Compound chocolate is a product made from a combination of cocoa, vegetable fat, and sweeteners. It is used as a lower-cost alternative to true chocolate, as it uses less-expensive hard vegetable fats such as coconut oil or palm kernel oil in place of the more expensive cocoa butter. It may also be known as 'compound coating' or 'chocolatey coating' when used as a coating for candy.Often used in lower-grade candy bars, compound chocolate is designed to simulate enrobed chocolate on a product.