Chocolate, Meet Choco-Luxe

Chocolate is getting a makeover. With the commodity price of cocoa nearly doubling over the past year, Hershey's and Mars--which claim two-thirds of the U.S. chocolate market--have shifted focus from mass-market bars to upscale gourmet in order to shore up profit margins. That's bitter news for some: to cut costs, Hershey's recently replaced cocoa butter with vegetable oil in several products, which is why the labels on Mr. Goodbar, Milk Duds and Krackel now have to say things like "chocolatey" instead of "milk chocolate." But even as the king of American candy cheapens its low-end stuff, Hershey's--which saw its quarterly profit double recently--is diving into choco-luxe. Cran-blueberry almond, anyone?

To help take high-end chocolate national, Hershey's bought organic chocolatier Dagoba as well as top-shelf artisans Scharffen Berger and Joseph Schmidt. Mars is trying to keep pace, launching deluxe Dove bars and premium M&Ms in flavors like raspberry almond for $4 a bag. Supermarket shoppers can now select their sweets on the basis of preferred percentage of cacao (the mod way to refer to cocoa content): from Hershey's Cacao Reserve (35%) to its Scharffen Berger Extra Dark (82%).

But in their race to broaden the high-end market, the giants are competing with tech-savvy upstarts like Tcho and Amano. Founded by former nasa software developer Timothy Childs, Tcho brews limited-edition "beta" bars superb enough to extract $5 for a few bites. Childs classifies batches with wine descriptors like fruity, nutty and floral.

Amano, established in Utah by another software developer, recently teamed up with four other start-ups to launch an artisanal association--the Craft Chocolate Makers of America--for small high-end "bean to bar" producers that do everything from roasting raw cacao beans to packaging pristine bars. Meanwhile, another newbie, Chuao, is cranking out little pods of chocolate with crazy flavor combinations like its aptly named Firecracker, whose chipotle, salt and popping candy send tiny bursts of electricity through your tongue.

"Chocolate is enjoying a renaissance, just as coffee did a decade ago," says Kent Bakke, U.S. importer for luxury brand Claudio Corallo Chocolate, which charges $14 for a few powerful pieces. A glass of milk costs extra.