Creating a sustainable chocolate industry

01_Introduction • From cocoa bean to finished chocolate product is a long

and complex process which raises the question of how
Whenever market researchers report on UK consumers’ favourite
all involved in the industry can benefit from the financial
purchases, chocolate-based products feature strongly. Chocolate is
returns in a way that is fair to everyone who contributes
a key ingredient of many products we enjoy e.g. hot drinks, biscuit
at the various stages.
snacks, cakes, and confectionery.
The major manufacturing companies in the UK are members
To make their products, chocolate manufacturers use recipes that
of the BCCCA: the Biscuit, Cake, Chocolate and Confectionery
rely heavily on cocoa beans. Cocoa liquor and cocoa butter come
Association. Based in London, the BCCCA provides a common
from cocoa beans. Chocolate manufacturers buy the cocoa beans,
liquor and butter they need on world markets. voice through which UK chocolate manufacturers can express
their views. It also enables co-operation between companies
Chocolate production and manufacture is a worldwide industry
on non-competitive issues. One task for BCCCA members
with some interesting characteristics.
is to decide how best to create a sustainable chocolate industry
• Most chocolate products are eaten far away from where
that offers:
cocoa is grown.
• a continual improvement in the quality of chocolate products
• Cocoa is grown in a small number of tropical countries,
which depend heavily on successful production of cocoa • a fair standard of living for cocoa growers
to sustain their economies. • steady business growth for manufacturing companies.
02_The world market for cocoa Developed countries are the major consumers of the world’s
cocoa supply. However, they are mature markets and new growth
Much of the world’s cocoa comes from West Africa, which
is likely to come from countries such as China. There, rising living
provides 70% of total output. The two main suppliers are the standards and growing familiarity with chocolate products are
Cote d’lvoire and Ghana. In these countries the cocoa beans causing a rapid increase in consumption. For the industry to
are typically grown on small family farms. Most of these are only prosper, it is vital to put time and effort into marketing.
two to three hectares in size. Each farm produces around one tonne
of beans each year. 03_The supply chain
Growers for chocolate
Chocolate manufacturers recognise that the small growers are (typically small
cocoa farmers) As with many other manufacturing
the industry’s lifeblood, and that our enjoyment of chocolate industries, creating chocolate
products depends on their wellbeing. So, the industry is working products involves a chain of
with other organisations on the ground in West Africa on a series production with many links. It starts
Intermediaries with cocoa bean growers and ends
of programmes designed to improve the economic and social well- (buying from when retailers sell us the final
being of the cocoa farming villages and to ensure that small farmers)
product. This may be in a small shop,
farmers secure a sustainable future. supermarket, vending machine or
Although some finished chocolate products will be consumed some other retail outlet. Some
Cocoa obvious links in this chain are shown
close to local production (e.g. in West Africa), far larger quantities processors in the diagram on the left.
are consumed elsewhere. Farmers grow around three million
At each stage of the chain there will
tonnes of cocoa beans each year. Of these, about 700,000 tonnes
be additional services that help
go to the USA. UK manufacturers import about 215,000 tonnes. producers to operate more
Chocolate
Demand for chocolate products drives the supply of cocoa. manufacturers
effectively. These include banking
and insurance services, packaging
Without willing consumers to sell to, there is no point or profit
firms, transport specialists.
in producing. Consumers, manufacturers and suppliers all rely
Retailers The supply is actually far more
on each other. If cocoa growers are to stay in business,
(shops, vending complex than the simple diagram
manufacturers that use cocoa must do more than offer them fair machines and other suggests. The illustration below
prices. They must also ensure that the global market for chocolate- outlets)
shows the complexity of the cocoa
based products remains buoyant and growing. supply chain in the Cote d’lvoire.

Farmers
Cote d'Ivoire Cocoa Pipeline
Plantations, Estates
Co-operatives
Pisteurs

"Up-country"
buying stations Local Consumer
Traitants

Local Grinding Local Chocolate

Exporters Manufacturers

Shipping Lanes

Warehouse (Europe/USA) Chocolate Manufacturers Other Raws - milk,

sugar, packaging

Grinders (Europe/USA) Distributors / Wholesalers

CTN (impulse), Supermarkets

(grocery), vending
Ice Cream
Baking
Drinks Consumer

Please see simplified supply chain above

• Current and Previous Case Studies

• Downloads • Quizzes • Company Info • Theory
It is clear that in the course of converting cocoa beans into cocoa
butter the raw material will be traded several times. Only after that
will UK and other manufacturers purchase the cocoa beans and
cocoa butter for final processing.
In countries like Ghana, where the Government regulates the
market, the price paid to farmers is fixed and they use established
local buying stations. In contrast, in the Cote d’lvoire the farmer’s
product will move along the supply chain to the end consumer in
several ways; usually a local agent may approach the grower and
offer a deal.
04_Working towards sustainability
A sustainable business is one, which is committed to helping meet
the needs of society today, while respecting the needs of future
generations. In promoting ‘sustainability’, the chocolate industry
wants to see growth and improvement in:
• the quantity and quality of the product
• the standard of living enjoyed by growers.
Both of these contribute to a healthy cocoa industry from which all
involved can benefit.
Chocolate manufacturers have a key role to play in this process by
seeking to ensure that:
• Demand is sustainable by working to improve chocolate quality
and through marketing activities.
• Supply is sustainable by helping growers receive a fair price and
increase cocoa yields.
Chocolate manufacturers work to ensure the quality and
reputation of chocolate products. They use market research
and other marketing techniques to meet customers’ demands
for an increasing variety of products. Manufacturers constantly
introduce new chocolate products, e.g. ice cream chocolate bars,
ready-made desserts.
At the same time, chocolate manufacturers work in partnership
with growers and with the cocoa-producing countries to empower
the grower. Current projects include:
• providing market information processes, such as information
on world cocoa prices and timing of sales
• supporting growers in developing better farming techniques
and practices.
To maintain a sustainable industry, it is vital to be fair to the
grower, the first link in the chain. Fairness involves encouraging
a reasonable living for growers and their families.
More than 10 million people live on cocoa farms in parts
of the world that offer a warm, wet environment which is ideal
for growing cocoa. These lie in a band near the equator.
Cocoa is a very important industry for some countries.
For example, in the Cote d’lvoire, the world’s largest grower of
cocoa beans, cocoa growing provides over 50% of total household
income. Almost all the farms are small.
Typically, farms consist of a smallholding of cocoa plants, which
are surrounded by other types of tropical trees that provide
the necessary shade. Cocoa production is not suitable for a large
scale, exclusive approach. This is because a monoculture runs
too high a risk of spreading disease that could wipe out the
industry. By promoting biodiversity, cocoa growing contributes
to the global environment and to local development.
Chocolate manufacturers support fair prices for growers.
A market which operates on the basis of very low prices for cocoa,
puts at risk the sustainability of cocoa growing. This is because
most cocoa producers have some choice over what they grow.
For example, a cocoa farmer who cannot make a living from
growing cocoa may switch to producing palm oil.
So, the chocolate industry worldwide supports several initiatives
aimed at achieving better prices for cocoa growers.
These include:
• Market information systems. Unlike many other crops,
growers are able to store mature cocoa beans for up to a month.
As a result, the grower does not necessarily have to sell to the
first potential buyer. However, small farmers in remote areas of
the Cote d’lvoire find themselves at a disadvantage compared
with other growers. Because of their remote location they will
have fewer opportunities available to them. They usually do not
have Internet access and often lack key market information.
The chocolate industry is providing data on current market prices
to growers through Field Training Officers, and via newsletters.
Armed with this data, together with advice and training, the
grower is better placed to negotiate a fair trading price.
• Research. When cocoa growers produce a better yield of high
quality cocoa beans, everyone benefits. The chocolate industry
funds research into improving agricultural techniques and
approaches. This has provided treatments for cocoa plant pests
and diseases such as the Cocoa Pod Borer. Without support,
farming families can lose well over a third of their crops each
year from disease and pests.
• Training. The industry also funds a range of Field Schools
for cocoa growers in Africa. These schools show farmers how
to improve their production methods. This includes pruning dead
cocoa pods; weeding around plants; planting suitable native trees
alongside their cocoa. The schools cover other vital aspects too
e.g. business management techniques; fair and proper treatment
of workers.
05_The benefits of sustainability
To be truly sustainable, the chocolate industry’s supply chain
initiatives focus on 3 key areas:
Helping cocoa growers to be better informed creates:
• economic benefits Better returns for growers and
chocolate manufacturers. Higher
Gross Domestic Product for the
countries in which cocoa is grown.
• Current and Previous Case Studies
• Downloads • Quizzes • Company Info • Theory
• environmental benefits Encouragement of bio-diversity because
cocoa growing does not involve
plantation-type agriculture, and helps
the proliferation of species.
• social benefits Valued, traditional ways of life are
sustained but in a way that fosters
better economic returns for the cocoa
farmers, their families and communities.
06_Conclusion
For nearly every industry, sustainability is a key objective.
Creating a sustainable chocolate industry benefits all of the
industry’s stakeholders, from the grower to the manufacturer.
The chocolate industry is working with relevant partners to create
a sustainable future. By co-operating in this way, it is possible
to improve the sustainability of the industry: better working
conditions on farms; better quality cocoa; fair prices for
all contributors; superior and more varied chocolate; more
satisfied customers.
The Times Newspaper Limited and ©MBA Publishing Ltd 2005. Whilst every effort has been made to ensure accuracy of information, neither the publisher nor the client can be held responsible for errors of omission or commission.
Glossary
Biodiversity: Wide range of plant and animal life.
Consensus: A general level of agreement between
participants.
Demand: A want for a good that is supported by a
willingness and ability to pay for it.
Developed countries: Countries in which modern
industrial practices allow citizens to enjoy a relatively high
standard of living.
Fair price: The price sellers and buyers recognise as being
a reasonable return for the risk and effort involved, and for the
value added to the product at that stage.
Gross Domestic Product: The economic activity in a
country measured by the total market value of goods and
services produced in a given year.
Import: A good or service purchased from other countries.
Market information system: A means of communicating
prices etc. to buyers and sellers.
Monoculture: Growing only one type of crop in a given area.
Standard of living: The goods and services that individuals
and communities are able to enjoy by spending their income
and/or wealth.
Supply: The quantity of a product that suppliers
(e.g. growers) are prepared to bring to market at a prevailing
market price.
Supply chain: The links involved in bringing a product
through to the final consumer.
For more information about BCCCA
please browse:
www.bccca.org.uk