Chocolate is made by harvesting pods from the cacao tree and allowing them to ferment for about a week. The beans are then shelled from the cacao pods and dried. After being dried, the beans are graded, roasted, and ground. The ground beans are pressed to release the fat, or cocoa butter. The remaining cocoa solids, known as "cocoa liquor," are then used to make various kinds of chocolate.
As for the percentages indicated on chocolate bars, these represent the percentage of cocoa liquor contained in the chocolate. The U.S. Food and Drug Administration has set standards on what percentage of cocoa liquor a particular type of chocolate must have in order to be labeled and sold as that variety. Types of chocolate, in order of sweetness (low to high) include:
►Unsweetened Chocolate
Also known as: bitter chocolate, baking chocolate, chocolate liquor, and pure chocolate. Unsweetened chocolate is pure chocolate liquor, composed solely of ground cocoa beans. Unsweetened chocolate is the base ingredient in all other forms of chocolate... except white chocolate. Use—mainly baking.
►Dark Chocolate
Dark chocolate contains chocolate liquor, sugar, cocoa butter, vanilla, and lecithin (an emulsifier).There are no milk solids added to dark chocolate. The cocoa liquor content of commercial dark chocolate can range from 15-40% (sweet dark) to 70-85% (bittersweet). Bittersweet, semisweet, and sweet dark all fall under the “dark chocolate” category. Use—baking and eating.
►Bittersweet Chocolate
Most bittersweet chocolate contain at least 50% chocolate liquor, with some pushing 70-85%. This chocolate typically has a deeper, more bitter flavor than semisweet or sweet dark chocolate.
►Semisweet Chocolate
"Semisweet" is primarily an American term, popularized by Nestle Toll House semisweet chocolate chips. Semisweet chocolate contains at least 35% cocoa liquor, and is generally assumed to be darker than sweet dark chocolate, but sweeter than bittersweet.
►Sweet Dark Chocolate
Sweet dark chocolate is categorized a “dark chocolate” because it doesn’t contain milk solids, but it still has a high percentage of sugar and is much sweeter than other types of dark chocolate. Many brands of sweet dark chocolate have only 15-40% cocoa liquor.
►Milk Chocolate
In addition to containing all the ingredients of dark chocolate, milk chocolate contains either condensed milk (most European varieties) or dry milk solids. According to FDA standards, milk chocolate must contain at least 10% chocolate liquor (in the United States), 3.39% butterfat, and 12% milk solids. A good-quality milk chocolate will have at least 33% cocoa liquor. Milk chocolate is typically much sweeter than dark chocolate, and has a lighter color and a less pronounced chocolate taste. Use—some baking and eating.
►Unsweetened Cocoa Powder
Cocoa powder is pure chocolate with most of the cocoa butter removed.
It is available in natural or “Dutch-processed” (alkalized) varieties. Natural cocoa powder is light brown, with a strong, pronounced chocolate flavor. It is somewhat acidic, so it's best used in recipes calling for baking soda. "Dutch-processed" cocoa powder is darker or redder in color, is less acidic, and has a milder chocolate taste. Its mellower flavor makes it ideal for recipes that call for baking powder. Use—mainly baking.
►White Chocolate
Commonly called a chocolate, white chocolate is actually not a chocolate at all. Although its texture is similar to milk and dark chocolate, it does not contain any chocolate liquor or other cocoa products at all. White chocolate is made of cocoa butter, sugar, milk solids, and flavoring—usually vanilla. By law, white chocolate must contain at least 20% cocoa butter, 14% milk solids, and a maximum of 55% sugar. There are some white chocolate products out there that contain vegetable fats instead of cocoa butter—these should be avoided from a taste standpoint. Use—mainly eating.
(Primary Sources: E. LaBau & A. Kaminsky)