The European Candy Kettle Club’s 2011 winner, Pedro Lopez Lopez of Valor Chocolates, stays faithful to his company’s legacy of producing beautiful bean-to-bar chocolates by taking advantage of technology and tradition.

The European Candy Kettle Club's 2011 winner, Pedro Lopez Lopez of Valor Chocolates, stays faithful to his company's legacy of producing beautiful bean-to-bar chocolates by taking advantage of technology and tradition.

Most family-business executives would agree that they are, well, wedded to their work. Few, however, can claim they actually held their wedding reception where they work.

In Pedro Lopez Lopez’s case, he didn’t have any options. The managing director and fourth-generation head of Valor Chocolates explains that he and his then wife-to-be, Maite, had watched their guest list expand to a staggering 500-plus circle of family and friends.

“We were in the process of building our new headquarters and production facility at the time,” he explains. “The basement had just been completed. When we sought a place to hold the wedding reception, we realized that the only place large enough to accommodate all of our guests was the basement.”

It takes a man of vision to transform a concrete slab into a subterranean “sweetland.” Sure enough, come wedding day, chocolates greeted guests at nearly every turn. Even when the final guest count topped 600, there was plenty of food, drink, music, chocolate and, most importantly, room to go around.

Lopez’s ability to recognize opportunities in the face of overwhelming challenges has stood him and Valor well over the years. As this year’s European Candy Kettle Club winner, Lopez welcomes the recognition, but not for himself. Rather, he sees the honor directed toward his team of managers and employees, validating what the group has been able to accomplish during this most recent downturn.

Despite a global economic crisis, despite an unprecendented surge in commodity prices affecting cocoa and sugar, and despite retailer pressures on pricing, Valor Chocolates has posted 7% annual sales gains during the past three years. Sales for fiscal year 2011 topped €100 million ($136 million).

In evolving the company’s “pure pleasure” strategy, Lopez has concentrated on emphasizing Valor’s key competencies, namely, bean-to-bar production, the use of Marcona almonds, a growing network of “chocolaterias” (chocolate shops) throughout Spain, and the nation’s leading supplier of “A la Taza” drinking chocolate.

Hence, by building on the pleasures of chocolate through “focused differentiation,” Valor has steadfastly expanded the growth of its brands in Spain, while continuing to pursue exports, particularly to the United States.

“We are the leader in Spain with sugar-free chocolate tablets, accounting for 65% of the market share,” he says. “In the ‘A La Taza’ drinking chocolate category, we’re No. 1 with a 40% market share. And in the chocolate with almonds segment, we are also No. 1 with a 37% share. Finally, in global dark chocolate, we’re also the leaders in Spain, with a 20% share.”

The numbers reflect the progress Lopez and his team have made in realizing Valor´s vision of becoming globally “recognized as the best brand manufacturing chocolate with almonds, sugar-free chocolates and ‘A La Taza’ chocolates”.

Heady numbers, indeed, for a midsized company competing with the likes of multinationals such as Nestlé and Ferrero. But then, as one of the last companies in Spain to process its own blend of cocoa beans into chocolate - a mix of Ghanaian, Ecuadorian and Panamanian beans - Valor prides itself on delivering chocolate with a specific “bouquet” and characteristics that can’t be duplicated.

It’s a legacy that dates back to 1881, when founder and Pedro’s great-grandfather, Don Valeriano Lopez Loret began making and selling chocolate, one that provides a competitive advantage, Lopez says.

It’s also a component he passionately monitors. Thus, when he’s not traveling on business, it’s second nature for him to walk through the plant to taste the “chocolate paste” being created from this specific blend of beans, to sample the finished product as it heads toward high-speed wrappers.

To novices, the bitter taste makes it difficult to distinguish any variations. Having spent the better part of his life sampling chocolate paste/liquor and chocolate daily, Lopez can detect nuances the uninitiated cannot.

In doing so, he’s adamant about preserving the bouquet that’s inherent in Valor chocolate products. It also explains, in part, the success of the company’s sugar-free selection. With some minor differences in the refining and conching process, the beans are processed identically as those used for regular chocolate.

This year the company invested in a dedicated refining and conching system for sugar-free products. The dedicated production, from bean to bar, eliminates excessive cleaning and satisfies capacity needs as the category continues to grow.

Another investment aimed at improving overall quality involved walling off the cocoa bean cleaning and roasting area as well as the almond roasting area from the production areas. The move further minimizes any chance of cross-contamination into the production area.

The company also invested in a new pouch-filling line for its La Taza chocolate drinks and contracted out additional warehouse space and logistics support.

Late last year, Valor installed a new Delver chocolate chip line to meet growing demand from the company’s professional line of couvertures focused on foodservice and bakery accounts.

“We typically invest between two to three million euros annually,” Lopez explains. “And in each case, the emphasis is on leading edge equipment, a philosophy that has paid back in efficiencies, quality and longevity,” he says.

From cleaning and roasting, where the company uses a F.B. Lehmann system, to prerefining and conching, a combination of Buhler and Lloveras-supplied pre-refiners and conches, quality parameters are strictly enforced.

An Aasted 1.2 moulding line continues to handle the bulk of Valor’s bar production, which includes nine varieties of its 250- and 300-g bars as well as three varieties of its 500-g bars. The unit operates at a speed of 19 moulds per minute.

Dedicated sugar-free chocolate production runs on the company’s Aasted 700 moulding line that’s tied into a Rotzinger buffering line and a SIG Sapal wrapping line.

To feed its 39 “chocolateria” retail shops scattered throughout Spain, as well as several key retail chains, the company runs a Chocotech Frozen Shell line as well as a dedicated Knobel sugar-free line.

As Lopez points out, initially the chocolate shops provided Valor with brand publicity as well as revenue, with emphasis on the former. Today, the shops provide a serious income stream for the company, with brand leverage and revenues equally going hand in hand.

Ironically, during the last two, most economically depressed years, Valor opened up 10 new units, helped in part by more realistic real estate prices, and, in part, by consumers searching for trusted, reliable brands.

“We’ve learned a few things over the years in how to operate a retail location,” explains Lopez. That knowledge, coupled with a revamping of the product display area, which now fosters self-serve, has contributed to the growth.

The 150-sq.-meter shops, excluding an outdoor patio area, average about €400,000 annually.

“Today, more than ever, we’re conscious of who we are,” Lopez says. “In the past we tried to sell whatever, wherever,” he explains, referring to the company’s export strategy. “Moreover, it’s easier to export when you’re a reference in quality.”

That reference point can be seen in the company’s product breakout: chocolate bars – 62%; drinking chocolate – 14%; pralines – 13.5%; couvertures – 7%, remainder – 3.5%. The bulk of Valor’s revenues come from sales to a broad range of retailers in Spain, 86%, while exports, industry sales and chocolate shops account for 6%, 5% and 3%, respectively.

As part of its focused differentiation, the company has expanded new product offerings within its key competencies. To complement its “breadwinners,” the 250-gram and 300-gram dark and milk chocolate with almond bars, as well as dark and milk chocolate with hazelnut bars, the company now offers 45-gram bars targeted toward the impulse market.

Earlier this year, the company opted to introduce a filled “mousse” line of sugar-free bars, available in 70% Dark Chocolate with Orange Mousse, Dark Chocolate with Truffle Mousse and Milk Chocolate with Hazelnut Mousse varieties.

With the installation of a new liquid pouch-filling machine as well as the new Sig-Pack 1 liter unit for the company’s La Taza chocolate drink line, Valor has taken another step in improving efficiency and capacity for a unique product item.

“We recognize that not everyone outside of Spain is a fit for our drinking chocolate,” Lopez says. Nevertheless, many chocolate aficionados, once having tried this thick and rich drinking chocolate, are hooked.

The company also expanded its Autor line of pralines to include a wine-infused selection, thus complementing its growing range of premium pralines.

For Lopez, new product development doesn’t revolve on quantity, rather quality. Typically, the company will introduce three to four new products a year. A small pilot plant situated on a mezzanine overlooking the refining and conching area provides Valor’s team the ability to replicate the entire bean-to-bar process on a minute scale.

Lopez’s emphasis on quality stems from the company’s heritage, one that’s captured in displays visitors can see during a plant tour.

“We have more than 70,000 visitors come through our plant annually,” he says. As part of the tour, the company upgraded its gallery, which includes beautifully carved Mayan chocolate statues as well as a comprehensive packaging and chocolate wrapper display.

In addition to offering visitors a nostalgic look at packaging, the wrapper exhibit provides an education about the company’s guiding strategy.

Back in the day when many companies were offering incentives such as toys to stimulate chocolate sales, Lopez explains, his father elected to concentrate on offering the best possible piece of chocolate within one large mould, thus leading to the creation of today’s classic Puro line 50 years ago.

In releasing the Puro (Pure) brand to the public, Lopez’s father was confident quality would win out over trifles. Valor’s growth as a company has been predicated on that premise ever since.

Conscious of the need for continuous improvement in today’s competitive global climate, Lopez looks to continue investing in automation and technology. Projects on the drawing board include a new robotic pick ‘n place unit to automate praline packaging as well as installation of a third moulding line.

The company has also acquired land to accommodate construction of a new production facility during the coming years. Last year, as part of a renewed push to step up exports to the United States, the company moved into new offices and expanded its warehouse capacity in Miami, Fla.

The company looks to introduce its new 45-gram impulse bars into the American market while remaining focused on its key competencies: premium chocolate bars with Marcona almond inclusions as well as exquisitie sugar-free counterparts.

It’s been nearly 16 years since Lopez celebrated his marriage in the basement of the newly built plant. Then, as now, he remains wedded to the business, a commitment consumers in Spain and abroad appreciate more and more.

At a Glance
Valor Chocolates
Headquarters: Villajoyosa, Spain
Sales: €100 million ($136 million) for fiscal year 2011
Employees: 180
Plant: 17,000 sq. meters (two moulding lines, two praline lines, panning units, chocolate drink line, powder line).
Output: 11,000 tons annually
Brand: Valor, Puro, Autor
Types of products: Chocolate bars, pralines, cocoa powder, couvertures, chocolate chips.
Product breakout: Chocolate bars – 62%; drinking chocolate – 14% pralines – 13.5%; couvertures – 7, remainder – 3.5%.
Retail shops: 39 (located throughout Spain)
Management: Pedro Lopez Mayor, honorary chairman; Pedro Lopez Lopez, ceo and general manager; Valeriano Lopez Adrover, cfo; Juan Fullana Verdera, marketing director.