more expensive than delicacies like caviar, saffron or black truffles.

How can anyone justify paying that much for a gift? Economists have struggled over that question for years, suggesting that anything other than a cash gift is inefficient.

But the high-end sector in retail is red-hot, whether it’s superpremium vodka, tequila, blue jeans or chocolate. The luxury goods market, which exists by convincing people they are getting higher quality or higher status by paying a premium, was stronger in the last holiday shopping season than that for more prosaic products.

And while cash cards have proved popular during Christmas, a gift card, even one festooned with red hearts, does not quite seem appropriate for this romantic occasion.

The question of how much of a premium is reasonable in gift-giving recently nagged at a blogger who writes about local food at the DallasFood.org site. In a 10-part series that can only be called investigative blogging, he tried to justify Noka’s price. He analyzed the marketing of the chocolate with lawyerlike logic and came to the conclusion there was little special about it. He noted that the company, just as other chocolatiers do, buys bulk chocolate, called couverture, from chocolate makers, who process the cacao. But while truffle makers like Michael Recchiuti or Michel Cluizel charge a mere $80 or $85 a pound for their treats, the markup for Noka could be as much as 50 times the wholesale cost of the couverture, the blogger estimated.

Through taste-testing and some deduction, he guessed that the source of the Noka chocolate is Bonnat, a French chocolate maker. A consumer can also find a Bonnat chocolate bar in stores for about $7.50, or $34 a pound. (Noka is hardly the most expensive chocolate. A Forbes.com survey gave that honor to a shop in Norwalk, Conn., Chocopologie by Knipschildt Chocolatier, for its slightly more pricey $2,600-a-pound bonbons that have unusual ingredients like pink peppercorns or crystallized violets.)

Heavily trafficked sites like Boing Boing.net, Chowhound.com and Slashdot org publicized the exposé on the little-known DallasFood blog. The report has had 750,000 page views since the story went up in December and has been passed from chocophile to chocophile. A clerk at Fog City News, a San Francisco magazine and chocolate store, laughed when asked if she carried Noka chocolates. “Haven’t you read the posting about that on Dallas Food.org?” she asked.

Katrina Merrem and her husband, Noah Houghton, who started Noka three years ago in their Dallas-area apartment, took umbrage at the attack. They will not reveal the source of their chocolate, though most chocolatiers brag about that. Mr. Houghton said, “The couverture is made specially for us.”

The couple, both former accountants, do not add flavorings to their chocolates, which are identified by the country of origin and which, they say, each come from a single estate. “Our focus is on the pure natural flavor of the cacao,” Mr. Houghton said. In other words, it is pretty much the chocolate they get from the wholesaler, just molded into little pieces.

He said the product’s value was also in the “total gifting experience” with brushed stainless steel boxes available at Neiman Marcus stores and a distinctive logo that belies the company’s origins in a one-bedroom apartment in Plano, Tex.

Like the premium ice cream Häagen-Dazs (created in the Bronx), which sounded foreign and expensive, the Noka logo has exotic typography: capital N, small o (with a macron over it), capital K, capital A in a meshing of the owners’ first names. “On the gift end, no one was really doing justice to the gifting experience,” Mr. Houghton said.

To succeed in the luxury good market, he said, “the value people are getting must be there.”

DallasFood.org saw it differently. “If you or your gift recipient are rich, stupid and vain, Noka is probably the way to go,” it said.

But not so fast. There might be some rationale here for springing for at least something more than the Whitman sampler at Walgreens. Most economists would say that giving gifts, other than cash, makes no economic sense. The recipient would be better off spending the money on something he or she values.

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