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Cocoa sector – hour glass
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Farmers and labourers
Supermarkets
Consumers
Chocolate
makers
Traders&
processors
• Worldwide ±5 million
smallholders & families
• Large concentration in
trade, processing,
chocolate making and retail
• Millions of consumers, with
concentration in US and
Europe
Why?
• Global, regional and local risks for supplier failure (e.g. climate change, aging farmer population,
aging trees, soil erosion, migration, deforestation, child labour…)
• Increasing role for private sector in economic development in cocoa producing countries
• Demand for (sustainable) cocoa continues to grow
• Increased competition for (sustainable) cocoa
• Active role of civil society (e.g. media – Tony Chocolonely; Oxfam – Behind the brands campaign)
• Consumer demand for sustainable and traceable cocoa grows
Beyond certification
• ‘Verification’
• ISO/CEN Sustainable & Traceable Cocoa - Framework
• National Sustainability Initiatives
• Origin Chocolate (direct trade)
• Quality
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Can taste be a catalyst for sustainability?
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Quality (taste) has been neglected in sustainability discourse Bulk market
Theory of Change: Fine flavour higher quality higher prices higher rewards for farmers
Fine flavour cocoa
• A specific origin and grade of cocoa beans of a unique flavour or colour, sought after by makers of
high quality, specialty chocolate.
Fine flavour chocolate (products)
• A high quality of cocoa beans and chocolate, with a specific taste for which a higher price is paid. It is
often combined with terms such as ‘high quality’, ‘single origin’ and/or ‘bean to bar’ chocolate. The
combination of cocoa genetics, cultivation methods, environmental conditions, post-harvest practices
and processing techniques are all contributing factors.
Sustainable Business Models
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Source: ppt Martin Christy Direct Cacao, Chocoa 2013
A virtuous circle for the
fine or flavour cocoa
production: an alternative
business model?
Market segments: towards more differentiation
• Fine flavour as fastest growing market
segment
• Increasing number of suppliers
• But: is demand keeping up with supply?
• Is this market segment professional
enough?
• How is the bulk market responding?
• Do we know our customers?
• How can we engage customers to
differentiate their consumer behavior
(like wine, beer and coffee)?
High end
(fine flavour)
5-7%
Middle
>10%
Bulk
80-85%
Fine flavour & speciality
Price*High
2600€
500€
120€
Market size/value of the product
highMarket size/value
low
Price of productLow
The middle market for chocolate in the
Netherlands
1€
Certified
The middle market
3€
2.65€
2€
Conventional chocolate
Certifiedchocolate
*Indicative- price per product- should be comparable eg per kg
Average prices on Dutch
market
14.2 €/kg conventional
segment
47.07 €/kg middle
segment
152.52 €/kg speciality
segment
Differences between markets & their productsConventional chocolate
products
Middle-market chocolate
products
Specialty products
Quality low medium high
Price Low Medium high
Sustainable cocoa Certification Certification, story telling &
branding
Story-telling, bean2bar,
traceability
Origin Important for blending Important for marketing Important for taste
Region Focus on West Africa and Asia All regions Focus on Latin America
Size of company Large Medium-large Small-medium
Example of companies Nestle, Mondelez, Mars,
Hershey, Ferrero
Tony Chocolonely, Lindt,
Mondelez, Chocolate
makers
Pacari, Marou, Original
Beans, Duffy, Akkessons
Example of products Chocolate products chocolate bars & chocolate
milk
Chocolate bars
Example of retailer Albert Heijn, Coop, Jumbo, Plus Marqt, Ekoplaza, Ahold,
chocolatiers
Coffee shops, Online, Trade
fairs
Emerging middle market
• Product differentiation by conventional multinational
chocolate companies, introducing origin products and/or
taking over smaller brands
• Stronger positioning of large-scale companies as quality
brand.
• Upscaling of niche product/brandmodel
Middle market and sustainability?
• Provides more choices for consumers: requires transparency and traceability
• Creates space for alternative business models
• Higher quality translates in higher price, also for producers (but can also include higher costs or
risks): show evidence!
• Closer collaboration with value chain actors, including farmer (organizations)
• Risk management strategy: differentiation
Options for scaling up differentiation
• Using origin indication
• Improving bean quality at source
• Securing high quality bean sources
• Branding and stories
• Increase consumer awareness
• Awards to increase consumer recognition
• Engaging in chocolate tourism
• E-branding
• Verifying sustainability claims – certification or other means
• Innovations in post-harvest practices, processing and transport
KIT – Royal Tropical Institute
Mauritskade 64
1092 AD Amsterdam
Contact
Anna Laven
www.kit.nl/sed
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