This question originally appeared on Quora. 
Answer by Rick Levine, Sockmaker. Lapsed Chocolatier. Cluetrain refugee
It is definitely a money thing, for a bunch of reasons, some obvious, some not so obvious.
The options for producing a wrapped chocolate bar are either a two-piece wrapping, with some combination of foil and paper, or a sealed "plastic" envelope, done on a horizontal flow-wrapping machine. At a basic level, foil or plastic are necessary to stop greasy cocoa butter from migrating from the inside of the package to the outside.
Two-piece foil-and-paper combinations, used on the Kit-Kat bars of our youth, come in a few styles. One has foil on the inside, usually a layer of very thin aluminum foil wax-mounted to a 15# paper tissue, and either a full paper covering, with neat little hospital corner folds on the ends (an "envelope" wrap) or a package with a laminated foil covering but with the foiled ends sticking out visibly and a paper band around the middle of the bar. (A "band" wrap.)
Aluminum foil is laminated with wax to the paper substrate to make it easier to handle and to reduce the amount and cost of the metal required to produce a robust wrapping that won't puncture or tear in the process of packaging the bar.
Another variation you'll see are bars covered with envelope-folded foil laminate packed in an individual paperboard box. All of these folded foil variations have the down-side that they don't have vapor-tight seals (at least as vapor-proof as the wrapping material is) nor are they proof against squiggly-wigglies that might find their way into the packages. Vapor-tightness is an issue for chocolate products that oxidize or dry out, and a physical barrier is nice to have for chocolate containing nuts, as there are some bugs that might wander into a package and eat the nuts. (Or, more likely, they'll be packed into a single bar when a nut containing them is put in some chocolate (accidentally, of course!) and then they'll eat their way out of one package and into another dozen.)
The chocolate industry came up with a wrapping process that used non-laminated, hermetically sealed foil for an inner wrap to help mitigate these two issues, and you'll find bars with glue-sealed foil inner wrappers.
All these wrapping styles are executed by machines specifically designed for the purpose, and the machine designs haven't changed much in the last 40-50 years. Here's a picture of a Swiss SIG CL single-stage wrapper, this one manufactured in 1963.
(This one was a wrapping machine I bought, and the picture was taken when it was being cleaned up by AMP/Rose in Lincolnshire, England.) These machines are mostly mechanical, take reluctantly to electronic control systems, and they're fairly finicky as to the maintenance they need. The paper stock these machines require has to be very thin (60# C1S Book with a caliper in the .0030" neighborhood) and the machines are sensitive to variations in wrapper humidity and ink coverage and thickness.
Also, most of the machines have a top wrapping speed in the 100-200 bars/minute range, depending on bar size. To wrap lots of Kit-Kat bars (which these machines did, back in the day), you would need lots of wrapping machines, and lots of operators to change foil and paper rolls. Here is a video, courtesy of Union Machinery in the Bronx, of a smaller SIG CK machine wrapping bars:
(Chocolate bars are entering on what's either a walking-beam or belt feed from the left, the yellow labels from the lower front, and the foil is being feed from a roll under each label, just before it's dragged towards the back of the machine to cover the bar.)
While the foil in the inner wrapper is nominally recyclable, you have to separate it from the paper outer. And, if you're using foil that's wax-laminated to paper tissue, recycling just gets too complicated for most of us to deal with. Most organizations putting together "green" venues don't want foil-wrapped chocolate in their waste streams.
For commodity chocolate, ie Kit-Kats, Snickers, and peanut butter cups, almost all manufacturers have moved to horizontal flow-wrapping.
- The packaging materials are cheaper to produce on a large scale, possibly an order of magnitude cheaper
- The machines can run much faster than envelope-wrapping machines
- Tighter, tamper-evident seals, formed by fusing the wrapping material with heat and pressure or by squishing together surfaces with pre-applied cold contact adhesive
- Film structures engineered to manage grease, moisture, and oxygen migration
- "Standard" equipment, based on the same flow-wrapping tech used for myriad other products
Here is a video, from AMP/Rose, of a machine capable of 800 packs/minute of a decent sized bar:
You'll find that chocolate manufacturers with style, elegance, or luxury aspirations and smaller production volumes will tend to use foil/paper wrapping combinations rather than flow-wrap, as the paper envelope wrapping has more of a luxury connotation for some buyers. If a manufacturer goes the flow-wrap route for an up-scale bar, they often try to use fancier plastic film, possibly a heavier structure or one with fancy printing effects like irridescence and metalized ink.
There are also some manufacturers, Alfred Ritter and their Ritter-Sport bars come to mind, who have tried to create flow-wrapped packaging with a nicer feel and tackles the issues around resealability that most flow-wrap packages ignore.
Is that enough about chocolate bar packaging?