The Cocoa Market in The 21 Century

The Cocoa Market in the 21st century

Shortage Risks or the Emergence of Pioneering Artisans,
Drivers of a Sustainable Change

Bachelor Thesis – Alizé Couzigou

With the guidance of Mr. Christian Koenig & Mr. Hughes Derycke

Bachelor of Business Administration
Class of 2014

The Cocoa Market in the 21st century: Shortage Risks, or the Emergence of Pioneering Artisans

Acknowledgements

July 2014. Closing the chapter of the ESSEC Bachelor in Business Administration. It is with
much pride and joy that I finalize this four-‐year learning adventure with a project of my own.
Through the wonderful experiences – abroad at Kenan-‐Flagler Business School, University of
North Carolina, USA, at the Universidad Austral in Rosario, Argentina, as well as working at
the JW Marriott Cannes, France, and Baglioni Hotel London, UK, and for all those memorable
moments spent on the ESSEC campus in Cergy back home in France – I am grateful.
Fortunately I have been given the challenge to keep on learning constantly, the strengths to
continue building up my leadership skills, and the courage to give myself a purpose larger
than myself, making good around me. And that is here to stay.

First of all I would like to express my gratitude to both my thesis tutor – Mr. Christian Koenig
– who guided through the preparation and execution of this thesis, and advisor – Mr.
Hugues Derycke – who continuously encouraged and challenged me to pursue my passion
and go further in developing my interests.

Also, I am sincerely obliged to Mrs. Claire Castan – Founder and Chairman at Castan
Chocolatiers (France) –, Mr. Samuel Maruta – Founder and Chairman at Marou, Faiseurs de
Chocolat (Vietnam) – as well as Mathieu Alesi – Founder and Chairman at Puerto Cacao
(France). In spite of their demanding positions, they kindly took the time to answer my
questions, and contributed to enrich this thesis in the most insightful and helpful manner.

And most importantly, I am wholeheartedly lucky and grateful for my mother Monique and
beloved one Kevin who accompanied me in the most unimaginably caring and supportive
ways, throughout my years at ESSEC Business School up to the present achievement. I hold
them dear in my heart and thank them for believing in my project and never doubting of the
success of its realization. To family and friends for their support and deep understanding,
merci.

Alizé Couzigou
2


Executive Summary

Whether we like it or not the world of chocolate is changing. What the Mayans and Olmecs
referred to as “brown gold” is as delicious as ever, but perhaps the global sweet tooth and
current production methods for this delicacy are not headed down the right road. According
to forecasts, demand will outstrip supply by 2020 and prices for this luxury will skyrocket.
What caused an offset balance in the cocoa economy? To understand the problem, it seems
necessary to dig into the heart of the supply chain and particularly right at its roots with
cocoa growers.

For the past couple decades, giant chocolate processors relied on the large quantities of
easily accessible cocoa beans to supply global demand. But the 21st century cocoa beans’
production has shown signs of weaknesses with resulting yields lower than average. This
memoire will provide a comprehensive look at how chocolate is produced, the cocoa supply
chain in its entirety, and the risks implied by the shortage on the supply side of the industry,
consequence of the impoverishment of cocoa growers. Additionally, by looking at chocolate
makers from artisans to giant industrials, as well as consumers from convenience-‐based to
value-‐conscious, and luxury purchasers, we will get a better grasp of both demand and
supply levels threatened by the forecasted shortage.

If adequate management of cocoa beans supply hadn’t been thought through in terms of
viability and sustainability for the major players of the chocolate industry, a profound
change progressively comes to the surface with an emerging generation of chocolate
artisans. With a redefined manner to interact and cooperate with suppliers, artisans are
instilling sustainability of both financial performance and growth in the cocoa community in
the long term.

We will explore the steps along artisans’ strategies that are inspiring to make a change for a
world where we can hope to continue enjoying chocolate, as we know it.

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Table of Content

Introduction ....................................................................................................................... 6
1. Supply Chain Breakdown: From the Tree to the Brown Gold .......................................... 8
1.1. Production ............................................................................................................................ 8
1.1.1. Growing ................................................................................................................................................ 8
a. A Better Understanding of the Cocoa Tree ........................................................................................... 9
b. Climate Conditions .............................................................................................................................. 12
c. Soil Conditions ..................................................................................................................................... 13
d. Cocoa Tree Varieties ........................................................................................................................... 14
1.1.2. Harvesting, Fermenting, and Drying .................................................................................................. 16
1.1.3. Marketing, Trading, and Shipping ...................................................................................................... 17
a. Distinction Physical and Futures Market ............................................................................................. 17
b. Marketing Channels ............................................................................................................................ 17
c. Export Warehousing, Stocking, and Grading ....................................................................................... 18
d. Packing & Shipping .............................................................................................................................. 18
1.1.4. Processing Cocoa ............................................................................................................................... 19
a. Roasting ............................................................................................................................................... 19
b. Grinding ............................................................................................................................................... 20
c. Blending ............................................................................................................................................... 20
d. Pressing ............................................................................................................................................... 20
e. Conching .............................................................................................................................................. 21
f. Tempering ............................................................................................................................................ 21
g. Molding ............................................................................................................................................... 21
1.1.5. Distribution ........................................................................................................................................ 22
1.2. Cocoa-‐nomics of the Supply Chain ...................................................................................... 23
1.2.1. International Cocoa Price Evolution from 2000 Onwards ................................................................. 25
1.2.2. Commodity Futures Markets: Trading Cocoa on the Stock Exchange ............................................... 23
1.2.3. The Supply Chain Paradox .................................................................................................................. 30
2. Evidences behind the Risk of Shortage ......................................................................... 32

2.1. Actual Cocoa Market Structure: A Comprehensive Analysis ................................................ 32
2.1.1. The Demand Side ............................................................................................................................... 33
a. Growing Markets ................................................................................................................................. 34
b. Consumer Trends ................................................................................................................................ 36
2.1.2. The Supply Side .................................................................................................................................. 44
a. Producing Countries ............................................................................................................................ 44
b. Trade in Cocoa .................................................................................................................................... 48
2.2. A Forecasted Cocoa Shortage by 2020 ................................................................................. 50
2.2.1. What is a Shortage in the Cocoa Sector? ........................................................................................... 50
2.2.2. Causes of the Forecasted Shortage .................................................................................................... 51
a. El Niño / La Niña: Weather Disturbances ............................................................................................ 52
b. Aging Trees, Pests & Diseases ............................................................................................................. 56
c. Political Instability ............................................................................................................................... 58
2.2.3. Implications on Worldwide Cocoa Supply ......................................................................................... 59
a. Inflation in Prices ................................................................................................................................. 59
b. Impact on Producing Countries ........................................................................................................... 62
c. The Dependency Theory ...................................................................................................................... 64
3. The Emergence of Chocolate Artisans Worldwide: Drivers of Change ........................... 67
3.1. Understanding the Chocolate Artisan’s Phenomenon ......................................................... 67
3.1.1. What is a Chocolate Artisan ............................................................................................................... 67
3.1.2. A Global Phenomenon? ..................................................................................................................... 68
3.1.3. Re-‐Thinking the Supply Chain ............................................................................................................ 70
3.2. Attributes of Success .......................................................................................................... 71
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3.2.1. Sharing a Sustainable Vision with Producers ..................................................................................... 71

a. Context within the Forecasted Shortage ......................................................................................... 71
b. Sources of Supply & Sustainable Management ............................................................................... 73
3.2.2. Competitive Dynamics ....................................................................................................................... 75
3.3. Artisans: Drivers of Sustainable Development .................................................................... 77
3.3.1. The Creation of Shared Value ............................................................................................................ 78
a. Empowering Farmers and Communities ............................................................................................. 78
b. Parallelism with Consumer Trends ...................................................................................................... 81
3.3.2. The Prospective End of Standardization? .......................................................................................... 82
a. Why Location Matters ......................................................................................................................... 83
b. Valuing Heterogeneity over Standardization ...................................................................................... 85
Conclusion ....................................................................................................................... 88

Bibliography .................................................................................................................... 91
Appendix ......................................................................................................................... 95
1. Historical Context: From Origins to Today’s Consumption ...................................................... 95
1.1. First Appearances ................................................................................................................................. 95
1.2. Discovery ............................................................................................................................................... 96
1.3. Discovery Continued & the Start of Commercialization ....................................................................... 97
1.5. The 20 Century: a Mass Consumption ................................................................................................ 98
th
2.6. The 21 Century, a New Impulse for Chocolate ................................................................................. 100
st
2. History of Chocolate: Key Dates ........................................................................................... 102

3. Cocoa Main Three Varieties ................................................................................................. 105
4. Flow Chart: Transformation Process .................................................................................... 106
5. Production Of Cocoa Beans By Country ................................................................................ 107
6. Interview (1/3) .................................................................................................................... 108
7. Interview (2/3) .................................................................................................................... 113
8. Interview (3/3) .................................................................................................................... 116

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Introduction

Of course the demand for chocolate is increasing. Of course the supply of cocoa beans
processed into cocoa powder – base to all chocolate products – offsets these increasing
levels of demand. Or… so people think. And when the supply doesn’t offset the demand, we
have a shortage. The big players of the chocolate industry confirm this shortage, announcing
a complete zero chocolate stock globally by 2020. Does this entail a risk of not having any
more cocoa beans, thus any more chocolate products soon? A risk for us consumers to not
find our daily chocolate treats tomorrow? Indeed this is some kind of very concerning news.

On one side the demand is undeniably increasing. The chocolate sector held up through the
financial crisis of 2008, even though consumers had to tighten their belt in terms of
spending, they would not give up on the little treats that make them feel good. Up to the
point that year-‐on-‐year higher market prices for cocoa have nothing on the demand.
Consumers will now consider chocolate as an “affordable luxury”. Yet on the other side,
what makes it difficult – even impossible – for the supply to cover the demand in a perfectly
balanced economy? Here is where a shortage is undeniably a problem. It originates right at
the heart of the supply chain – in fact at its very start – with producers.

For decades, producers have been frenetically cultivating the cocoa beans to respond to an
everlasting increasing demand. With inherited cultivation methods, producers, also referred
to as farmers, still grow, tend, harvest, ferment, and dry the beans that they breed by hand
in their small three to five-‐hectare farms.
Since a couple decades, chocolate processors – the ones that process the beans into
chocolate powder, the value added stage of the supply chain – amongst the biggest players
have grown in size, volume of sales, and power. Establishing their power and influence over
producers in order to process enough cocoa beans to feed the world, they squeezed the
major producing countries’ potential in the short term, with no long-‐term and sustainable
vision. Although it is never too late to readjust a strategy towards a long-‐term and more
sustainable one, the situation in plantations is at stake. Trees age, pests and diseases infest
6


the more fragile trees, weather disturbances affect crops, and consequently the productivity
is stagnant if not falling. Moreover, the lack of investment in the past couple decades, in
particular in the leading producing countries, the Ivory Coast and Ghana, has been an
impediment to reversing the downward curb.

However, all hopes are not down. Indeed, some actors of the value chain have genuinely
integrated this long-‐term and sustainable vision in their core business, by setting producers
amongst other actors of the chain on an equal footing. This is a new generation of artisans,
or chocolate makers. By focusing their efforts on the growing stages of the supply chain and
working with producers in finding sustainable ways to improve and manage the cocoa
plantations, artisans redefine relationships and interactions with their suppliers. They
dedicate their efforts in cooperating instead of controlling producers by empowering them
and enabling them to provide the cocoa beans of today, as well as the beans of tomorrow.

This study aims at looking into the cocoa market in the 21st century. Should we fear the
shortage consequences or are we facing the emergence of pioneering artisans, drivers of a
sustainable change for the cocoa beans supply?

In a first section we will break the supply chain down and focus our attention on its pivotal
stages, understanding the important role of cocoa growers. Consecutively, we will study the
cocoa-‐nomics of the supply chain by looking into the cocoa trades, international evolution of
prices from 2000 onwards, and futures markets. Then, we will have a comprehensive
understanding of the cocoa market in the 21st century, by studying the demand side and
supply side. Introducing the threatening risk of shortage, we will analyze the causes of the
latter, and its implication and consequences on the world of cocoa supply for the years to
come. Finally, in the scope of finding a solution to the forecasted shortage, we will observe
emerging artisans worldwide paving the way to a sustained cocoa supply. After defining
them, we will concentrate on their successful attributes and investigate the reasons why
they are the drivers of a long-‐term development and profound change in the chocolate
industry today.
7


1. Supply Chain Breakdown: From the Tree to the Brown Gold

From the pods on the trees, to the cocoa beans in the market, and the chocolate in the shop,
it is only by understanding the comprehensive relationship that we can hope to unravel the
mystery of the cocoa forecasted shortage in the upcoming years and future opportunities of
the market. In the following analysis, we will map out the supply chain to understand each
one’s role and value addition.

NB: Some will say “cocoa” and “cacao” have the exact same significance and therefore are
interchangeable. Some others rather use the term “cacao” when the beans still are
contained in the pod on the tree, differentiating it from “cocoa”, the beans after falling off
the tree and starting their process through the supply chain. Is there really a difference or
not, I will leave the question to nomenclature specialists. Therefore, as a matter of
simplification I will use “cocoa” alone throughout the analysis.
1.1. Production

In the past century, chocolate has become more popular in the consumer habits and cocoa
became a scarce resource. As a result, cocoa production expanded from Central and South
America to many areas that had never grown the brown gold before – West Africa with
Ghana and the Ivory Coast, as well as Asia with producing countries such as Malaysia and
Indonesia. As of today, the biggest producing countries per volume of cocoa beans produced
are Ivory Coast, Ghana, and Indonesia.

1.1.1. Growing

A few farmers still own their farms, but the colonial plantations once controlled by Europe
and America are gone. Africa and Indonesia now produce cocoa as the main providers of the
8


cocoa beans – countries surprisingly far from the original birthplace of the cocoa beans in
the tropical rainforest of Central America.

Farmers still grow cocoa by hand, working either independently or in cooperative system.
Cocoa is predominantly a smallholder crop. More than 90% of world cocoa production
originates from small farms1. In Africa and Asia, a typical smallholder cocoa farm covers only
two to five hectares of land.
a. A Better Understanding of the Cocoa Tree

A cocoa tree is characterized by several distinctive elements listed as followed. In order to
have a deep understanding of the farming processes, the terms will be described succinctly.

• Cocoa tree from early ages to maturation
A tree grows at a height of approximately 12-‐15 meters. At one to one and a half meters the
terminal bud breaks into three to five meristems to give upright branches. These branches
bear thinner ones that hold the large green leaves with petioles. Trees grow best under the
canopy of tropical rainforests, where they are protected from the extensive sunlight and
wind. This is a particularly important point in the early growth stages. The ground’s moisture
is a significant element of its growth: the trees’ dead leaves, and other decomposing
elements on the ground cover serve this purpose. The flowers as well as fruits grow directly
on its trunk and major branches.

Two methods are used to establish cocoa trees plantations. Traditionally, young trees are
interspersed with permanent or temporary shade trees such as coconut, plantains and
bananas, following the clear felling of the forest. This method, although still widely used
comes to a limit. Indeed cutting down the trees and burning the organic matter to clear out
space destroys the organic matter, weed, leaves and branches that are essential to feeding
the soil back with nutrients. Left out to the wind and sun, the soil becomes fragile and less

1
FairTrade Max Havelaar France. Producteurs, Filières, Cocoa. Quelques Chiffres. May 2014.
http://www.maxhavelaarfrance.org/cacao.html
9


fertile. Alternatively, forest trees are thinned out – cutting first tall weeds, creepers, and
small trees – and cocoa trees are planted in between established trees. While not all the
trees are cleared out, much of the ground residuals kept as such protect the soil from sun
and erosion. The plants rot and form humus following the natural plant life cycle and
regenerate the soil.

New planting ways stipulate that planting cocoa trees in rows with a space of two or three
meters in between each tree is necessary to avoid unused or overused soil nutrients. When
digging the holes in which young trees will be placed, above and below soils should be kept
separate as they contain different levels of nutrients. A greater percentage of successfully
grown trees are planted at the young cocoa seedling at a six-‐month stage approximately,
rather than the cocoa seed. Once ready to plant the seedling, the bottom of the hole should
receive the topsoil full of nutrients2.

Close attention to the cocoa seedling is needed following the plantation steps. Farmers will
need to replace seedlings that are too small or too fragile, weed the soil as to remove weeds
that nourish themselves from the same nutrients as the young cocoa tree, make sure to
cover the soil to protect it from erosion and encourage faster formation of organic matter,
and finally prune the cocoa trees. Pruning consists of cutting off shoots that develops
alongside with the straight branch. The shoots weaken the main strong branch that will bear
the fruits; therefore it is necessary to get rid of it. Sucker branches also weaken the tree.
These twigs that grow upward out of the trunk steal the sap out the man branch and need to
be removed at their roots. These two last steps will ensure the tree grows with full energy
and substantial nutrients from the soil.

If well grown and in the adequate conditions, the tree will bear fruits four years after being
initially planted, and will stop bearing fruits after twenty-‐five years.

2
FAO Corporate Document Repository. Agriculture and Consumer Protection. Choosing and Preparing the
Plantation Site. May 2014. http://www.fao.org/docrep/006/ad220e/AD220E03.htm
10


• Leaves
The broad, dark, and striped leaves of the tree are about 25 centimeters long. Most of the
leaves finish in a sharp point called the “drip tip”. They mainly serve the purpose of creating
a ground cover that decays along with other plants. Fungi and other organisms will
decompose this debris, feeding the soil with essential nutrients that fertilize the tree.
Additionally, decaying leaves provide the perfect breeding ground for midges – tiny insects
that pollinate the cacao flowers.
So far, leaves have barely been used for any purposes. Yet a few pharmaceutical industries
tend to capitalize on the health benefits it provides. For instance brewed cocoa leaves for
infusions are used for their cardio tonic and diuretic properties.

• Roots
The cocoa tree has deep taproots that descend straight into the soil. Additionally, many
small branch roots grow near the surface where they benefit from the direct moisture of
rainfalls and nutrients released from the decayed plants.

• Flowers
Flowers bloom two times a year starting in the months of February and August. Thousands
of five-‐petalled and minusculled white flowers adorn the stem and branches. Only 1% to 5%
of flowers will be successfully fertilized naturally – due to small insects, midges – and form
pods. It corresponds to approximately one flower fertilized in 500. Modern processes can
also help the fertilization stage that is performed manually still. These flowers once
pollinated will give a maximum of 40 fruits called cocoa pods3.

• Cherelles
Even when a flower turns into fruit, fruits up to seven, eight-‐weeks old shrivel up and drop
off the tree. This fruit thinning mechanism where the cherelles – or young fruit – stops
growing, turns black and shrivels up is a natural process from the coca tree. It will allow the
tree to carry its maximum amount of pods to maturation.

3
University of Queensland, Australia. School Science Lessons. Cocoa Project. May 2014.
http://www.uq.edu.au/_School_Science_Lessons/CocoaProj.html
11


• Pods
Around 20 centimeters-‐long and 500 grams each, the oblong, round, ridged melon-‐like
seedpods contain many dozen seeds. Pods become fully ripped in approximately five to six
months after pollination, ranging a small spectrum of colors from green to yellow, orange
and even sometimes to reddish-‐purple. Within each pod, there are from 20 to 60 beans,
with each bean covered in a sweet white pulp.
With great care, and without damaging the branches, the pods are harvested by the
plantation workers. The cocoa pods ripen for a few more days after the harvest. Then the
outer peel is opened using long knives and a very precise cutting movement as to avoid
damaging the bean4.

• Beans
The cocoa beans, the base to making chocolate, are the seeds inside the pod. They are
composed of three characteristic elements: a seed coat, a germ, and a kernel.

Fermenting the beans, through the action of enzymes and microbes present naturally with
the increase of temperature, gets rid of the seed coat, kills the germ, and changes the color
and flavor of the beans, then ready for exportation.

b. Climate Conditions

Cocoa trees only bear fruits if planted in a belt 15°-‐20° North to 15°-‐20° South from the
Equator. The natural habitat needed for optimized growth of the cocoa trees is in the lower
story of the evergreen rainforest where climate factors – rain and temperatures – are
adequate.

4
FAO Corporate Document Repository. Agriculture and Consumer Protection. Harvesting the Pods. May 2014.
http://www.fao.org/docrep/006/ad220e/AD220E05.htm
12


In terms of temperatures, cocoa trees respond well to variations of about 14° as long as they
are capsuled in between a minimum of 18°-‐ 21°C and a maximum of 30°-‐ 32°C.

Rainfalls are the major climate factor most likely to impact the year-‐on-‐year variations in the
yield of cocoa trees. Trees are very sensitive to a soil water deficiency. Rainfalls should be
plentiful and well distributed through the year. An annual rainfall of 1,500 millimeters up to
2,000 millimeters is adequate. Dry spells with less than a monthly 100 millimeters of water
exceeding three months usually result in a severe drying out of the cocoa trees.

A hot and humid atmosphere is needed for the optimum development of trees. Cocoa
producing countries experience a usual 100% humidity rate during the day. This rate lowers
down to 70%-‐80% humidity at night.

The cocoa tree will make use of any light available, but has traditionally been grown under
shade. Shading is indispensable in the cocoa trees’ early years. Its original environment
remains the Amazonian forest, which provides natural shade trees due to the density of the
flora natural ecosystem.

c. Soil Conditions

Cocoa trees grow on a broad range of soil types. Physical and chemical properties of the soil
need close attention.

In terms of physical properties, a soil containing coarse particles and with a reasonable
quantity of nutrients to a depth of about two meters allows the development of a good root
system. Below that level it is desirable not to have impermeable material, so that excess
water can drain away. Permeable soils from rapid to moderate permeability are surfaces
made out of stratified clay deposits, a mix of clay, silt, and sand, organic and inorganic silt,
sand and gravel. On the other hand, impermeable soils are made out of heavy clay, and
claypans. Cocoa will withstand waterlogging for short periods, but excess water should not
13


linger. The cocoa tree is sensitive to a lack of water, so the soil must have a balance between
water retention properties and good drainage.

In terms of chemical properties, the topsoil is most important. It requires a high quantity of
nutrients as the plant has a large number of roots close to the surface for absorbing those
nutrients.
Cocoa can grow in soils with a pH in the range of 5.0-‐7.5. It can therefore cope with both
acid and alkaline soil, but excessive acidity (pH 4.0 and below) or alkalinity (pH 8.0 and
above) must be avoided. Cocoa is tolerant of acid soils, provided the nutrient content is high
enough.
The soil should also have a high content of organic matter – plant and animal residues at
various stage of decomposition, cells and tissues of soil organism, and substances
synthesized by soil organism; about 3.5% in the top 15 centimeters of soil. The soil organism
matter (SOM) is regarded as the soil quality function. There is indeed a significant correlation
between SOM content and soil fertility, directly impacting the quality of the fruits.

d. Cocoa Tree Varieties

There is plethora of cocoa varieties in the world, derived from grafting varieties on others, or
with the exploration of genetics in the Research and Development department of industrial
groups such as Kraft and Nestlé. However the cocoa varieties all come from the same three
main origins: Criollo, Forastero, and Trinitario.

The earliest known variety first cultivated by the Mayans, the Criollo type, dominated the
market until the middle of the eighteenth century, but today only a few if any pure Criollo
trees remain. The reasons of so few plants are the difficulty with which the tree grows, being
very susceptible to disease, and producing fewer seeds per pods than other varieties. It is
however considered a “fine grade” or delicacy. Seeds are characterized by their large and
white seeds, and will give a no-‐bitterness but sweet aroma to the beans. They grow mainly
in the regions of Central and South America, as well as Madagascar and Indonesia. The
production deriving from the Criollo variety accounts for 5% to 10% of the world production.
14


Forastero is a large containing variety of cultivated, semi-‐wild, and wild populations of which
the Amelonado populations is the most extensively spread. The Amelonado variety is
planted in large areas of Brazil and West Africa (Ghana, São Tomé, Príncipe, and the Ivory
Coast). Types of Amelonado include Comum in Brazil, West African Amelonado in Africa,
Cocoa Nacional in Ecuador, and Matina or Ceylan in Costa Rica and Mexico. Recently large
plantations throughout the world have used upper Amazon hybrids – from Ecuador and
Venezuela where it originates. Forastero is a high yield variety and very resistant to disease
which explains its worldwide use in plantations. Seeds are recognizable to their flat shape. A
perfumed aroma with a fruity and bitter taste characterizes the flavor of those beans. Its full
flavor owes the Forastero to be generally blended. The production deriving from the
Forastero variety accounts for 85% of the world production.

Finally, the Trinitario population is said to come from a cross breeding between Criollo and
Forastero. Trinitario planting started in Trinidad in the Caribbean, then spread to Central
America in the countries of Venezuela and Ecuador, and finally to Cameroon, Samoa, Sri
Lanka, Java and Papua New Guinea. It combines some of the best aspects of the two
varieties it comes from as to the robustness against diseases and “fine grade” classification.
The beans, round-‐shaped or flat, have a distinctive spicy flavor added to the fruity and
slightly acid aroma. The production deriving from the Trinitario variety accounts for 10% to
15% of the world production5.

The world cocoa market distinguishes between two broad categories of cocoa beans: "fine
or flavor" cocoa beans, and "bulk" or "ordinary" cocoa beans. As a generalization, fine or
flavor cocoa beans are produced from Criollo or Trinitario cocoa-‐tree varieties, while bulk
cocoa beans come from Forastero trees. There are, however, known exceptions to this
generalization. Nacional trees in Ecuador, considered to be Forastero-‐type trees, produce
fine or flavor cocoa. On the other hand, Cameroon cocoa beans, produced by Trinitario-‐type
trees and whose cocoa powder has a distinct and sought-‐after red color, are classified as
bulk cocoa beans.

5
worldstandards. The World of Chocolate. The cacao tree and its fruits. May 2014.
http://www.worldstandards.eu/chocolate%20-‐%20cacao.html
15


“The share of fine or flavor cocoa in the total world production of cocoa beans is just under
5% per annum. Virtually all major activity over the past five decades has involved bulk
cocoa,”6 reminds the International Cocoa Organization, highlighting the interest of chocolate
makers for a variety of cocoa easily blended for standardized chocolate products.

1.1.2. Harvesting, Fermenting, and Drying

After harvesting the pods, opening them, and separating delicately the beans from the husk
that surrounds them, beans are fermented in order for the cocoa pulp clinging to the bean
to turn into liquid and drain away. There are two methods used to proceed to fermentation.
One method, the heap method traditionally used in West Africa, involves piling wet cocoa
beans surrounded by the remaining pulp, on banana or plantation leaves spread out on the
ground. The heap is covered in more leaves and left there for five to six days and regularly
turned to ensure even fermentation.
The other method used in large plantations of the West Indies, Latin America, and Malaysia
use what is called sweating boxes. These boxes made out of drainage holes at the bottom
allow air and liquid to pass through. This process takes six to eight days during which the
beans are mixed twice. Fermentation may rise to a 48°C temperature, but no above 50°C to
avoid the risk of burning the beans and therefore turning the flavor into an undesirable one.
With proper temperature and aeration management, fermentation of cocoa beans can be
achieved without temperature rising above 46°C. After fermenting for a few days, the beans
become darker and wrinkle, and lose their bitter and acid taste to develop softer flavors of
fruit, the precursors for chocolate flavor.

When fermentation is complete, beans go through the drying process. The wet beans are
either dried naturally under the sun on mats placed on the ground, or by special drying
equipment keeping optimally a 7% moisture to avoid the growth of undesirable bacteria and
molds that may produce undesirable flavors. As seen in the fermenting process, beans
should not be dried with a temperature rising above 50°C. Most dryers’ heat comes from

6 th
ICCO. Growing Cocoa. Origins of Cocoa and its Spread Around the World. March 26 , 2013.
http://www.icco.org/about-‐cocoa/growing-‐cocoa.html
16


wood fire. Once dried, beans are sorted by hand or mechanically to remove defective ones
or remaining debris. Then bagged, the dried beans are finally ready to be shipped to
importing markets.

1.1.3. Marketing, Trading, and Shipping

a. Distinction Physical and Futures Market

There is a clear distinction to be made when discussing the trading of cocoa between the
actual or physical market and the future markets, also called terminal markets. Almost all
cocoa traded from their countries of origin are exchanged through the physical market. A
few exceptions to the rule dealing with the stock markets will be further explained below.

b. Marketing Channels

The structure and length of the marketing channels differ from one region to another within
a same country, or across producing countries. On the one hand, one of many marketing
channels encompasses at least two middlemen up until the exporting stage: a local agent
and a wholesaler. After the beans are dried and packed into sacks, farmers sell them to small
traders, also known as local agents or buying stations. Those traders can also visit the farms
one by one to buy cocoa beans directly from the farmers. They will then transport – by
motorbikes, trucks, mules, horses, and even riverboats – and sell the bags to wholesalers,
who in turn will re-‐sell them to exporting companies located near ports.
On the other hand, the simplest marketing channel only consists of the cooperatives, or
association of farmers. In this channel, the farmers sell their cocoa beans directly to export
companies, or export the beans themselves to chocolate processors.

17


c. Export Warehousing, Stocking, and Grading

Once the beans reach out the port, they are stocked in the large warehouses of the most
well known food processors worldwide such as Cargill, Archer Daniels Midland, and Barry
Callebaut. Warehouses have a very specific floor structure: they should have cement and
non-‐flammable grounds, without cracks and crevices where insects can easily hide. Elevated
floors also prevent from floods or water to flow away. The quality of the beans are inspected
thoroughly, graded, bagged into particular jute or plastic bag, and finally loaded onto cargos.

Although techniques for grading the cocoa beans differ from producing countries and
importing ones, standard practices set out by international trade associations have arisen
over the years. The two main associations are the Federation of Cocoa Commerce Ltd (FCC)
and the Cocoa Merchants Association of Americas, Inc. (CMAA).

We will examine the FCC grading standards as an example, which focuses on the
fermentation stage of the bean as well as the cleanliness of the bag of beans. There are two
grades: good fermented cocoa beans and fair fermented cocoa beans. Samples of the good
fermented beans should have less than 5% of mold, less than 5% slate, and less than 1.5%
foreign matter (debris, or others). Samples of fair fermented cocoa beans should include less
than 10% mold, less than 10% slate, and less than 1.5% foreign matter. Tests are carried out
through the so-‐called cut test that involves counting off a given number or weight of cocoa
beans, cutting them lengthwise through the middle, and examining them. Bags containing a
certain number of beans that are moldy, slaty, insect damaged, germinated or flat will be
put aside, improper for processing and further down the line, for consumption.

d. Packing & Shipping

Once graded, the beans can be packed in jute bags or in bulks – jute is a natural fiber
extracted from the bark of the jute vegetable plant. It is considered one of the strongest
natural fibers in the world.
18


In recent years, shipping of cocoa beans in bulks has been increasingly utilized for cost
reduction reasons. Indeed, loose cocoa beans, loaded either in shipping containers or
directly into the hold of the cargo that is the so-‐called “mega-‐bulk”, are much cheaper than
the traditional jute bags. Larger cocoa processors usually adopt the mega-‐bulks as a mean of
transportation.

The system of cocoa processing facilities located near ports in cocoa importing countries
comes from the greater use of bulk shipments, economies of scale from processing large
amounts, and increased level of vertical integration of the late nineties.
As soon as the ship reaches its destination, cocoa beans are removed from the hold of the
cargo, and taken to a pier warehouse. Details of export process vary by importing countries.
Cocoa is stored in bags or in bulks in the warehouse before a buyer comes to conduct a
quality check to accept delivery. Then, the beans will stay stored until the processor or
manufacturer requests his part. Cocoa in the shape of a bean will finally go through a last
branch of transportation – typically by truck or train – up to the manufacturer’s facility.
Shipment branches from the exporting warehouse up to the importing manufacturer strive
to use the Just-‐in-‐Time management strategy to improve their business Return On
Investment (ROI) by reducing in-‐process inventory and associated carrying costs.
Transportation doesn’t create value, but is an important step of the holistic process.

1.1.4. Processing Cocoa

The following six processing stages are held in the food processors’ manufactures or in the
privately owned artisans’ factories.

a. Roasting

After a thorough inspection to clean out any extraneous materials, the beans are roasted in
order to bring out their flavor and dark brown color. Depending on preferences, beans can
be roasted with their shells on or without, which means only roasting the nib – inside of the
19


bean. The manufacturer will closely watch the temperature, time, and degree of moisture to
which the beans or nibs should be roasted. Those measures depend mainly on the type of
beans used and the sort of final chocolate required. Unless only the nib went through the
roasting stage, a winnowing machine is used to separate the nibs from the remaining shells.

b. Grinding

Once the beans have been shelled and roasted (or the reverse), the nibs are ground into
paste. The paste is in fact what is mostly known as cocoa liquor, or cocoa particles in
suspension in cocoa butter. The heat generated through this process causes the cocoa
present in the nib to melt into the cocoa liquor. Again, the temperature and degree of
grinding depends on the variety of nibs and the sort of final chocolate required.

c. Blending

Until very recently, most manufacturers generally used more than one variety of beans in
their products and therefore the mixture needed to be blended adequately to correspond to
the required formula. However latest trends, started out by cocoa artisans, are valorizing the
provenance of the beans as important to the taste of the chocolate bar, as a vine in a
particular terroir is to the wine. These flavored chocolates are also referred to as single-‐
origin chocolates. Therefore, we observe more and more chocolate retailers offering pure
provenance chocolate bar to emphasize on the peculiar flavors of one variety coming from
one territory.

d. Pressing

The cocoa liquor is fed into hydraulic presses that extract the cocoa butter leaving a solid
mass called cocoa presscake. The amount of cocoa butter extracted from the liquor is
controlled by the manufacturer depending on the required proportion of fat wanted in the
final presscake formula. The cocoa presscake can be sold onto the generic market in small
20


pieces to form kibbles, or ground into a fine powder – powder that is used for making
chocolate-‐flavored products such as cakes, cookies, and drinking chocolate.

e. Conching

In order to make the chocolate by-‐products, cocoa liquor is mixed with cocoa butter, sugar,
and in some cases milk. Most artisans working towards high quality chocolate will only use
natural product to add to the cocoa liquor. However this is not the case for most huge
corporations of cocoa processing that add emulsifying agents and cocoa butter equivalents
in an effort of cost reductions. The mixture goes under a refining journey through a series of
rollers until a smooth and even paste is formed. Conching further develops flavor and
texture by adequately kneading the mixture at a certain speed, temperature, and duration.
It is said that the longer the chocolate is conched, the smoother it will be. Conching may last
from a few hours, to three full days, or even longer depending on what the required
consistency and texture.

f. Tempering

To prevent discoloration and fat bloom crystallization of cocoa butter on the surface of the
solid mixture, a necessary series of cooling and reheating steps ensure a smooth and glossy
chocolate surface; tempering here standing for the variations of cool to hot temperatures
the chocolate mixtures goes through successively. Additionally, the use of emulsifiers and
stabilizers can greatly affect the rate at which crystal changes occur in the solid state.
Various additives are used to control crystallization in substitute chocolate.

g. Molding

Dark chocolate is made with chocolate liquor, sugar, cocoa butter, and vanilla. Milk
chocolate is made with chocolate liquor, cocoa butter, sugar and milk powder or other
equivalents. White chocolate is made with cocoa butter but no chocolate liquor.
21


The liquid chocolate is now ready to be filled in molds or solidify in its liquid form. Industrial
manufacturers will sell the chocolate in blocks to confectioners, dairies, or bakers. The molds
will be cooling down in a cooling chamber. Packaged, it is ready for distribution to end-‐
consumers.

1.1.5. Distribution

Distribution, or the very last step of the supply chain consists of providing the liquid or solid
chocolate in a ready-‐to-‐use form and ready-‐to-‐sell brands to professionals and end-‐
consumers.

Some artisans, with a capacity to process their own cocoa products, direct their sells to end-‐
consumers directly. On the other hand, processing companies (Cargill, Barry Callebaut, and
ADM) target two types of segments: the food manufacturers (Mars, Nestlé, Mondélez,
Ferrero, Hershey Foods, etc.) as well as artisans including small chocolate makers and
chocolatiers. Main modes of transportation to these segments are road and sea transports.

Let’s have a closer look at how Barry Callebaut – a world-‐leading manufacturer of quality
chocolate – provides food manufacturers. Callebaut offers three differentiated chocolate
lines: Standard products, Specialty products, and Tailor-‐Made ones. First, Standard Products
include a wide range of chocolates, fillings, and decorations, as well as other cocoa and/or
nut based products for the food industry. Second, Specialty Products encompass single-‐
origin chocolate, organic fair trade cocoa and chocolate, cocoa nibs, colored and flavored
chocolates, a range of healthy chocolate including reduced sugar and sugar-‐free chocolates
to name a few. Finally, the Tailor-‐Made line comprises customized recipes from taste to raw
material, technical specifications, composition and more. Alongside with the different
product lines offered to food manufacturers, Callebaut provides solutions of advice and
support services to their customers throughout the entire production process.

22


Besides the food manufacturers’ segment is the Callebaut Artisans and Chefs segment of
customers. They include professional chocolatiers, pastry chefs, bakeries, hotels,
restaurants, and caterers. With a comprehensive collection of branded products, the
company meets the needs of artisans and professionals by providing them with Gourmet
and Specialty quality brands. Callebaut® the tailored chocolate brand, Cacao Barry® for the
widest international community of chocolate professionals, Van Houten® and its pricey
range of high-‐quality chocolate and cocoa drinks that appeal to all types of drinkers across
the retail, are just a few of the brands sold under the Callebaut manufacturer’s name.

1.2. Cocoa-‐nomics of the Supply Chain

Except for transportation, most of the logistics activities are site-‐specific, which means they
are carried out at one particular location. In reality, transportation doesn’t add value to the
chain but promise a safe and efficient distribution of goods from the very first supplier to the
end-‐consumer. Putting aside the marketing, trading, and shipping stages along with the
distribution stage, we will concentrate on the site-‐specific activities of production and
processing.

The Industrial Revolution of the ninetieth century saw the inventions of adapted
machineries for faster cocoa manufacturing. With today’s advanced technologies, it has
become “an exclusive blend of art and science”7. Engineers and technicians, who perfect the
steps towards the transformation of the cocoa beans into chocolate, carry out most of the
processing stages. With an expertise in machineries capable to roast, grind, blend, press,
conch, and temper the cocoa beans, as well as with a strict control of the stages, engineers
decide very accurately what the final product will be. Its look, taste, and smell are precisely
calculated. Cocoa beans, once imported to warehouses are safe and sound, just a few steps
away from being ready-‐to-‐eat for end-‐consumers.

7
World Cocoa Foundation. About Cocoa. Cocoa Value Chain: From Farmer to Consumer. May 2014.
http://worldcocoafoundation.org/about-‐cocoa/cocoa-‐value-‐chain/
23


In an attempt to further our understanding of the supply chain from beginning to end, we
will have a look at the futures market to better grasp the downstream pricing methods and
speculative trades in cocoa.

1.2.1. Commodity Futures Markets: Trading Cocoa on the Stock Exchange

Like any other commodity, cocoa is traded in the commodity future markets in two places:
NYSE/LIFFE Futures and Options in London (London International Financial Futures
Exchange) and ICE Futures US in New York (Intercontinental Exchange Group). These
organized exchanges provide the platform to bring buyers and sellers together. Moreover,
they set and enforce rules to ensure that trading takes place in an open and competitive
environment. As a result, all bids and offers are made through the Exchange’s Clearing
House – Clearing Houses acting as a third party to all futures and options contracts.

Trade balances, pricing, and future contracts depend on accurate supply estimates, so cocoa
production is monitored throughout the supply chain, as well as by governments and
international organizations. Cocoa futures contracts are not used to secure the supply of
cocoa but rather to offset the risk of adverse price movements. A cocoa futures contract is a
commitment to make or take delivery of a specific quantity or quality of beans at a
predetermined place and time in the future. These contracts are particularly crucial for
global cocoa processors that deal with a great quantity of cocoa all year round. Overall, the
entire supply chain actors from producers, to exporters, trade-‐houses, refiners and
manufacturers use these futures contracts, alongside the associated options contracts,
extensively as price discovery and risk management tools.
With current forecasts threatening the global supply in cocoa beans, and actual decline in
cocoa output last year in 2013, the contracts on cocoa futures jumped 26%8 in New York
reported Deborah Aitken, analyst at Bloomberg Industries.

8
INTL FCStone Australia. Public Brokers. Cocoa Daily. December 4th, 2013.
http://publicbrokers.intlfcstone.com/Research/Document/DocumentViewPublic/26032178-‐e0bd-‐42dc-‐a444-‐
c73d2ae63a18
24


Daily cocoa prices can be found on the International Cocoa Organization (ICCO)9. The 2010
analysis on the cocoa Economy worldwide, led by the International Cocoa Organization
about the determination of prices nowadays notes that: “Following liberalization of cocoa
marketing systems in the nineties, farm gate prices in most cocoa producing countries are
now largely determined by international prices. As a result, farm gate prices have shown
greater fluctuations in most cocoa producing countries reflecting, inter alia, changes in
international cocoa prices, variations in the international value of the domestic currency,
and specific local market structures and conditions, including taxation, competition, distance
from port and quality”10.

Similarly, the commodity futures markets don’t create value, but they are an important step
of the holistic process as they determine pricing of the cocoa supply on medium and long-‐
term periods. In the same perspective of prices’ determination we just looked into, we will
analyze what were the actual cocoa prices that gave rhythm to the 21st century, their causes
and consequences.

1.2.2. International Cocoa Price Evolution from 2000 Onwards

We will cover the international cocoa prices from the exercise 2000/01 up to the latest data
provided by the International Cocoa Organization. This analysis laid down for approximately
each exercise does not aim at being exhaustive explanations for each fluctuation in cocoa
prices but a holistic understanding of factors that affected prices over the 21st century.
These bases will be more than useful to understand the reasons of a potential shortage by
2020.

As reported by the ICCO Executive Committee11, in the two years preceding 2000, cocoa
beans built up a stock, creating a comforting cushion for the beginning of the 21st century.

9
ICCO. Statistics. ICCO Daily Prices of Cocoa Beans. May 2014. http://www.icco.org/statistics/cocoa-‐
prices/daily-‐prices.html
10
ICCO Executive Committee. The World Cocoa Economy: Past and Present. London. July 2012. EX/146/7
11
ICCO Executive Committee. The World Cocoa Economy: Past & Present. Market Prices. London. July 2012.
EX/146/7.
25


Yet, research analysts defined the exercise of 2000/01 as a structural deficit. Characterized
by a substantial decline in stocks, the period of low and falling prices had reduced farmers’
incomes, and they were responding by reducing inputs, which was reflected in lower yields.
In the farms, husbandry standards – or the practices and requirements needed for optimal
production – declined. Additionally, pests and diseases retained yield from going back up.
Mostly due to a lack of resources to tackle the phenomenon, it spread globally with the
Black Pod disease in most regions of the world – especially Africa – Witches’ Broom in the
Americas, and finally Cocoa Pod Borer in Asia. A 28-‐year low record took place in November
2000 with a price per ton of USD $774. At the same time, the demand side is responding well
to previously low prices. Additional growth in demand from emerging countries in Eastern
Europe and Asia progressively announces an upward trend for prices.

Afterwards, periods of irregular but sustained price increase succeeded each other from
2001 up to 2009/10. They can be easily identified in the following graph recording ICCO daily
prices from the years 2001 to 2011.

ICCO Daily Prices – 2001/02 to 2010/11

Source: ICCO Executive Committee. The World Cocoa Economy: Past & Present. London. July 2012. EX/146/7.
26


Looking at the graph above, we notice four major peaks in prices along the years, the first
one recorded in 2001/02. The upward pattern suggested a difficulty for the supply side to
meet demand. On top of the unbalanced economic growth, an attempted coup in
September 2002 in the world biggest producing country, the Ivory Coast, triggered cocoa
futures prices to jump. Many concerns on the LIFFE and ICE futures markets rose about
potential disruption to the flow of cocoa at the beginning of 2003. Pursuant to records, “the
harvesting, transportation and commercialization of cocoa proceeded normally in Côte
d’Ivoire, despite the prevailing political and social unrest in the country. Moreover, the
higher international cocoa bean prices were closely reflected in a rising trend in farm gate
prices in Côte d’Ivoire, which prompted higher standards of husbandry, as well as increased
sales of pesticides and fertilizers. Thus, rising yields may have helped farmers to offset the
impact of civil unrest in the country”12. As measured by the ICCO daily price, prices averaged
US$ 1,873 per ton in 2002/03.

Moving on to 2003/04, the market recorded a drop of 18% compared to the preceding
exercise. Underlying factors of such downward movement for prices came from positive
weather conditions in West Africa – welcoming improved rainfalls – for the large mid crops,
as well as lessened concerns on the political situation.

In the 2005/06-‐exercise, prices increased due to low levels of cocoa beans stock – worries of
a supply shortage surfaced.

From 2006 to 2010, prices experienced a steady increase, influenced by three deficits out of
four seasons:
-‐ 2006/07 recorded a 279,000-‐ton deficit of cocoa beans due to weather conditions
mainly. El Niño, a strong warm current hit the Tropical Pacific, and a harmattan in West
Africa, lead to a period of drought. Additionally, significant growth in global demand to
about 4% pressured prices upwards
-‐ 2007/08 recorded a smaller deficit of 75,000-‐ton than the very preceding exercise. In
that period of time, factors announcing prices of commodities were functions of the

12
ICCO Executive Committee. The World Cocoa Economy: Past & Present. EX/146/7. London. July 2012
27


concerns of “world’s financial markets, the deterioration of global economic growth,
and fluctuation of the US dollar against other major currencies”13. Indeed, in reaction
to the concerns stemming from the near collapse of the US investment bank – Bear
Stern – “investment funds decided to reduce their risks by taking their profits across
all assets, including cocoa”14 affirms the report. Cocoa futures prices skyrocketed
again with the ICCO daily price reaching its highest level for 28 years on July 1st, 2008
at USD $3,296 per ton
-‐ 2009/10 the final recorded deficit in cocoa beans came back up by 132,000 tons
compared to two years before, due to an increase in demand levels

The supply surplus of 26,000 accumulated during the 2008/09-‐exercise is the result of a 7%
drop in global demand data were first published by the trading house Gill & Duffus Group
Ltd. Such drop in global demand derives from the financial crisis and consequently
reluctance of consumers to spend money on treats.

Globally, during these four seasons, “stocks of cocoa beans declined by 460,000 tons”.
Conforming to the ICCO report on World Cocoa Economy, the main reason of low stocks
accumulations is the lack of growth in the cocoa output of the Ivory Coast – the world’s
major cocoa producing country.

The Ivory Coast political schedule gave the 2010/11-‐exercise tempo. The year 2010 started
out with a weak demand from North America and Europe as indicated in the publications of
grindings data – grindings data measure the amount of cocoa beans that have been ground,
considered as the equivalent to the amount of chocolate consumption. The cocoa futures
markets held their breath in the suspense of the Ivory Coast presidential elections
supposedly happening at the end of the year 2010. Finally, the first and second rounds of the
elections of October-‐November resulted in President Laurent Gbagbo and leader Dr. Alassan
Outtara both claiming victory. “Cocoa futures rallied from January 2011 and attained a 32-‐
year high, at US$3,730 per ton in March 2011”. Accrued pressures from the European Union
Council regulations and the export ban imposed by President Alassane Ouattara rose

13
14
28


concerns about cocoa supply for the year.

By the end of the year 2011, two factors – grindings data demonstrating slowly increasing
demand in West Europe and North America, with growth rates of 1.8% and 1.5%
respectively and inadequate weather conditions in the West African producing areas –
resulted in prices moving insecurely. Nevertheless, a brighter future seemed to open up for
the Ivory Coast as the government “initiated its forward sales program for the 2012/13 main
crops, initiative that forms part of the country’s planned reforms of the cocoa sector. In
particular this program aims to guarantee fixed prices for cocoa farmers in the country”15.

Below are the recorded averages in international cocoa prices for each year started at the
beginning of the century:
Average Internaaonal Cocoa Prices (in US$ per

ton)
$3 500,00
$3 000,00
$2 500,00
$2 000,00
$1 500,00
$1 000,00
$ 500,00
$-‐
Cocoa Price (in US$ per ton)

For the past ten years, cocoa prices have been on average, following a quite consistent
upward trend as observed on the above chart. Will this trend continue its path towards
higher averaged prices per annum? And In fact why exactly would this trend continue to be:
is there a reality that triggers such phenomenon? We will focus on these aspects in the
following section.

15
ICCO Executive Committee. The World Cocoa Economy: Past & Present. London. July 2012. EX/146/7
29


1.2.3. The Supply Chain Paradox

Throughout the detailed breakdown of the supply chain observed in the first section, a key
point is to be noticed. Amongst the five factors that influence the flavor of chocolate that
are genetics, growing environment, fermentation, roasting, and conching, the first three out
of the five are part of the production stage. In other words, most of what the chocolate
consumer world expects in terms of nutrition, health, quality, quantity, and flavor lies on the
farmer’s shoulders16. Here lies the supply chain paradox.

New technologies, and research and development have allowed farmers to produce faster
and sell cocoa seeds at cheaper prices. Faster productions were made possible thanks to the
discovery of hybrid cocoa varieties that have higher yields and are more resistant to pests
and diseases. Yet, cocoa farming’s production hasn’t changed over the centuries. Farmers
still cultivate, harvest, ferment, dry and pack the seeds by hand. The proximity of trees, the
fragility of the pods containing the brown gold, the precise extraction of the beans from the
pods before letting them ferment and dry under specific temperature and moisture
conditions, are still managed by smallholder farmers.

In most producing countries, the smallholder farmer is poor, sometimes very poor. For
instance, a typical farmer in West Africa – Ivory Coast and Ghana from where 70% of the
world production originates – grows a plantation of approximately three hectares of cocoa,
yielding 650 kg per hectare per year17. Therefore after the maintenance cost of the farm
through the year, and handling millions of beans to ferment, sun dry, and bag, the annual
net income can be as low as USD$ 2,000. Which amounts to annual incomes of USD $300 per
capita for families we know shelter on average six to seven members. However, with less
land, unpredictable lower yields, the inconsistency of volatile prices, and an increase in
taxes, the income of the family drops below two dollars per capita per day. This is below the
poverty line, established in the Millennium goals of the United Nations. The International
Cocoa Organization estimates that “in the past decade, during which cocoa prices were

16 st
World Cocoa Foundation. Cocoa Market Update. Production. April 1 , 2014.
http://worldcocoafoundation.org/wp-‐content/uploads/Cocoa-‐Market-‐Update-‐as-‐of-‐4-‐1-‐2014.pdf
17
30


predominantly low, the average income of the majority of African cocoa farm families has
been below USD $2 per capita per day”. According to Antonie Fountain from the Voice
Network in an interview for the CNN Freedom Project: “The cocoa worker is earning 10% of
the absolute poverty line”18. An alarming state of poverty plagues the population who makes
up for more than half of what we are delightedly tasting as chocolate.

It should be noted that a major concern on the cocoa supply side has been a lack of
investment in the cocoa sector in the past decades. Aging trees, cocoa pests and diseases,
and fluctuating weather conditions have very negative effects on annual cocoa production.
Cultivation of cocoa continues to be a delicate process. Unlike larger agribusinesses, the
small, family-‐run farms rely on outdated production practices and have limited
organizational leverage. Crop losses inducing lower yields and incomes encourage farmers to
switch to other commodity crops. We will further develop the risks mentioned above and
their impacts in the following section.

Unless the steadily increasing demand from worldwide consumers happen to be wrong, or
that a technological disruption encourages major chocolate manufacturers and food
processors to change their production to non-‐chocolate products, the world supply of
chocolate will depend on the sole hands of the impoverished cocoa farmers for additional
years. May their crops yield less and the number of farmers becomes smaller, then the risk
of having the world demand outpace the available supply is a reality.

18
The CNN Freedom Project, Ending Modern Day Slavery. CNN Freedom Project: Cocoa-‐nomics. Can the
th
Chocolate Industry Change Its ways documentary. March 6 , 2014.
http://thecnnfreedomproject.blogs.cnn.com/category/chocolates-‐child-‐slaves/
31


2. Evidences behind the Risk of Shortage

“What a Choc horror!” some would say. What the Mayans considered as the food of the
Gods has great chances to become a scarce commodity in the upcoming years, with
rocketing prices to the grand despair of a large pool of consumers worldwide. Although
experts have been sounding the alarm for quite some time now, news of a cocoa shortage
only started spreading across the world around the beginning of 2012.
Before introducing the causes of the forecasted cocoa shortage announced for the upcoming
years, and consequences on worldwide chocolate provision, we will first have a deeper look
into the cocoa industry.

2.1. Actual Cocoa Market Structure: A Comprehensive Analysis

According to the Max Havelaar database19,
 More than 40.000.000 people are dependent on the culture of cocoa for a living
 Approximately 3.900.000 tons of cocoa was produced in the 2012-‐2013 exercise
 Demand should surpass 4.500.000 tons of cocoa by 2020
 More than 90% of the world cocoa production relies on 5.500.000 farms
 Only 1.2% of world cocoa production was sold under the Fair Trade / Max Havelaar
ethical conditions.

Food for thought, don’t you think? If so many people depend on the culture of cocoa to
produce huge volumes of cocoa per year (not to mention that the supply levels will probably
be outstripped by a constantly increasing demand from consumers globally)… If almost all
the world cocoa production relies on farms and farmers using their own hands to cultivate
the brown gold, while most of them still being critically poor… Maybe we should think more
when grabbing a chocolate bar. Now it is time to know, and know better.

19
32


2.1.1. The Demand Side

Once cocoa beans leave their country of origin, their journey ends in processing factories
where their components are separated for commercial consumption. All data and statistics
analyzing the demand, consumption, and growth – are measured according to volumes
ground in importing countries. “Processor grindings of cocoa beans serve as the key metrics
for market analysts, for an overall overview of historical and anticipated demand”20. Cocoa
beans can be equally compared to supply up until the very last stage of the supply chain: the
processing phase. After that, the individual components of the beans are sold separately to
food processors for confections, to pharmaceuticals for healthcare as well as to the
cosmetics industry.
Below, the evolution of the global cocoa grinding market share amongst consumer markets:

Source: Cocoa Market
Update, World Cocoa
Foundation, published in
April 2014

As of today, we can notice on the map of the world below the cocoa grindings distribution
by regions in the 2011/2012-‐exercise. Europe and Russia dominate the cocoa grinding
market by two fifths confirming their leading position observed on the above chart,
compared to a close-‐to-‐equal distribution across the Americas (21%), Asia and Oceania
(20%), and finally Africa (18%).

20 st
World Cocoa Foundation. Cocoa Market Update. April 1 , 2014. http://worldcocoafoundation.org/wp-‐
content/uploads/Cocoa-‐Market-‐Update-‐as-‐of-‐4-‐1-‐2014.pdf
33


a. Growing Markets

As stated in the World Cocoa Foundation Market Update, “the average year-‐on-‐year
demand growth has been just over 3% since 2008”21. This average growth rate is confirmed
by the European Head of Consumer Markets at KPMG, John A Morris: “According to official
government figures, current host spots include India (annual growth rate 15%), China (9%),
Russia (6%), and Mexico (3.8%)”22. Additionally, “the BRIC countries Brazil, Russia, India,
China) accounted for more than 55% of global confectionary retail growth in 2011”. Drivers
of such booming growth rates can be explained by factors such as demographics and

21 st
22
KPMG Consumer Markets Report. The Chocolate of Tomorrow. What today’s market can tell us about the
future. Where next for chocolate? June 2012.
34


growing infrastructure. Following is a list of factors to which have added to the demand in
growing markets:
-‐ Youthful population: strong market for candy and chocolate. Mexico, with more
than half of its population under 20 years old, markets 80%-‐90% of chocolate
products to children
-‐ Arising middle class: thus rapid capital inflows. The middle classes have an increasing
disposable net income per capita; therefore they are substantially prompter to
consumption. Three most prominent examples of these new economically
empowered populations are found in China, Russia, and India. China has experienced
a 30% market growth annually says Lindt in its 2012 annual report. In its 2012 “The
Chocolate of Tomorrow” report, KPMG expects Russia and India to grow by 45% and
15% respectively by 2016, which are significant growth rates
-‐ Retail Consolidation: mainly experienced in mature and slow growth markets
including Western Europe and North America that both account for 52% of global
chocolate market share in 2011 according to Euromonitor

Furthermore the global chocolate retail market value has been estimated at over
US$100 billions. The increasing competitions in chocolate offerings encourage
manufacturers to look into new, innovative, and appealing ways to attract
consumers. Health is a major driver in Europe with the launch of vegetarian, no
additives, and organic products of all kinds. In the UK, tackling obesity is the main
driver to curb overeating. Portion control and smaller packages are the result of the
35


British government’s pressure on manufacturers. It implies for retailers to find ways
to appeal to consumers and continue to drive growth including new regulations. In
North America, retailers are mostly inclined to offer greater value as to
corresponding to the demand for exotic blends and combinations in taste
-‐ Expanding taste for chocolate: particularly in emerging countries that became very
recently the target market for manufacturers in quest to educate new palates. In
China and Japan, premium products are very popular. In Japan, the largest Asian
market valued at USD $11.4 billions, Japanese chocolate artisans are flourishing, and
consumers inclined to acquiring premium offerings

Overall, the global demand for chocolate shows signs of vitality. New markets in the Eastern
part of the world continue to develop a sweet tooth, and factors such as young populations
and rising middle classes are more likely to increase chocolate’s appeal to consumers.

b. Consumer Trends

Three traditional ways to make use of chocolates have persevered through times.
Consumers buy chocolate for individual consumption, gift giving, and cooking. If we know
why people buy chocolate, we now need to know who they are.

There are decisive underlying variables to segment chocolate buyers. Evolving
macroeconomics and lifestyles are changing the buyers’ behaviors and demand. The 2012
KPMG Consumer Markets report distinguishes the following three types of buyers23:
-‐ The convenience buyer
-‐ The value buyer
-‐ The luxury buyer

First, as stated in the 2012 KPMG Consumer Markets report for convenience buyers:
“Chocolate may be seen as an impulse purchase, but it’s becoming increasingly everyday

23
36


among consumers. Convenience is a major driver for chocolate lovers who want to grab a
bar from a local store or throw a multi-‐pack into the trolley during a weekly shop”24. These
days, convenience is key to consumers that are too busy to spend much time shopping. In
order to appeal to those buyers, manufacturers and artisans need to capture the essence of
“grab-‐and-‐go”. Chocolates are modified in shape to create more suitable formats for
individual or shared consumption. Examples of successful strategies are small tablet bars –
“sales of tablet bars are growing (up 37% in the UK last year)” – as well as packaging
innovations that allow consumers to enjoy a chocolate product at different times without
losing any flavor such as “the memory wrapper by Mars that allows bars to be twisted,
closed and saved”.

Second with the value buyers we observe that value is a key element of the chocolate
products. But what do consumers look for when they want value? In the 21st century, value
stands out for many different meanings based on Lu Anne Williams, market analyst at
Innova Market Insights. Find below the key-‐trends based on her study, summarized in the
following six-‐key trends table25:
Attractiveness for “pure” or “true to nature” products made
out of natural ingredients. Strongly linked to the health-‐
conscious consumer trend. Lean processes like reducing water
usage, electricity and energy, lighter packaging, and the
consciousness for externalities. Companies that communicate
Clean & Green labels
authenticity, and clarity of all processes from origin to final
product, as well as prove to be respectful of the environment –
with higher environmental standards – are more likely to
appeal to those consumers (i.e. chocolate labeled with
certifications such as UTZ certified, Rainforest alliances)
Company’s code of conduct and behavior: to capitalize on
Work Ethics
sustainable work processes along the supply chain in order to

24
25 rd
Confectionary news.com. News > Ingredients. 10 key trends for chocolate. January 23 , 2012.
http://www.confectionerynews.com/Ingredients/10-‐key-‐trends-‐for-‐chocolate-‐products
37


obtain the product (i.e. Fair Trade or Max Havelaar seals of

approval). Wish to reverse the cycle of poverty in producing
countries by better rewarding farmers, workers, and
empowering the communities
Values carried out through the quality of ingredients, using the
Premium highest quality materials and produced by the most premiere
methods available
Shifts in consumes’ minds from the core product of chocolate
Location to the perceptual concepts of traceability and clarity of all
processes from origin to final consumer. Original location and

production are therefore key
With numerous scientific reports highlighting the nutritional
and healthy benefits of chocolate in its darker composition,
numbers of consumers adopt chocolate products in new ways.
Women in their forties needing to treat themselves the way
they did in their twenties along with the growing pool of
Health & nutrition
people over the age of 60 years old – that the United Nations
confirmed would triple by 2050 – needing increased calorie
and nutrient intake. Finally, the demographic of children that
need their nutritional intakes, this time with cocoa content
dark and milk chocolates in moderation
“Eat less salty, less sugary, less fattening” campaigns from food
and health authorities followed by regulations – “fat taxes”
threatening countries such as the US and the UK when they
Regulations are already in place in certain European countries such as
Hungary and Denmark – against certain types of food helps
fight against obesity or healthy detrimental foods. It opens up
opportunities for product activity with no trans-‐fat claims

In line with the KMPG Market Consumers Research, value is important in Occidental
countries. “In the US, 79% of consumers look for good value when choosing chocolate,
38


although 70% also want a name brand”, according to Mintel Oxygen. However, also in
emerging economies where “Value is particularly important ⎨…⎬ where the middle classes is
still being defined – and may exist far below the Western levels. According to research from
financial services provider Rabobank, a 45g chocolate bar accounted for less than 1% of the
weekly shopping budget in the US and UK in 2010, but in India the same bar made up 18% of
the weekly food allowance: which means a snack comes at the expense of a full meal”26.

Within the value-‐shoppers segment, there are two key points to observe attentively: brand
names and distribution.
As mentioned in the above quotation, the brand name plays an important role in the buying
decision of the consumer. 70% of US consumers are looking for a brand name. Meanwhile,
Japanese consumers favor small domestic labels. Why is the brand a strong determinant in
the shopper’s mind? 21st century consumers define themselves with the products and
services they buy. Not only do they want an experience around the product or service that
will go beyond their expectations, they are also looking for a purchase that has a full
meaning. They may want to be seen with and associated with a brand much like people buy
Fiji water, which is not significantly different from normal bottled water. This means they
need to belong to a greater goal, being the very last responsible actor of the supply chain. A
consumer is a unique spokesperson for the product it consumes and endorses. Therefore
the successful companies will be the ones, which translate those attitudes into creating
identities around their brands, brands that convey the values the company stands for. Brand
names carry out the weight of a reputation, a guarantee stamped on their products and
services that are the company’s behaviors and conduct. Truth and honesty about the
authenticity, traceability, and origin of the companies’ products are more likely to win over
the fickle consumers.

Additionally, distribution has experienced modifications in the past decades. In keeping with
KPMG’s report, “Value-‐conscious shoppers favor a new generation of outlets. Discount
stores are flourishing, which is forcing supermarkets to think like discounters, to attract
fickle customers, including increasing their private label ranges. Small grocery stores may

26
39


lack the economies of scale to compete on prices, while specialists’ formats are being
crowded out. In emerging market one stop retail locations are becoming popular due to low
prices and greater choices”27.

Thus, if supermarkets and discounts stores account for almost half of the entire distribution
system as shown on the circle chart, knowing their shelves filled with broad ranges of
chocolate types, differentiation will be key for chocolate makers to be recognized and valued
by consumers. Labels, certification, and strong identity will more likely drive brand
recognition amongst value-‐conscious consumers, and build loyalty towards the brands.

Finally with the third segment of consumers – the luxury buyer – we can acknowledge that
the luxury market continues its steady growth, both in Western and emerging countries. Just
as Marcia Mogelonsky, Global Food Analyst at researcher Mintel, mentioned, “The
psychology is that even expensive chocolate is an affordable luxury”.

27
40


Chocolate has become increasingly premiumized, and brands such as Godiva and Lindt have
become almost mass market as consumers develop a taste for everyday glamour. Godiva as
an example has increased its sale by 75% in 10 years, and plans to become a staple for the
health-‐conscious, sweet tooth consumer. “Our revenues have increased in all our markets,
especially in China and Japan, which are the most important markets right now,”28 stated
Godiva CEO Jim Goldman.

Source: KPMG Consumers Market, The Chocolate of Tomorrow, published in June 2012

As incomes continue to increase with the size of the BRICS’ middle classes (Brazil, Russia,
India, China, and South Africa), so is the consumption of chocolate, and in particular cocoa.
An important question to ask is: what is really considered a premium chocolate? Ongoing
trends in chocolate consumption have been characterized by two main attributes: high
cocoa content products for their healthy and nutritional attributes, and chocolate products
coming from ethical working practices and sustainable conducts. Find below the detailed
explanations for those two trends.

Mostly driven by high cocoa content dark chocolates, “Chocolate manufacturers (…)
traditionally known for milk chocolate products have been introducing new dark and high
cocoa content products. According to Euromonitor, in the past five years up to 2008, the
growth has been mainly driven by single-‐origin chocolate which grew by over 20% per

28
41


annum as well as by organic certified chocolate (up by almost 20%) and dark chocolate (up
by over 15%)”29. Additionally, higher cocoa content dark chocolate has a nutritional value
and provides health benefits, which appeals to the growing number of health-‐conscious
consumers as well as chocolate manufacturers that want to get a bite of this burgeoning
sector. According to the ICCO “Chocolate is a source of energy, containing minerals and
vitamins, and is considered a healthy diet when consumed in moderation.”30 Cocoa beans
contain active compounds called polyphenols, which have shown to have the properties of
antioxidants. We hear very commonly about “flavanols”. These are the compounds most
abundant in cocoa beans. “There is a growing body of evidence about the health benefits of
cocoa flavanols. Flavanols are powerful antioxidants and are believed to help the body's cells
resist damage”. More studies and scientifically proven results show that “cocoa flavonoids
may benefit cardiovascular health”31.

And secondly, the luxury segment in line with the value-‐conscious segment is driven by the
high quality and uniqueness of products that come with a certain code of conduct and ethics
in business, as part of a sustainable global community. Consumers value products that
correspond to certain ethical, healthy, and environmental-‐friendly standards. Smaller
entities such as artisans usually have the structural flexibility and wish to do good around
them. They are notably ready to pay higher prices than the market prices to farmers for the
quality and care they bring to their cocoa beans. It would be interesting to study
certifications and labels such as Fairtrade/Max Havelaar and UTZ Certified, and how these
actually affect consumers’ behaviors when it comes to the purchase of a chocolate product.
It is a vast topic we will not look into here.

I have chosen two particular artisans with fair trade practices that are Castan Chocolatiers –
located in Toulouse, South of France – and Marou, a chocolate maker established in
Vietnam. Castan’s priority is to work with established chocolate manufacturers that have fair
practices with farmers that supply them (i.e. pay them higher than the cocoa market price).

29
ICCO Executive Committee. The World Cocoa Economy: Past & Present. London. July 2012. EX/146/7.
30
ICCO Promotion Committee. Inventory of the Health and Nutritional Attributes of Cocoa and Chocolate.
st
November 21 , 2005. PRC/3/4/Rev.1
31
st
42


On the other hand, Marou works directly with their suppliers by sourcing cocoa beans
directly on-‐site and advising farmers on their growing techniques. Fair practices defined in
their blog as “covering costs, making a profit, taking into account market prices (in particular
the price a farmer could earn replacing cacao with another crop), the quality of the product,
and the work and investments necessary for maintaining a high quality production,” 32 .
Overall, by creating a win-‐win situation for both suppliers and the chocolate makers,
products acquire additional value found in respectful and sustainable conduct, which
industrials and chocolate manufacturers are eyeing with much interests. “Unsurprisingly,
larger manufacturers are keen to get a bite of this burgeoning sector but, without the
personal story required to sell such products, they can struggle. The solution: purchase
artisans brands and market them as separate entities – large producers’ economies of scale
mean this phenomenon makes life hard for the survival of artisan brands”33.

Based on KPMG Consumer Markets 2012 Report, overall growth of the demand side will be
driven by four factors including sustainability, innovation, health, and eventing.

Sustainability encompasses the importance of food origin, with Fair Trade and organic
sources.
Innovation is lead by personalization in “the next consumer-‐driven revolution in the
industry”34. Major manufacturers are already leading the way, as well as artisans such as the
Belgian-‐based Pierre Marcolini that invites consumers to create their own box of chocolates
through their website platform35.
As far as health is concerned, “an increasing emphasis on healthy lifestyles is an imperative
for governments facing rising healthcare costs, particularly in developed economies that are
battling childhood obesity. This has impacted child-‐focused product launches, which fell 62%
last year in the US and Brazil. Those two countries are both struggling to keep their weight

32 th
Marou, Faiseurs de Chocolat. Blog. Celebrating World Fair Trade Day, our Way… May 11 , 2014.
http://marouchocolate.com
33
34
35
Pierre Marcolini. E-‐boutique. Choose your box. May 2014. http://www.marcolini-‐eboutique.com/en-‐
gb/create-‐personalised-‐chocolate-‐box
43


down (more than 35% of Brazilian children under six are over weight or obese). “Globally,
21% of parents reported switching products to give their children healthier snacks,
potentially reducing brand recognition among the next generation.”36 Chocolate is part of
what we call the functionality food, or food that has nutritional and health benefits. With the
varying antioxidants and energy-‐boosting properties of high content cocoa, dark chocolate
can combat these consequences in moderation. Smaller-‐sized packages, calorie-‐capped
chocolate products, combinations with high-‐energy contents such as fruits and nuts are
already on shelves.
Last but not least with eventing future opportunities, the seasonal chocolate market shows
signs of prosperity with an environment that is “in fact far from saturated”. Potential for
gifts and premium chocolate is still in demand in particular in Canada that experienced a
seasonal activity increase of up to 89% in 2011, and in the UK and France with activities as
boosted as to 53% and 41% respectively. Chocolate remains a highly seasonal purchase with
peak volumes made around religious events such as Christmas and Easter. The rest of the
year is to win over.

Consumers, regardless of the type of consumption and reasons of purchase, keep on being
fond of chocolate, a phenomenon that spreads globally. Trends are varies, and give boost to
chocolate manufacturers and chocolate makers to provide consumers with multiple
offerings depending on the opportunistic segments of consumers.

2.1.2. The Supply Side

If the demand side shows signs of vitality and assured growth, how about the supply side
and volumes of cocoa beans?

a. Producing Countries

The primary growing regions are Africa, Asia, and Latin America. Major producing countries

36

44


in each region are

-‐ Africa: The Ivory Coast, Ghana, Nigeria, Cameroon
-‐ Americas: Brazil, Ecuador, Colombia, Venezuela
-‐ Asia/Oceania: Indonesia, Malaysia, Papua New Guinea

More than 70% of the world’s production of cocoa beans comes from Africa, as highlighted
in the map above. Within Africa, the Ivory Coast and Ghana account for most of the
production. They are the two major producing countries of cocoa beans in the number one
supplier continent in the world.

Below is the estimated cocoa beans production in 2012 in tons per countries of origin. The
selected countries are in the top-‐20 producing countries per quantity produced. Not so
relevant in terms of figures, the chart gives a great overview of the players present on the
supplier market side.
45


Source: powered by Factfish http://www.factfish.com

Unlike large industrialized agribusinesses, 80% to 90% of cocoa comes from small family-‐run
farms, with about 5 to 6 million cocoa farmers worldwide. Figures given for Africa and Asia
confirm that the typical farms cover two to four hectares. Additionally, the production for
each hectare amounts up to 400 kilograms of cocoa beans in Africa, and 500 kilograms in
Asia. With slightly larger cocoa farms, Latin America produces up to 600 kilograms of cocoa
beans per hectare. Yield per hectare varies not only by region depending on weather
conditions and geologic soils, but also by country and by type of cocoa variety37. Those
variations are immediately causing the production fluctuations that we can observe on the
graph below:

Source: World Cocoa
Foundation, Cocoa
Market Update.
Published April 1, 2014

37 st
46


According to the World Cocoa Foundation and as illustrated on the chart above, the total
production since 2008 has increased by 13% to 4.8 million metrics in 2012 – a year-‐on-‐year
increase of 3.1%. However, cocoa production forecasts are not as bright: “This rate of
increase may slow down in the coming years, as cocoa trees are sensitive to changing
weather patterns. Periods of drought and excessive rain or wind can negatively impact yield,
and will continue to fluctuate as climate change intensifies”38. Indeed, as shown in the cocoa
supply chain steps, making possible to grow cocoa trees so that they become quality beans
sold on the commodity market as higher prices is the combination of very meticulous
variables such as specific levels temperatures, moisture, wind, shade, and natural soil
nutrients. A successful yield is the result of combinations of optimal quantities of each of
these dimensions. Unfortunately, much of these variables come down to weather
conditions, hardly predictable and often times causing irreversible consequences. Farmers’
yields are therefore a function of weather conditions – or the investment injected in the
development and strengthening of the farms.

Cocoa farms development however, has been legitimately residing at the center of
attentions. Especially in the Ivory Coast and Ghana as well as expansion in Western Africa
and Indonesia, which productions covered “the increase in demand of cocoa beans during
the last ten years”39. However, concerns amongst chocolate manufacturers and processors
arise as this well-‐balanced supply over demand (i.e. “the level of world grindings closely
mirrored the pattern in global demand and consumption of cocoa in finished products over
most of the review period (2000/01 – 2009/10)”40) might be reversed with the forecasted
demand of the next 10 years. Found in the appendix 5 are production levels and evolution
from 2005 onwards for the producing countries in the world. As noticed, the Ivory Coast
followed by Ghana and Indonesia firmly lead the way – and still do according to the latest
data for the 2012-‐2013 exercise. The question is: Will these plantations be strong enough to
overcome the skyrocketing demand? We will analyze how producing countries face the
consequences of the global pressure resulting from the shortage.

38World Cocoa Foundation. Cocoa Market Update. April 1st, 2014. http://worldcocoafoundation.org/wp-‐
39 ICCO Executive Committee. The World Cocoa Economy: Past & Present. London. July 2012. EX/146/7.
40
47


b. Trade in Cocoa

Here we will have an overview on the cocoa export’s situation. The most recent data found
on the World Economy Report by the International Cocoa Organization relates back to the
cocoa exercise of 2010/11.

As stated in the report, Africa accounts for the majority of the world exports, keeping its
dominant seat as the largest cocoa supplier in the cocoa world market. According to the
following pie chart, the region makes up for 77% of net exports, followed by Asia and
Oceania with 16%, and the Americas with approximately 6%. Sub-‐segmenting regions into
distinctive countries, the three main countries mentioned many times before form the
unique and timeless top-‐3 cocoa export countries: the Ivory Coast is the world leading
export country, with a 37% of the global cocoa trade. Ghana ranks second after his neighbor,
counting for 22% of global cocoa trade. Finally comes Indonesia with a 15% share.

REGIONAL EXPORT OF COCOA BEANS IN 2010/201141

41
ICCO Executive Committee. The World Cocoa Economy: Past & Present. Trade in Cocoa. London. July 2012.
EX/146/7.

48


The pie chart emphasizes on the flow of cocoa beans in between regions of the world in the
2010/2011 period. Clearly highlighted, the majority of exports from Africa go to the
European Union. This transaction accounts for 54% of total export balance worldwide.
Which means the European Union, the largest cocoa consuming region, holds more than half
of the world’s cocoa beans in stocks. Second trading flow after the European Union is North
America with a share of 13% of total export balance worldwide.

Asia presently trades its cocoa beans within Asia – a trend that seems to have reversed from
its major North America trade flow in the past couple exercises according to the Cocoa
Organization. We can assume the increasing demand in China, India, and Japan mostly
caused this change. Latin America exports mainly to Europe and North America, annual
flows counting 3,1% and 2.7%42 of total export balance worldwide respectively.

Lately, more investment efforts resulted in enabling producing countries to grind their
primary resource, also referred to as processing from origin. As stated in the report, the
finished products now represent higher proportions of total cocoa trade for those countries
(figures were not disclosed43).

Therefore, we can say that exports of cocoa beans keep on being an important source of
income for producing countries. In particular, Africa, which producers are highly dependent
on the brown gold commodity trade, and risk to be more subject to market evolutions
including price volatility and weather conditions unpredictability. A risky situation? Very
much so for such powerfully export country.

42
EX/146/7.
43
EX/146/7.
49


2.2. A Forecasted Cocoa Shortage by 2020

We hadn’t seen it coming… unfortunately. "The industry is keeping it fairly quiet at the
moment, but they're all looking very carefully at the situation over the next few years,"44
Angus Kennedy, the world well-‐known chocolate taster for some of the world’s biggest
manufacturers, said at an interview held by the NBC News.
An increasing global demand boosted by the opening of new markets, markets themselves
divided in many chocolate consumer trends; a major reliance on Western African countries
and Indonesia having trouble yielding as good crops as earlier in the 21st century; a world
supply stock decreasing progressively, while intensified agricultural production practices
exerts themselves. Many reasons to consider the global cocoa supply at stake for the
upcoming years. Let’s have a deeper understanding about this forecasted insufficiency in
cocoa beans stocks.

2.2.1. What is a Shortage in the Cocoa Sector?

The principle definition of a shortage is “a situation where demand for a product or service
exceeds the available supply”45. Applied to the chocolate sector, it means that the demand
for chocolate products globally will surpass the actual supply made available by producing
countries. What the definition also says is that a miscalculated demand might be the cause
of such imbalance. However in the chocolate context, this assumption is highly improbable
for the many reasons developed in our market structure analysis of the demand side.
Indeed, emerging countries developed a novel appetite for sweet treats and chocolate in
particular. Moreover Europe – although characterized by a stagnated growth rate in the
consumption of chocolate products – is most likely going to keep its leading seat as the
largest consumer and processor of chocolate in the world. And this is set to go on.

44
NBC News by Alice Tidy. Business / Consumer. Choc Horror! Cocoa shortage, rising prices threaten chocolate
th
bars. October 18 , 2013. http://www.nbcnews.com/business/consumer/choc-‐horror-‐cocoa-‐shortage-‐rising-‐
prices-‐threaten-‐chocolate-‐bars-‐f8C11418435
45
Investopedia Dictionary. Financial Theory, Microeconomics. Definition of ‘Shortage’. May 2014.
http://www.investopedia.com/terms/s/shortage.asp
50


Source: ICCO Quarterly Bulletin of Cocoa Statistics, July 2012

As reported by the International Cocoa Organization, and visible on the above graph, the
cocoa economy started facing a succession of cocoa supply deficits since 2012. On a year-‐on-‐
year basis, surplus often offset deficits, and the equilibrium between demand and supply is
regulated. However, the chocolate sector is much more concerned about the actual
forecasts, as the deficits are expected to last up until 2017 or for several years after that.

Knowingly advised for, and expecting an ever-‐increasing demand for chocolate products
globally, why is the supply side not able to catch up and cover the global cocoa needs for the
upcoming years?

2.2.2. Causes of the Forecasted Shortage

How did we reach this point? Several factors limit the growth of cocoa beans supply:
weather fluctuations on crops, aging cocoa trees, spread of pests and diseases, and finally
51


instable political environments are affecting the flows of cocoa beans towards processing
countries. We will methodically drive into each of these factors.

a. El Niño / La Niña: Weather Disturbances

“El Niño and La Niña are meteorological events affecting rainfall patterns in different parts of
the world,”46 stated the International Cocoa Organization. El Niño and La Niña represent the
extremes in “a vast repeating cycle of large-‐scale fluctuations in air-‐pressure”, also referred
to as ENSO (El Niño/La Niña-‐Southern Oscillation). El Niño is the warm extreme whereas La
Niña is the cold one. Cycles originate in the Tropical Pacific to last for about nine to twelve
months, and usually come back every three to five years on average. These meteorological
events form around the months of August to reach their strongest peak in
December/January. According to the National Oceanic and Atmospheric Administration
(NOAA), “For both El Niño and La Niña the tropical rainfall, wind, and air pressure patterns
over the equatorial Pacific Ocean are most strongly linked to the underlying sea-‐surface
temperatures, and vice versa, during December-‐April,”47 when ENSO have the most impact.

OCEAN TEMPERATURES (°C)

Source: NOAA Climate Prediction Center. The ENSO Cycle. El Niño and La Niña Ocean Temperatures Patterns.

Major impacts are felt in the Eastern Pacific region, in cocoa producing countries such as

46 th
ICCO Executive Committee. Impact of El Niño / La Niña weather events on the world cocoa economy. July 8 ,
2010. EX/142/7
47
NOAA Climate Prediction Center. The ENSO Cycle. El Niño and La Niña Ocean Temperatures Patterns. May
2014. http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/ensocycle/ensocycle.shtml

52


Indonesia, Papua New Guinea, Ecuador and Peru. However, the changes in weather patterns
spread out across the globe through the phenomenon of teleconnections or trade winds.
Indeed, the tropical Pacific region – near the equator around Central America – where ENSO
events originate, is also the birthplace of trade winds. Those winds tend to pull surface
water off the ocean along an East to West pattern, carrying warm water westwards towards
regions including Indonesia, and many Pacific islands. Meanwhile, the coasts of South
America become colder as the warm waters flows to the West. Colder water surfaces from
the depth of the Ocean. These water temperatures of sea-‐surface levels are observable on
the graph above, where the warm colors stand for the warm temperature and vice versa.
Cool air is denser than warm air, thus cooler water temperature on the sea-‐surface levels
limit the formation of clouds, and consequently rainfalls48.

 El Niño
El Niño events are characterized by warmer sea-‐surface levels. During these events, trade
winds weaken and accentuate the overall global warm temperatures across the Pacific
Ocean.

EL NIÑO ATMOSPHERIC CONDITIONS (left) COMPARED TO NORMAL CONDITIONS (right)

Source: NOAA Climate Prediction Center. El Niño Theme Page. What is El Niño.

Therefore, El Niño results in wetter than normal conditions, heavy rainfalls along the
Equator in the Americas and Western Pacific region – Indonesia, and Papua New Guinea
amongst other cocoa producing countries on the Asia & Oceania region – from December to

48 th
2010. EX/142/7
53


February (right side of map). Dryer than normal conditions can be observed across those
regions from June to August (left side of map).

Source: NOAA Climate Prediction Center. The ENSO Cycle. El Niño related Global Temperatures & precipitations
Patterns.

 La Niña
At the opposite, la Niña events are associated with below-‐average sea-‐surface temperatures
in the eastern Pacific regions.

LA NIÑA ATMOSPHERIC CONDITIONS (left) COMPARED TO NORMAL CONDITIONS (right)

Source: NOAA Climate Prediction Center. El Niño Theme Page. What is El Niño.

Accentuated trade winds pull the flow of warm water towards the Eastern region of the
Pacific Ocean, and therefore heavy rainfalls to the far end of the eastern-‐Pacific region –
Indonesia, Pacific Islands (left side of map below). Rainfalls are nearly absent in the Eastern
Pacific side – Central and South America (right side of map below). Overall, the episodes
54


bring abnormally cooler temperatures across the globe49.

Source: NOAA Climate Prediction Center. The ENSO Cycle. La Niña related Global Temperatures &
Precipitations Patterns.

The core question is to understand what are the ENSO events’ impacts on cocoa production.
Cocoa production is highly sensitive to changes in weather conditions as explained earlier in
the growing stage of the cocoa supply chain. As the weather changes, year-‐on-‐year
variations in cocoa yield are highly possible. “Ecuador is the country suffering the most from
El Niño events. On average, it is estimated that the occurrence of El Niño events reduces
cocoa production by over 6% on a yearly basis, whereas its effects are less severe in other
cocoa producing countries (…) production falls on average by 2.03% and 2.39% in Côte
d’Ivoire and Indonesia, respectively. In Ghana, production declines on average by 1.72%”,
reports the ICCO.

ENSO indicators located in the Tropical Pacific have enabled scientist to better forecast these
meteorological variations that affect the cocoa value chain as a whole. Traders and cocoa
processors can predict strategies depending on cocoa beans’ yield and make decisions
accordingly. Yet, farmers’ crops are directly impacted by these fluctuations, and
consequently the supply in cocoa beans, which can decrease significantly.

Australia Bureau of Meteorology and the United Nations both are expecting a 70% chance of
occurrence for an El Niño event occurring in 201450. As to the Ivory Coast, “the country had

49
NOAA Climate Prediction Center. The ENSO Cycle. El Niño related Global Temperatures & precipitations
Patterns. May 2014.
50 th
Bloomberg. Com. Phoebe Sedgman. El Nino Alert Remains as Australia Sees Pattern by August. May 19 ,
2014. http://www.bloomberg.com/news/2014-‐05-‐20/el-‐nino-‐alert-‐remains-‐as-‐australia-‐predicts-‐pattern-‐by-‐
august.html
55


as much as double the normal rainfall, helping replenish soil moisture, David Streit, an
agricultural meteorologist at Commodity Weather Group in Bethesda, Maryland, said in a
telephone interview. Ghana had as much as 25% above normal rains, he said”51 reports
Bloomberg. Predictions for low yields of cocoa beans in the upcoming exercise are expected.
The cocoa beans supply stock this year is undeniably at risk.

b. Aging Trees, Pests & Diseases

In the cocoa business, farmers up to traders and manufacturers are well aware of the
existence and impact of aging trees and the dozen pests and diseases eroding their crops.
The phenomenon particularly raised the attention of the masses early in the year 2010 when
alarming signs of old trees and the spread of diseases appeared in the two largest producing
countries of West Africa, and in the world: the Ivory Coast and Ghana.

Farmers are facing two issues in one. Cocoa trees age, which means first that the production
does not increase, if only average production levels could be sustained52. And second, older
trees are more fragile and therefore prone to diseases. The latter expands in distinctive
cocoa producing countries, often affecting crops “with some estimates putting losses as high
as 30% to 40% of global production”53 in keeping with the International Cocoa Organization.
“Most common ⎨diseases⎬ are fungi that rot the pods, such as witches broom, black pod and
frosty pod rot. The pods are also vulnerable to pests like the cocoa pod borer, a moth larvae
that infiltrates the pods”54. Even the black pod fungus has been attacking cocoa fruits for
years since the 1920s, yet the lack of methods to overcome their spread has aggravated the
supply situation by reducing yields.

51
Bloomberg.com. Luzi Ann Javier, Marvin G. Perez, and Isis Almeida. Chocolate Eater drive Record Cocoa-‐
th
Output Deficit: Commodities. Decmeber 17 , 2013. http://www.bloomberg.com/news/2013-‐12-‐17/chocolate-‐
eaters-‐drive-‐record-‐cocoa-‐output-‐deficit-‐commodities.html
52 th
Financial Times Magazine. Javier Blas. Falling Cocoa Yields in Ivory Coast. May 28 , 2010.
http://www.ft.com/intl/cms/s/2/28e00036-‐67a0-‐11df-‐a932-‐00144feab49a.html#axzz32YlwTe16
53 th
ICCO website. About Cocoa. Pests & Diseases. March 26 , 2013. http://www.icco.org/about-‐cocoa/pest-‐a-‐
diseases.html
54
The Story of Chocolate. The Farm. Sustainable methods. May 2014.
http://www.thestoryofchocolate.com/Where/content.cfm?ItemNumber=3430&navItemNumber=3435
56


Let’s be reminded that a cocoa tree starts bearing fruits at around four years of maturity
only, which requires a certain amount of patience and time for farmers and processors to
expect a return on investment. Additionally, trees experience noticeably lower yields around
twenty to twenty-‐four years of age. Therefore, there is a strong need to implement
strategies and “cocoa plans” as part of a long-‐term vision for the global production.

It should be noted that the African producing region has seen its cocoa output diminish in
the past 20 years, mainly due to the above limiting factors. The International Cocoa
Organization points out that African cocoa farming methods use few to none fungicides and
fertilizers – costly products for poor farmers to maintain their plantations in good conditions.
Overall, and most importantly, the organization emphasizes on the fact that the poor
performance of the African region in the recent years is to be blamed on a lack of
investment in the sector55. As a result, a study by the Ivorian Government’s agricultural
research body admitted that about half of the cocoa trees were found to be more than 20
years old in 2010, and about one fifth over 30 years old56.

In order to plan for the medium and long term, industry manufacturers, non-‐governmental
organization, and the World Bank have coordinated their efforts to boost productivity back
into the West African plantations. Chocolate processor Nestlé has even implanted its
Research and Development Center57 in Abidjan (capital City in the Ivory Coast) to study raw
materials on site – potential hybrid cocoa varieties giving higher yields, more rapidly, and
with strong resistance to diseases.

Several of those programs consist of the planting of new varieties developed in laboratories.
For instance in 2011, 15,000 Ivorian farmers benefitted from 30,000 hectares of newly
planted trees through a program launched by the National Center for Agronomic Research58.

55
56
57 th
Nestlé. Media. Nestlé Opens R&D Center in West Africa to Improve Local Agricultural Crops. April 30 , 2009.
http://www.nestle.com/media/pressreleases/allpressreleases/nestleopensranddcentreinwestafricatoimprovel
ocalagriculturalcrops
58
Bloomberg.com. Baudelaire Mieu. Ivory Coast to Replant Cocoa Trees with Faster-‐Growing Variety.
rd
November 23 , 2011. http://www.bloomberg.com/news/2011-‐11-‐23/ivory-‐coast-‐to-‐replant-‐cocoa-‐trees-‐with-‐
faster-‐growing-‐variety.html
57


These hybrid varieties of cocoa trees are expected to give fruits within 18 months. However
those programs are still very much localized in Western Africa. Other smaller producing
countries that are facing the same difficulties need important upfront investments that the
country’s government and NGO are financing with difficulty.

It is interesting to note that other, more sustainable farming methods can also benefit the
cocoa farmers. Grafting old trees to give them another life, or use natural treatments against
pests and diseases such as red ants59. They consist of a more sustainable way to develop the
plantations’ productivity but also require expertise from farmers.

c. Political Instability

Instable political environments in producing countries have strong impacts on the flow of
commodities. Without going too deep into details and historical cause-‐effect systems, I
would like to simply draw the attention on several limiting factors due to the political macro
environment.

Given the failed coup, during the 2011 presidential elections in the Ivory Coast, with amid
fear of disruption to the cocoa beans, prices rocketed to a 32-‐year high of USD $3.775 a ton.
Cocoa beans smuggling rose in the country when Leader and President-‐elect Alassane
Ouattara “ordered all exporters to halt shipments of beans that had not yet bean declared
for taxes”60, reports Bloomberg. President Laurent Gbagbo refusing to leave office, “the ban
was designed to cut off tax revenues” and push Gbagbo out. In the meantime, and although
“offline routes” were consolidated for the passage of cocoa beans towards importing
countries, the flow of beans was significantly reduced and commodity prices went
skyrocketing.

59
National Newspaper of PNG. Pestnet.org. Ants and Cocoa Pod Borer, PNG. February 2011.
http://www.pestnet.org/SummariesofMessages/Crops/Plantationcrops/Cocoa/AntsCocoapodborer,PNG.aspx
60
Bloomberg.com. Pauline Bax. Ivory Coast Cocoa Beans Get Smuggled Through North Export Route. February
th
10 , 2011. http://www.bloomberg.com/news/2011-‐02-‐10/ivory-‐coast-‐cocoa-‐beans-‐getting-‐smuggled-‐through-‐
northern-‐route-‐amid-‐ban.html
58


Besides Government instability, another major issue resides in the tax systems of the
country. The Financial Times reports that farmers are more inclined to abandon their cocoa
beans crops, uproot trees to plant rubber ones – much cheaper to cultivate and harvest, and
much more lucrative too – as “about 40 per cent of the international price of Ivorian cocoa
now finds its way into the government’s coffers”61.

Similar unstable macro-‐economical pattern can be observed in other cocoa-‐producing
regions with countries such as Indonesia that have to “overcome some political hurdles to
consolidate and avoid political instability in the near future” 62 as well as secure public
security. Venezuela also presents a strong political unrest, various protests, and is still trying
to find its democratic system to date63. The flow of cocoa beans for export, as well as other
important resources the country owns, is economically threatened today.

2.2.3. Implications on Worldwide Cocoa Supply

All these limiting factors developed in the previous section have consequences on the actors
of the cocoa supply chain. Yet the ones to be significantly it by these issues are suppliers,
and by suppliers we mean cocoa growers. What will they be facing if no long-‐term strategy
for a sustained production is implemented?

a. Inflation in Prices

Like with any other commodities dependent on bad weather conditions, facing the difficulty
of highly sensible crops, and/or under the pressure of an unstable political environment,
market prices shoot up.

61 th
62 rd
CENAA Analysis. Asia. Gil Pérez Javier. Instability Factors in Indonesia. May 23 , 2014.
http://cenaa.org/analysis/instability-‐factors-‐in-‐indonesia-‐2/
63
Council on Foreign Relations Press. Contingency Planning Memorandum. Patrick D. Duddy. Political Unrest in
Venezuela. September 2012. http://www.cfr.org/venezuela/political-‐unrest-‐venezuela/p28936
59


In the chocolate sector nowadays, the forecasted rise in demand observed in the market
structure compared to the lower supply levels in the Ivory Coast and Ghana mainly –
accounting for two third of the cocoa beans’ supply worldwide – are likely to encourage this
price trend upwards. Clearly visible on the following chart, as well as observed earlier on,
prices have been on a constant upward trend since the beginning of the century, and
relentlessly increasing up until today (to the exception of the 2008-‐year when the financial
crisis hit the markets).

Source: ICCO Monthly Averages of Daily Prices

As the chart demonstrates, cocoa beans prices increased by 113% in a four-‐year period of
time in between 2005 and 2009!

The response on the commodity market is immediate “Palm oil, sugar, cocoa and wheat are
among crops that may be most hurt by an El Niño this year, Barclays said May 8 (2014)”64.
Soft commodity prices – which means not only cocoa powder, but all ingredients coming
into the composition of a chocolate bar – can be expected to rise from 10% to 40% on

64 th
Bloomberg. Com. Phoebe Sedgman. El Nino Alert Remains as Australia Sees Pattern by August. May 19 ,
2014. http://www.bloomberg.com/news/2014-‐05-‐20/el-‐nino-‐alert-‐remains-‐as-‐australia-‐predicts-‐pattern-‐by-‐
august.html
60


average, with cocoa beans increasing by 1% within the first month of the episode.

Both cocoa butter and cocoa powder extracted from the cocoa beans are the most
susceptible to price changes. Bloomberg through a Mintec research study announced that
“the price of cocoa butter, the vegetable fat extracted from cocoa beans which makes up
about a quarter of every chocolate bar, rose 63% in the past 20 months, reaching a four-‐year
high. Whole milk powder, another major component, rose over 20%”65. As to cocoa powder,
“research analyst (Simona Gambarini) at ETF Securities tells CNBC the price of the cocoa
bean – from which the powder and butter are made – is up 22 percent in the year to date,
hitting a two-‐year high in early October (2013)”.

As Angus Kennedy (the famous chocolate taster for major manufacturers) said for CNBS
News, "People are prepared to pay ⎨USD $113⎬ per kilogram for chocolate"66. If consumers
are ready to accept chocolate as a luxurious product, and manufacturers benefitting from
even higher margins, suppliers on the other side are weakened due to the plantation’s
overall lower yields. Institutions such as the United Nations through its Common Fund for
Commodities organizations watches with an attentive eye the prices evolution on
commodities. Resolution 17 reported in the General Assembly meeting of February 2012
“calls upon international financial institutions and development banks to assist developing
countries, in particular commodity-‐dependent developing countries, in managing the effects
of excessive volatility”67. The United Nations’ ability to reach out to the weakest factions in
the cocoa value chain will determine parity between actors and players of the chocolate
sector; an essential component to a well-‐balanced economy.

65
th
66
th
67
United Nations General Assembly. General Assembly. Resolution adopted by the General Assembly. February
th
14 , 2012. A/RES/66/190. http://www.common-‐fund.org/uploads/tx_cfc/UN_66-‐
190_Commodities_N1147022.pdf
61


b. Impact on Producing Countries

As we take a step back, we are reminded that producing countries, and the farmers who
deliver the cocoa beans:
-‐ Are major actors in three out of the five steps leading to the beans’ exquisite taste
(Genetics, growing environment, fermentation)
-‐ Face the difficulty of cultivating highly sensitive crops, affected by weather
disturbances, aging trees, and hit by pests and diseases
-‐ Struggle through fluctuating yields and outdated farming methods

The question is why are they not able to invest in their farms, to get better infrastructures
and ensure crops are taken care of with the advanced agri-‐products available – fertilizers,
resistant cocoa varieties – that they would need to sustain the cocoa plantations? Two
reasons seem to emerge: the lack of control of selling prices (also referred to as “gate price”)
and income insecurity. Farmers’ lack of insight in the cocoa market mandate for prices, they
are subject to cocoa prices dictated by intermediaries. Additionally, the cost of storing and
controlling cocoa beans on the market could deter farmers’ resistance to volatility in prices.
“Farmers in the Global South however are often forced to sell their beans immediately due
to poor living conditions, the immediate need for money and a lack of storage facilities”68.

Today, cocoa growers collect 6% of what a consumer is ready to pay for a chocolate bar; a
percentage of the total that declined more than a 100% in 30 years. By contrast,
manufacturers’ share has increased by 14% from 30 years ago, and retailers by 5%69.

68
Make Chocolate Fair! Campaign. European Campaign for Fair Chocolate. Cocoa Prices and Income of Farmers.
May 2013. http://makechocolatefair.org/issues/cocoa-‐prices-‐and-‐income-‐farmers-‐0
69
The Guardian. Guardian Sustainable Business partner zone. Dave Goodyear. The future of chocolat : why
cocoa production is at risk. May 2014. http://www.theguardian.com/sustainable-‐business/fairtrade-‐partner-‐
zone/chocolate-‐cocoa-‐production-‐risk
62


Source: Make Chocolate Fair! Campaign. European Campaign for Fair Chocolate. Cocoa Prices
and Income of Farmers. May 2013.

Do all these figures and evidence assume that there is a deeper cause to the forecasted
succession of deficits in the upcoming years? Probably so, and this cause goes by the name
of poverty. As a matter of consequences, low incomes for farmers result in low productivity
and undeniable impoverishment.

“Cocoa growers are typically illiterate subsistence farmers who grow cocoa alongside staple
food crops to provide the main cash income to pay school fees, medical bills and other
household necessities. Their communities have poor education and healthcare services and
lack electricity and decent sanitation, with water only available from communal wells”70,
said Dave Goodyear, research and information manager at Fairtrade Foundation. Child labor
too, rings the alarm of extreme poverty in the sector, and powerful chocolate manufacturers
are accused of encouraging the practice by looking away. Although we will not develop this
part further as it is another different study, it is important to mention that if a country’s
children are not given an education, this country is far from a sustainable development. Such
a country may lack the human capital for integration in the global world, and is therefore at
risk for generations to come.

70
The Guardian. Guardian Sustainable Business partner zone. Dave Goodyear. The future of chocolate: why
cocoa production is at risk. May 2014. http://www.theguardian.com/sustainable-‐business/fairtrade-‐partner-‐
63


c. The Dependency Theory

Cocoa producing countries continue to be “highly dependent upon the employment and
income provided by cocoa farming and foreign earnings from cocoa sales”71 reports the
International Cocoa Organization. Since chocolate products became available for mass
consumption after World War II in particular, why are we observing very concerning traits of
impoverishment in these commodity-‐dependent countries? And why aren’t the producing
countries developing?

Is this the consequence of wrong economic model schemes? Or unstable and corrupted
governments? Maybe this is not all, and that is what the dependency theory explains. The
idea behind the neo-‐Marxist theory formulated in the 1950s, is that countries interact with
each other with differences in the balance of power. The idea is that resources
(commodities, natural resources) flow from a “periphery” of poor, undeveloped countries
(cocoa producing countries in our case), to a “core” of wealthy, industrialized states
(importing countries) enriching the latter over the former. The poor countries are
impoverished while the wealthy states are enriched by the way poor states are intertwined
in the global system. In other words, the global system, made out of dominant countries
over others, prevents producing countries to develop themselves.

71
64


THE GLOBAL SYSTEM ACCORDING TO THE DEPENDENCY THEORY72
Centers of Peripheries of

Centers Centers
Centers of Peripheries of

Peripheries Peripheries

The Dependency Theory makes several assumptions concerning,
1. The international division of labor: Peripheral countries all serve the interests of the
more wealthy countries – represented by the arrows on the above graph
2. A class distinction: the wealthy population of each countries all cooperate to
increase their power and wealth; middle classes and poor populations left aside
3. Global capitalism: in which liberal theories dominate – trade, finance, etc. Banks,
international Institutions such as the World Bank, all serve the interest of the
“center”, the wealthiest of each country; even education and the media are
maneuvered by the latter

As a result, all three arguments – the international division of labor, class distinctions, and
global capitalism are concentrated on the interests of the wealthiest, and none onto the

72 th
Youtube. Allen G. Sens (Ph.D, Queen’s University). Dependency Theory. February 27 , 2012.
https://www.youtube.com/watch?v=JN6LlMY2ApQ

65


developing countries. The global system is therefore designed to sustain the wealthy by
promoting dominance and exploitation. It would be hard for poor countries to actually
develop, which dependency theorist call “underdevelopment’’. The theory demonstrates
why there is poverty and inequality, and the reasons why countries find it difficult to grow.
The argument is still the same today, as it was formulated back in the 1950s.

Farmers by producing the base are considered a small part of the change. Initiatives to
better the situation are lead by institutions such as Fairtrade / Max Havelaar organizations,
and the United Nations that “Reaffirms that every State has and shall freely exercise full
permanent sovereignty over all its wealth, natural resources and economic activities”73. Will
these efforts be enough to eradicate poverty amongst cocoa producers, empowering and
enabling them to invest adequately in their farms, and sustain the world supply for the years
to come?

73
United Nations General Assembly. General Assembly. Resolution adopted by the General Assembly.
th
Resolution 18. February 14 , 2012. A/RES/66/190. Commodities http://www.common-‐
fund.org/uploads/tx_cfc/UN_66-‐190_Commodities_N1147022.pdf
66


3. The Emergence of Chocolate Artisans Worldwide: Drivers of Change

What do artisans do that others don’t, to drive the chocolate industry towards a true
sustainable development? The heart of this study lies in understanding who they are and
why they are the hope and drivers of a sustainable strategy for the global chocolate supply.

3.1. Understanding the Chocolate Artisan’s Phenomenon

3.1.1. What is a Chocolate Artisan

In order to lie down the basis of this study, we will first clarify what the meaning is behind
the word “artisan”, also referred to as many other names in the chocolate industry.

As stated in the Oxford Dictionary, the principle definition of an artisan is “a worker in a
skilled trade, especially one that involves making things by hand”74. Referring to the ones
handling food or drinks, it is said that the latter are “made in a traditional or non-‐
mechanized way using high-‐quality ingredients”. A chocolate artisan is therefore a
craftsman, using expertise and savoir-‐faire to make chocolates, by constantly researching
perfection in the products he develops and choosing the finest, high-‐quality ingredients to
enter the composition of the products.

In my analysis, I consider two sub-‐segments of artisans: chocolatiers and small chocolate
makers. On the one hand we have chocolatiers. Since the Industrial Revolution of the 19th
century and the coming of advanced machineries, numerous manufacturers were able to
process cocoa beans into ready-‐to-‐use chocolate. This era facilitated the rise of numerous
chocolatiers who would source the ready-‐to-‐use chocolate ingredient (chocolate in bulk or
liquid form) from manufacturers and transform it into chocolate confections. Confections
can be of all sorts – ganache, truffles, sweets, caramels, pastries, etc. – as long as they are

74
Oxford Dictionary. Oxford University Press. Definition of Artisan in English. May 2014.
http://www.oxforddictionaries.com/definition/english/artisan
67


composed of chocolate. Examples of chocolatiers I use along the study are Castan
chocolatier located in Toulouse, south of France, and Puerto Cacao located in Paris, France.
On the other hand, we have small chocolate makers. These artisans work with cocoa beans
that they source directly from producers (also referred to as farmers), and process them into
ready-‐to-‐eat chocolate. Adding fine, raw ingredients of their choice, they make chocolate
products from scratch. A new generation of chocolate makers emerged, bearer of the bean-‐
to-‐bar concept that advocate single origin bars, whose beans come from a particular
location, and “in which the whole process, from the grinding of the bean to the molding of
the bar, has occurred in one spot”75. Examples of small chocolate makers I use along the
study are Marou, Faiseurs de Chocolat founded in Ho Chi Minh City, Vietnam and Dandelion
Chocolate founded in San Francisco, USA.

Although the two sub-‐segments of artisans have different ways to source their beans, both
have in common to explore the experience of chocolate at its full potential by searching for
its true flavor.

At the opposite, the world giant cocoa grinders whose priority goals are consistency and low
cost will try to remove the cocoa beans nuances’ for the sake of consistency and low cost.
This leaves most people void of experiencing the complexity of chocolate flavors, although
the tasteful variations between beans of different origins are considered to be as rich as
wine and the infinite amount of vines grown in multiple terroir. “Many people don’t realize
it, but most of the world’s chocolate is industrial,”76 reminds Dandelion Chocolate.

3.1.2. A Global Phenomenon?

There is no global chocolate artisan market per se, where buyers and sellers of these
specialty chocolates meet to perform transactions: chocolate products in exchange of

75 th
The Telegraph. Food & Drink News. Andrew Baker. Is ‘bean to bar’ the new thing in chocolate? March 20 ,
2014. http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/10710823/Is-‐bean-‐to-‐bar-‐the-‐next-‐big-‐
thing-‐in-‐chocolate.html
76
Dandelion Chocolate. About Us. How we make chocolate. May 2014.
http://www.dandelionchocolate.com/process/#anchor
68


money. We are not talking about public companies whose stakeholders are numerous and
varied. There is no such thing as a global confederation of chocolate artisans. Yet chocolate
artisans have a very clear differentiation from other chocolate makers or industrials: to
provide a high quality chocolate by sourcing origin cocoa beans chosen on specific locations.

The chocolate artisans’ phenomenon exists and expands, as there are a greater number of
them in the world that the media press around these days. The telegraph newspaper
elevates the bean-‐to-‐bar concept to a whole new level. “Single origin bars, whose beans
come from a particular location, are now becoming hugely popular, and supermarkets are
making their own”77. Moreover, the concept has become adopted fairly rapidly for the
reasons that those small chocolate makers pay such particular attention to the cocoa beans
they work with, that they treat farmers as they would treat any other partners along the
supply chain: with respectful and fair labor standards.

This phenomenon isn’t developing in a particular geographic location. It is developing at a
global scale. Historically, chocolatiers and chocolate makers all started building up
businesses in Europe. Even though originally consumers were conditioned to believe that
great chocolate would come from Europe and Europe only, the trend is progressively
replaced by the importance of origin chocolate – South and Central American, Caribbean
cocoa beans provenances as well as many other provenances are now becoming promisingly
popular.
Since the era of the Internet, the facility with which information flows, and the extra
capacity given to business and consumers to rely on more sophisticated and integrated
transportation and logistics, people have been given the opportunities to broaden their
horizon on a large-‐scale. Businesses flourish where opportunities are. Chocolate artisans
have benefitted from these major changes, emerging in the four corners of the world to the
pleasure of many.
The bean-‐to-‐bar concept in particular, is the inspiration of many today. This has occurred far
from what originated in Europe – old birthplace of chocolate artisans – trendsetters

77 th
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emerged first in the United States with companies such as Dandelion Chocolate located in
the heart of San Francisco, CA by the Silicon Valley or Potomac Chocolate from Virginia. It
recently expanded to Europe with London-‐base fine chocolate maker Paul A. Young. Paul
says: “The cocoa bean is so precious and special that I didn’t want to waste any part of it. I’m
so proud of what we have produced and I hope it will pave the way for others to try this new
way of making bean-‐to-‐bar chocolate” 78 . This study will be based on the bean-‐to-‐bar
concept, as it the most innovative form of sustainable cocoa supply and offer.

3.1.3. Re-‐Thinking the Supply Chain

By focusing on bringing out the flavor of chocolate, artisans understand the importance of
the three factors that directly make up for the taste of their products. Mentioned earlier
these factors are genetics, growing environment, and fermentation. However, it isn’t as easy
as it sounds. While genetics are in the hands of artisans, cultivating the cocoa trees and
fermenting the cocoa beans once harvested both are in the hands of farmers. Thus, a major
part of artisans’ success lies within producers’ expertise.

In order to bring out the most important attribute of their chocolates – the flavor – artisans
have tailored a new vision of their supply chain. From the location’s choice of the cocoa
beans, to the partners working along the chain, and modes of transportation and logistics,
every step is a combination of optimal factors to keep the bean’s full potential. However,
what makes artisans different from their competitors is their relationship with producers. By
empowering farmers and their community in creating a win-‐win situation, it is a long-‐term
and sustainable development they strive to achieve. We will study these dimensions in the
section Attributes of Success.

It is important to note that,
-‐ Not all chocolatiers and chocolate makers are willing to focus on the flavor of the
beans or provide high quality chocolate as their core value proposition

78 th
paul.a.young fine chocolates. News. paul.a.young launches first whole bean-‐to-‐bar chocolate. March 26 ,
2014. http://www.paulayoung.co.uk/2014/paul-‐a-‐young-‐launches-‐first-‐whole-‐bean-‐to-‐bar-‐chocolate/
70


-‐ Additionally, not all chocolatiers and chocolate makers are willing to redefine the
way they do business by partnering with producers in a vision of long-‐term and
sustainable development
This study will only entail artisans who are fundamentally willing to redefine the way they do
business. Some examples will punctuate the assumptions made along the study.

3.2. Attributes of Success

With the forecasted shortage by 2020, and consequently scarce cocoa beans resources,
industrials are most likely going to provide consumers with ordinary chocolate products, in
which cocoa liquor/powder and cocoa butter – the two base ingredients to making
chocolate – will be replaced by chemical flavorings and fillers. How is it then possible for
chocolate artisans to go their own way in a very different direction than the leading cocoa
grinders, and continue to make quality chocolate entirely or partially with cocoa
liquor/powder and cocoa butter – which are also the two most costly ingredients of the
chocolate composition?
The key to their success lies within the very first actor of the cocoa supply chain: producers.
By bringing farmers up to the status of key partner to the success of the business, by
enabling and empowering them to invest in and sustain their plantations, artisans capitalize
on the farmer’s potential to sustain the cocoa beans’ production of tomorrow.

In this section, we will see the conditions of success for chocolate artisans as defined above.

3.2.1. Sharing a Sustainable Vision with Producers

a. Context within the Forecasted Shortage

The global demand progressively outstripping supply has made cocoa beans become very
valuable to all chocolate makers and big-‐name chocolate industrials. As previously studied,
inflation in prices strikes, and farmers have seen their monetary retribution fall in the past
71


couple decades, as it now continues to do for them. With just too few bargaining power
amongst the different intermediaries along the supply chain – traders, processors, exporters,
manufacturers – farmers receive the bare minimum for their bag of cocoa beans. “When you
hear a company talks about sustainability, what they're actually talking about is the
sustainability of them being able to continue to buy cocoa in the future,”79 says an Ivorian
farmer interviewed by CNN International. "So little by little, if rubber is better paid we'll drop
cocoa because [we] cocoa farmers work for nothing,"80 he tells CNN. Therefore a more
pressing concern, leading to the risk of seeing the cocoa supply stock reach a zero-‐point, is
letting producers abandon their cocoa crops, precipitate the shortage.

Big chocolate industrials, afraid to face the consequences of the shortage, have recently put
into place “proprietary sustainable cocoa programs”81 to ensure their future cocoa supply.
These programs oblige companies to set a deadline for their entire cocoa supply to come
from sustainable sources.
Is sustainability defined by industrials greenwashing though? Indeed, the term doesn’t mean
much to farmers from the Ivory Coast for instance, who have been kept aside from the so-‐
called “sustainable developments” in the past decades. Chocolate industrials, whose goals
are to make volumes and gain market share globally, barely rewarded producers for their
work. We will also be reminded that for the longest times, big companies turned a blind eye
to child labor, in Africa mainly. This win-‐lose situation and the lack of trust and confidence
between the two parties are more likely to hasten the fall of chocolate supply for good.

Sustainability only makes sense as long as it is sufficient revenue farmers can reinvest not
only in their plantations but also amongst their family members and communities. Can
artisans create such benefits for cocoa growers?

79
CNN International. Africa CNN Freedom Project. Matt Percival. From bean to bar, why chocolate will never
th
taste the same again. February 28 , 2014. http://edition.cnn.com/2014/02/13/world/africa/cocoa-‐nomics-‐
from-‐bean-‐to-‐bar/
80
CNN International. Africa CNN Freedom Project. Matt Percival. From bean to bar, why chocolate will never
th
taste the same again. February 28 , 2014. http://edition.cnn.com/2014/02/13/world/africa/cocoa-‐nomics-‐
from-‐bean-‐to-‐bar/
81 th
Confectionaynews.com. Oliver Nieburg. 2020 Sustainable cocoa targets ‘a tall order’ – Intertek. March 28 ,
2014. http://www.confectionerynews.com/Commodities/2020-‐sustainable-‐cocoa-‐targets-‐a-‐tall-‐order-‐Intertek
72


b. Sources of Supply & Sustainable Management

Chocolate industrials, chocolatiers, and chocolate makers all work through the supply chain
described earlier. Exporting the beans to chocolate manufacturers, processing up to
distributing the read-‐to-‐use chocolate are stages, which present many similarities. We will
note that the only differences in the process of making chocolate reside in the techniques
used to ferment and dry the beans, roasting, conching, and tempering. Durations and
temperatures are crucial factors of transformation of the bean into chocolate, as we know.

Where artisans become unique in their ways is by sourcing the base ingredient in a certain
way. With the goal to find the most exquisite, high quality beans full of flavor, artisans put at
the heart of their business to find cocoa growers who care for the quality of their products
as much as they do. Therefore artisans re-‐think and redefine the role of producers as a
unique micro-‐actor and integral part of the supply chain. Most importantly, the cocoa
growers are the chocolate makers’ drivers of success.

Artisans have a specific way to source their cocoa beans that differentiate them from their
industrial counterparts. We will examine every step of the sourcing by focusing on the bean-‐
to-‐bar chocolate makers.

First and foremost – and independently of the plantation’s location – artisans source the
cocoa beans directly to growers. By establishing a first contact with producers they are able
to understand the motives of growers and select amongst farmers that share a same
purpose: provide a quality fruit. This entails that farmers know how to properly ferment and
dry the beans. Producers not only supply the beans, but they also have the expertise that
leads the chocolate making company to success. Small chocolate maker Marou pays
particular attention to who become their key partners. The two founders started out their
company in Vietnam by sourcing the cocoa beans themselves, crossing the Vietnamese
countryside on a motorcycle in the search of farmers caring for their work82.

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After choosing carefully their partnering cocoa producers, the wish to develop a respectful
professional relationship is crucial to a long-‐term and prosperous future with cocoa growers.
Though many industrialists treat cocoa growers as members of the bottom of the pyramid,
artisans focus on fostering a relationship. The relationship establishes both parties on an
equal footing. Taylor Kennedy – founder of Siren Artisan Chocolate Makers, a Victoria-‐based
company (Canada) – understands it well. The cocoa beans he sources in only two unique
locations, Ecuador and Madagascar, have a name: the names of men, women, and even
families who own the cocoa plantations83. As good and subtle as the vines brought up by
wine makers, the quality of the beans reflect the expertise of the worker behind it.
Additionally, artisans emphasize on creating an environment of perpetual improvement: by
making sure to be available and flexible enough as soon as cocoa farmers contact them
when a load of cocoa beans is ready, by providing advice on working techniques to better
the quality of the crops, and by encouraging cocoa growers to assist in trainings on growing
techniques84. Through focusing all their attention on giving growers the ability to develop
their plantations and grow quality beans optimally, artisans continuously strengthen the
relationship, and by doing so progressively establish trust for long-‐lasting partnership with
growers with savoir-‐faire and care. In other words, creating sustainable sources of quality
cocoa beans.

When working with artisans, the monetary retribution given to farmers in exchange of their
work is fair. But beyond the money, it is the process of realizing their potential and imagining
a sustainable development for and with them and the community that matters. Marou says:
“At the end of the day, we know the farmers who sell us cocoa by their first name, we pay
them a premium reflecting the extra care given to the post-‐harvest processing (…) the
money goes directly in their pocket with no intermediaries to pay”85.

As a result, artisans experience an interesting phenomenon. Instead of going across the
countryside to search for the cocoa growers with whom they want to do business, farmers

83
Sirene Artisans Chocolate Makers. The Farms. May 2014. http://sirenechocolate.com/#intro
84 th
Marou, Faiseurs de Chocolat. Blog. Training Cacao Farmers in Vietnam. December 11 2011.
http://marouchocolate.com/page/3
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come to contact them directly. Indeed, artisans built up a reputation of fair partnerships and
management that pulls and attracts cocoa growers wishing to sustain their farms and their
communities.

The win-‐win situation – where both parties enjoy the reward of a quality work – creates a
sustainable working environment that is more likely to foster long-‐term partnerships, and
therefore long-‐term cocoa supplies.

3.2.2. Competitive Dynamics

Thriving as a small chocolate maker in a marketplace dominated by large and well-‐
established competitors with significant resources is certainly a difficulty. Yet, artisans have
developed a key differentiator: their close relationship with suppliers, a unique driver of
sustainable performance. This gives them the competitive advantage of sustaining their
future inputs – the cocoa beans. Moreover, they capitalize on building strong brand
recognition amongst suppliers, and consumers looking for ethically sourced products.

Artisans’ businesses are unique, capable of differentiating themselves and positioning
themselves above competitors. Differentiation according to Michael Porter “stems from the
specific activities a firm performs and how its affect the buyer”86. In the artisans’ context,
the procurement of the raw material as to the cocoa beans directly affects the performance
of their businesses. Let’s be reminded that artisans focus on the quality of the cocoa beans,
not the quantity. And as we’ve seen earlier, part of making finished quality chocolate
products comes from downstream the value chain, starting with the cocoa beans supplier.
Two major uniqueness drivers for artisans based on the analysis87 of M. Porter are:
-‐ Policy Choice: performance goes by the name of quality, the quality of inputs
procured

86
Michael E. Porter. Competitive Advantage Creating and Sustaining Superior Performance. New York. The Free
Press United States of America. 1985. ISBN 0-‐684-‐ 84146-‐0.
87
75


-‐ Linkages: supplier linkage in particular. The result of a close coordination in between
artisans and suppliers, in an ethical and fair conduct, strongly helps to reaffirm
artisans’ differentiation to the chocolate buyers

Artisans give retribution to the cocoa grower, which reflects the amount of care the latter
puts into providing quality beans. Marou for instance, buys cocoa beans to producers at a
10% premium88 over Fairtrade price. Castan chocolatier makes sure to buy its chocolate
liquor from manufacturers that source the beans respectfully to producers: buying them
above market price. Higher costs lead to higher prices for the finished chocolate products.
Artisans’ products are consequently positioned as premium product of high quality, quality
stemming from the cocoa beans and other essential ingredients (sugar, with/out milk).
Artisans’ differentiation leads to the superior performance of earning profits by making a
margin on their high-‐quality, premium products.

On the other hand, global chocolate makers aim at reducing their cost in improving the
supply chain efficiency thanks to their logistical strategies. Those competitors operate in
another pool, with bigger players driven by large-‐scale production and sales volume.
Therefore, artisans compete indirectly against global companies such as Mars, Mondélez,
Nestlé – top-‐3 chocolate manufacturers making more than USD $11,760 in net sales in
201389 – who produce the multiple chocolate confections available across varied distribution
channels. Those companies have developed their own grinding manufacturers. But they
rapidly come back to focusing on their core business – the confection of chocolates – and
“make more financial resources available for the development of new chocolate products
and the marketing and promotion of the products”90. This implies they outsource their cocoa
liquor to the world biggest processors and top-‐3 makers of bulk chocolate: Barry Callebaut
AG, Cargill Inc., Archer-‐Daniels-‐Midland Co. (ADM). These three companies process up to
40% of global cocoa beans91, according to the International Cocoa Organization.

88 th
89 th
ICCO. The Chocolate Industry. Who are the main manufacturers of chocolate in the world? February 4 ,
2014. http://www.icco.org/about-‐cocoa/chocolate-‐industry.html
90
91
76


Even though global chocolate companies and the biggest processors occupy a large share on
the marketplace, artisans find their success in sustaining their performance by creating
scalable models to deliver indirect social benefits to the cocoa growers and create business
value.

3.3. Artisans: Drivers of Sustainable Development

Can we assume that what is good for businesses is consequently good for society? If for the
past decades, corporations such as Barry Callebaut, Cargill, and ADM have assumed that the
simple act of maximizing profits was sufficient in order to build strengths and reputation in
the chocolate market, those businesses are now accused to be prospering at the expense of
societies impacted socially, environmentally, and economically. Concerns about human
trafficking, child labor, and abusive labor practices92, or drained resources amongst others
have burst out in the past couple years, highlighting the serious lack of commitment of
global chocolate companies in emphasizing sustainability. As shown in the previous section,
communities most impacted remain cocoa growers and their surroundings. Although
societal consciousness leads the chocolate leaders in adopting change, “most companies
remain stuck in a social responsibility mind-‐set in which societal issues are at the periphery,
not the core”93, M. Porter says.

While these big corporations have created tensions with key partners, both mutually
dependent on each other, artisans have procured longer-‐term influences and sustainable
development for all. Integrating this long-‐term vision in their core values gives them, both
sustainability, financial performance, and viability.

92
The Huffington Post. The Blog. Amanda Gregory. Chocolate and Child Slavery: Say No to Human Trafficking
this Holiday Season. October 31st, 2013. http://www.huffingtonpost.com/amanda-‐gregory/chocolate-‐and-‐
child-‐slave_b_4181089.html
93
Harvard Business Review (online). The Magazine. Michael E. Porter and Mark R. Kramer. Creating Shared
Value. January 2011. http://hbr.org/2011/01/the-‐big-‐idea-‐creating-‐shared-‐value/ar/1
77


3.3.1. The Creation of Shared Value

Artisans undoubtedly stay true to their value proposition as to making fine chocolate out of
the highest quality of cocoa beans. But beyond their effective model in creating business
value, they are committed to setting a lasting legacy. This legacy resides in the relationship
they are attached to develop between businesses and society. Instead of creating value at
the expense of the communities around them, they genuinely create economical and
societal value ultimately benefitting the communities around the farmers. M. Porter
associates this dimension with the creation of shared value”94. How can shared value be
applied to the chocolate industry? In this study, we emphasized on the importance of key
partners we’ve mentioned all along: cocoa growers. Here we will also broaden our horizon
to partners upstream the supply chain with Puerto Cacao chocolatiers.

a. Empowering Farmers and Communities

For too long, providing societal improvement was considered a constraint, which tempered
businesses’ economic success. In other words, if the chocolate bar represents the total value
of one of the biggest chocolate processors, the processors would have to share a greater
piece of value with cocoa growers (i.e. two squares instead of the initial one shown on the
shared value’s graph p. 63). This concept of fixed pie to distribute amongst shareholders is
also referring to the original concept of Corporate Social Responsibility.

According to M. Porter in his article 95 , as well as strongly believed by both Castan
Chocolatiers and Marou chocolate makers, Fairtrade/Max Havelaar label is one good
example of social responsibility standing right at the periphery of the business and not at its
core. The idea behind Fairtrade/Max Havelaar is to pay a better price to the farmers for the
crops they provide. This means giving a greater retribution out of the fixed amount of
wealth. But truly what is missing is rewarding the farmers for their participation in increasing

94
95
78


the size of the pie (i.e. making the size of the chocolate bar bigger before sharing wealth; bar
observed on page 63).

Indeed, the reverse logic says that creating social progress leads to creating business value96.
This means that by figuring out what the key societal issues to any chocolate companies are
– here the depletion of natural resources (cocoa beans) and the viability of key suppliers –
we better understand where and what the valuable stages of the value chain require to be
addressed. This is particularly pertinent now that the chocolate sector faces the reality and
consequences of an assured shortage.

Artisans’ legitimacy stems from their willingness to increase the size of the pie. By training
farmers on working techniques in the plantations, by allowing easier access to fertilizers
(chemical or natural), and by assisting them in improving the logistical means to carry the
crops from and to the processing factories, artisans empower producers to be actively in
control and manage challenges in the cocoa plantations. In result, the quality of the
partnership is improved and consequently the quality of the output, chocolate makers are
willing to pay for.
Marou chocolate makers work closely with Vietnamese farmers and advise them on working
techniques, and encourage them to participate in trainings in order to increase the quality of
their work, improving the quality of the beans. According to the Marou, access to higher
quality cocoa is a priority they are willing to pay for at a strong premium price: “we cultivate
⎨the quality of the cacao⎬ together with the farmers by sending a very clear signal that we
always pay more for better quality cacao.”97

The close cooperation between cocoa growers and artisans transforms partnerships “from
transactional ones that are centered around chasing price, to a system focused on creating

96
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value”98 that is social and economical. On the one hand, the premium (i.e. margin above the
local market price) paid to cocoa growers represents a significant amount to reinvest in the
farm to sustain its development, and can also benefit the community in terms of education,
infrastructural improvements, etc. On the other hand, the quality of the partnership and
resulting improvement of the working environment towards more respectful and fair
conducts, leads to long-‐term relationship that is fruitful and sustainable for all parties. In a
context where the pressure is stronger than ever on companies in the sector to secure
supplies, artisans have indeed found the supply dynamics that will provide them with the
cocoa beans of tomorrow.

While Marou emphasizes on the key subsistence of its suppliers, other artisans such as
Puerto Cacao founded in France are the example of the creation of shared value in a broader
dimension. This chocolatier works approximately with 35% of employees in a situation of
social and occupational integration 99 . With an emphasis on upstream management of
sustainability, Puerto Cacao cares to provide societal progress in addition to providing the
quality chocolate couverture it sources from partners Fairtrade/Max Havelaar-‐labeled. For
more details, see Appendix 8.

The profound change instilled by the dimension of shared value that smart businesses such
as chocolate artisans are capable of applying in their core values comes from the chocolate
makers’ genuine self-‐interest: be responsible to and for one another. All parties involved
directly (chocolate makers and cocoa producers) as well as indirectly (the families and
communities evolving around the chocolate sector and society as a whole) are empowered
to increase the size of the chocolate bar (i.e. increasing the overall size of the pie). Equally,
the share of wealth produced is greater for all parties. Now more than ever can these
maxims drive a sustainable development for the chocolate industry of tomorrow. What the
sector needs are more responsible artisans to pursue their goals, instill this change
increasingly, and inspire others to follow the legacy globally. Mobilizing the chocolate

98
Supply Management. The Purchasing and Supply website. Adam Leach. The Food supply chains need long-‐
th
term relationships. March 16 , 2013. http://www.supplymanagement.com/news/2013/food-‐supply-‐chains-‐
need-‐long-‐term-‐relationships/
99
Youphil. Le Média de toutes les Solidarités. Frédéric Sergeur. Mathieu et la Chocolaterie Solidaire. October
st
31 , 2013. http://www.youphil.com/fr/article/06635-‐mathieu-‐et-‐la-‐chocolaterie-‐solidaire?ypcli=ano
80


company as a whole to embody the shared value dimension will drive the next wave of
innovation, confirms M. Porter. Hopefully that way, the vicious cycle leading to an inevitable
chocolate shortage can be reversed for the long-‐term.

b. Parallelism with Consumer Trends

Are consumers interested in buying chocolate products coming from a redefined supply
chain instead of their usual ones? Do artisans’ efforts in doing good around them sufficiently
justify the premium prices advertised for their chocolate products to consumers? Indeed,
the question is: will consumer be ready to adopt those consumption changes, directly
impacting their wallets? Market analyses, as observed in the consumer trends section, are
encouragingly positive.

With the alarming cocoa shortage and the increase in prices of core natural ingredients such
as cocoa powder and cocoa butter, industrial chocolate makers will more likely need to
replace all pure chocolate products with cheaper ingredients, and chemical substitutes.
However the 21st century era has observed the rise of a vast segment of value-‐conscious
consumers – amongst which is the United States, second biggest chocolate consumer in the
world. Value-‐consciousness spans attributes from pure and green businesses’ conducts, to
work ethics, and nutritional food contents. These consumers are looking for products that
correspond to those attributes, or chocolate brands that translates the company’s code of
conduct. Why? Because those values have a meaning consumers can identify with and
endorse themselves by the simple act of purchasing.

By increasing transparency of the supply chain, emphasizing on the traceability of the base
ingredients, and priding themselves for the origin of their products and the people that are
providing them, artisans embody an identity that appeal to those value consumers.
Additionally, artisans encourage them to increase the size of the pie themselves by choosing
the right chocolate products, by purchasing the premium price. If consumers have been
critically considered passive in their purchasing decisions in the past couple decades, they
are today fully participating, directly involved in society’s progress.
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Dandelion Chocolate, a San Francisco-‐based chocolate maker, is the avant-‐gardist introducer
of the bean-‐to-‐bar concept in the United States. From sorting the beans out by hand right of
the jute bag to folding the ready-‐to-‐eat bars into hand made paper coming from India,
Dandelion realizes every steps on site, in their 34,000 square-‐foot factory. The main
challenge they face is to respond to the increasing level of demand. Tours across the factory
and classes to walk clients through the single-‐origin bars’ processes are pretty much sold out
at all times. Viewed as part of an education, Dandelion100 doesn’t hesitate in encouraging
consumers to learn the basics, produce a small batch from scratch, and invite them to visit
the farms they directly source their high quality beans from. By doing so, consumers can
truly be part of the chain; up to the point they are able to shake the hands of the first link in
the supply chain. Traceability, authenticity, and origin are accessible to all.

Ultimately, consumers realize that discovering and adopting what artisans have best to offer
benefit their well-‐being. Well-‐being here is referred to as the mind-‐set of doing something
good for the greater number, by choosing right.

3.3.2. The Prospective End of Standardization?

With an increasing number of artisans and an accrued interest in the single-‐origin, bean-‐to-‐
bar, ethically made, and nutritional chocolate products, could we imagine the end of the
global industrial standard chocolates? Is the 21st century the beginning of a profound
change, where high quality chocolate are distinctively characterized by the terroir from
which cocoa beans have grown?

In this section, we will imagine the waves of innovation that could follow the footsteps of
what artisans started. Tomorrow’s chocolate sector already looks to undergo a profound
change towards opportunities such as the importance of location, greater brand
heterogeneity, with perhaps the end of standardized commonplace chocolate products.

100 th
San Francisco Eater. Sophia Lorenzi. Cameron Ring and Todd Masonis of Dandelion Chocolate. January 16 ,
2014.
http://sf.eater.com/archives/2014/01/16/cameron_ring_and_todd_masonis_of_dandelion_chocolate.php#mo
re
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a. Why Location Matters

Perhaps the next global trend set by chocolate artisans will support the idea of location as a
key differentiator. The geographic scope may allow small chocolate makers to coordinate
value activities specifically on site, and serve different geographic areas and potentially
producing countries. By bringing the chocolate factory closer to the cocoa sourcing areas,
artisans could hope to establish greater interrelations with cocoa growers.

The bean-‐to-‐bar concept could notably lead this trend. Let’s have a deeper look at why with
Marou chocolate maker. As the industry is looking for other producing countries for
emerging markets, chocolate makers around the world are eyeing countries such as
Vietnam. According to the national newspaper The Japan Times, Vietnam’s production
exceeds over 5,000 tons of cocoa beans per year101, which is a small amount compared to
the 1.27 million tons produced by the Ivory Coast102. Given the different bean flavor from
the African beans, it is an outstanding chance to win over the markets in search of new
exotic flavors. Marou founders capitalized on the yet unknown Vietnamese beans and the
potential of the bean-‐to-‐bar right by the cocoa farms to implement their factories. They built
up a reputation for Vietnam luxury chocolate, whose products are single-‐origin chocolate
bars, positioned as a premium product for export. With every single ingredient sourced on
site, it is an incredible demonstration and opportunity to imagine more producing countries
managing the value adding stages of the chocolate production and exporting their finished
products globally, enriching the producing country’s own economic performance. For
artisans, it is an incredible chance to build strong brand equity worldwide, and expand the
knowledge and appreciation of a single-‐origin chocolate bar across the globe. The global
world integrated in local revalorization is a concept of opportunities that I like to refer to as
glocal.

101 th
The Japan Times. News. Luxury chocolate pioneers raise the bar in Vietnam. Feb 10 , 2014.
http://www.japantimes.co.jp/news/2014/02/10/business/luxury-‐chocolate-‐pioneers-‐raise-‐the-‐bar-‐in-‐
vietnam/#.U06BKlztIdt
102
ICCO Monthly Review of the Market. Cocoa Market Review. Supply and demand situation. April 2014.
83


As a result, if the coordination of these value activities on site enhances the differentiators
already in place, it would consecutively enhance artisans’ competitive advantage103.

Furthermore, the idea behind educating consumers about the products they buy and
encouraging them to fully become a participative actor of the value chain becomes
increasingly popular in many ways. Artisans do not need to set their factories on site, but
just as the traveling experiences Dandelion Chocolate makers created, it is about how much
involvement artisans are ready to offer to consumers. Dandelion Chocolate invites
passionate consumers to join them along a fully immersed vacation within one of the cocoa
plantations they source their beans from – a fun way to deepen their knowledge about
chocolate, from the bean to the bar, from the cocoa growers’ expertise to the chocolate
makers’ skills104.

Chocolate – finished product in which lies all the value accumulated through the value chain
– in fact becomes only 20% of a whole lot of comprising perceptual elements. These
perceptual elements are all experiences and services that complement the core product.
Inspired by the Pareto Principle (also referred to as “80/20 rule”), it would be interesting to
further the idea that perhaps these remaining 80% conceptual parameters represent what
the entire supply chain from first supplier to consumer are able to provide in the shape of
chocolate. Moreover, greater experimental adventures outside of our home countries will
replace the simple act of consumption at home to stretch the value chain right back at the
cocoa grower’s plantation, where consumers come to educate themselves and revalorize
chocolate. In other terms, artisans that bring chocolate down to the final consumers have
everything to gain from capitalizing on the 80% total chocolate life cycle from bean to bar,
back to suppliers in their home countries. Could we imagine then a greater appeal for
producing countries as a consumption marketplace, and a journey back to the chocolate
roots as a normal pathway for chocolate lovers?

103
Michael E. Porter. Competitive Advantage Creating and Sustaining Superior Performance. New York. The
Free Press United States of America. 1985. ISBN 0-‐684-‐ 84146-‐0.
104
Dandelion Chocolate. Chocolate Trips. May 2014. http://www.dandelionchocolate.com/trips/#anchor
84


In that perspective, what should we think of the “provenance paradox”? Rohit Deshpandé
explains in the Harvard Business Review. A significant obstacle to artisans’ global expansion
originating in or grown from emerging cocoa markets exists is known as the “provenance
paradox”. In 2010, Rohit Deshpandé wrote that the challenge of the next decade for single-‐
origin chocolates (versus blends) sold by chocolate makers is for them to oust the fact that
“consumers have been conditioned to believe that great chocolate comes from Europe, not
South America” 105 . By that he meant, “A product’s country of origin establishes its
authenticity”. Just like France for wine, Italy for Sports cars, Switzerland for watches etc.
Assuming that a chocolate maker establishes in Belize to create bean-‐to-‐bar single-‐origin
chocolates, the finished products would be seen as less authentic than a blended chocolate
coming from a European chocolate maker. Consequently, comes the difficulty to command a
fair price for their products, and a lower price in return reinforces the idea that the offering
isn’t as good as European-‐made chocolate. In response, artisans erode stereotypes rapidly
by leveraging brand equity and social media, a strategy to overcome the provenance
paradox and break the implied vicious circle.

Location truly matters, as it progressively becomes a strong determinant of artisans’ success,
a key differentiator of their high quality chocolate strategy along players of the industry.
Their strategy can become significantly efficient and advantageous thanks to a strong
reputation, brands, and designations. We will discuss the latter in the next section.

b. Valuing Heterogeneity over Standardization

The more we talk about chocolate the more we realize how complex the product really is.
Although undifferentiated chocolate products advertised by the global chocolate industrials
such as Mars, Mondélez, Nestlé, and others dominating players, there is a steady revolution
in consumers’ minds towards the recognition and acceptance of high quality and distinctive
chocolates. The perceived quality in chocolate, just as in wine, is complex and requires
consumers to have predisposed palates ready to appreciate the multiple flavors stemming

105
Harvard Business Review. Rohit Deshpandé. Why you aren’t buying Venezuelan Chocolate. Call it the
“Provenance Paradox”. It’s the big challenge for emerging markets in the next decade. 2010.
85


out of a chocolate tasting. Just like wines, we could describe chocolate with a sensory
profile, determined by the chocolate’s history, where and how the cocoa beans have grown,
as well as the types of production used to transform the beans into the bar.

In search of the chocolate’s pure flavor, thus bringing out the full potential of the cocoa
beans, artisans create chocolates with strong identities. Within the same factory, the
multiple single-‐origin bars are made out of the same ingredients. Yet, they are likely to have
differences in taste. The Wine Maker magazine reminds, “The foremost criteria for defining
a wine is the quality of the grape”106. Could we assimilate the principles on which high
quality wine stands to chocolate? With artisans already working towards highlighting the
close link between quality and geographical areas, we assume the analogy perfectly
possible. The popularity of single-‐origin chocolate bars already accentuates the idea of a
large enthusiasm towards distinctive, aromatic chocolates. This is therefore a vast
opportunity for chocolate makers to capitalize on the sensory profile of chocolate and sell
under designations such as: variety of beans as described in the firs section of the study,
geographical provenance, cocoa beans domain (instead of plantations), vintage, and other
descriptions to enhance the chocolate brand authenticity and distinction.

In order to capitalize in this vast market of opportunities where branded high quality
chocolates supplant standard, commonplace industrial brands, overcoming the provenance
paradox isn’t an option. Protected geographical status, a status that protects the so-‐called
authenticity of a product depending on the area it was grown as described in the Harvard
Business Review 107 (i.e. only sparkling wine coming from a specific region of France is
entitled the label Champagne), continues to insulate brands from quality competition
coming from emerging market companies. But there is hope of full acceptance for these
specific chocolate products thanks to “designations” or label information with characteristics
of chocolate from origin to traceability.

106
Wine Maker. Anne Dumont. Same Grape. Different Yeasts. April/May 2004. http://winemakermag.com/612-‐
same-‐grape-‐different-‐yeasts
107
“Provenance Paradox”. It’s the big challenge for emerging markets in the next decade. 2010.
86


High quality chocolates are most likely going to follow the wine tendencies, becoming
globally accepted by consumers as distinctive labels, rich in flavor and aroma. Will these
premiums, gourmet chocolates become a preference over the undifferentiated chocolate
blends created in the laboratories of industrial giants? Will artisans, rich of their
differentiated products and labels expand and monopolize consumer’s appetite for
chocolate? The answers to these questions make the chocolate industry one to watch
closely in the near future.

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Conclusion

The intent of this study is to discuss the breakdown of the supply chain with an emphasis on
the process of producing cocoa beans, the threatening cocoa shortage by 2020, the work of
pioneering artisans, and the profound change they instill in the industry thanks to
sustainable practices. There are surely many takeaways.

To begin, we first developed a holistic understanding of what a cocoa tree is, as well as how
it is grown, harvested, fermented, and dried. We took a deep dive into analyzing the varying
types of trees, the climate conditions affecting the trees, and what an important part the
experienced farmers play in the growing process. In our continued journey through the
supply chain (from the first supplier of cocoa beans to the last consumer of chocolate), we
analyzed the marketing channels, looked at export warehousing, stocking, grading,
packaging and shipping. The important steps in the supply chain after the bean has reached
its destination to the processing manufacturer were then carefully dissected in the stages of
roasting, grinding, blending, pressing, conching, tempering, and molding. Once ready to be
consumed, the cocoa beans finally transformed into the brown gold, or so-‐called chocolate,
continues its path towards consumers and is distributed through combinations of channels.

Importantly, by looking at the lucrative futures market associated with chocolate and
investigating the cocoa-‐nomics of the supply chain observed above, we discover that the
cocoa market relies heavily on farmers who only account for a small share of this global
industry. Low incomes for farmers and the too few investments in the cocoa plantations in
the past decades can explain the lack of output of producing countries and insufficient
supply to cover the levels of demand.

As a result, we dove into the evidences behind the risk of the forecasted shortage. We took
into account the demand side focusing on the growing markets such as the BRICS who are
developing a sweet tooth for chocolate, and consumer trends ranging from clean labels, to
ethical work practices, premium chocolates, nutritional and healthy values. Alternatively we
88


looked at the supply side, better understanding the role of producing countries, in this
declining economy.

Addressing the forecasted Cocoa shortage by 2020, we first looked at what a shortage would
actually look like. Examining the causes of the forecasted shortage we looked into weather
disturbances, political instability, as well as aging trees, pests and diseases. We dug deeper
into the implications on Worldwide Cocoa Supply, carefully considering inflation in prices,
the impact on producing countries, and covering the dependency theory. Consequently, we
understand that the viability of the cocoa plantations is at stake and the global cocoa market
is headed for decline.

Introducing chocolate artisans as agents of change in the cocoa market, we investigated
what makes artisans successful and what it means, in terms of reworked supply chain that
may save chocolate, as we know it. The fundamentals of sustainable development through
management, the creation of shared value, and the wish to increase the size of the pie are
attributes to the impulse and endurance of artisans’ work. As a result of strong supply
linkages and fostered relationships with cocoa growers, the empowered growers and
communities can manage and develop a sustainable cocoa production for tomorrow.

We now face a crossroads in the world of chocolate and the start of a profound change. The
world may see big businesses continue their unsustainable practices, causing a watering
down of chocolate with synthetics and chemical imitations, driving the costs of real
chocolate sky high, making it a luxury comparable to caviar. Alternatively we imagined a
progressive but steady decline of standardization as artisans’ practices flourish and increase
the value of distinctive, single-‐origin, and high quality chocolate. Artisans seem to have
fostered an invaluable competitive advantage by revalorizing the relationship between
cocoa growers and chocolate makers, differentiated their premium offerings from their
counterparts by enhancing the geographical location of the cocoa production and the
communities that surround them.

89


Will there be sufficient cocoa supply to cover the increasing levels of demand in the next few
years? This question still remains, as the risk of shortage exists. The sustainable practices
artisans pioneered at the heart of the supply chain need to continuously inspire other
chocolate makers to pursue greater goals that benefit not only the community on a small-‐
scale, but the society as a whole. An efficient global reach for artisans is the challenge raised
for an even greater sustainable cocoa supply. By leveraging brand equity and social medias
in particular, artisans can achieve strong identities around quality chocolates and get their
messages out. Only viral campaigns can propel visibility and transparency to global scopes
and help level the playing field with top industrial brands.

The market for chocolate is indeed a vast and delightfully interesting one with many
complexities, a rich history, and a (hopefully) sustainable future.
90


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Appendix

1. Historical Context: From Origins to Today’s Consumption
1.1. First Appearances

Cocoa beans are the fruit of the cocoa tree, species known as Theobroma Cocoa.
The generic name is derived form the Greek “food of gods” with theos meaning “gods”, and
broma meaning “food”. The specific name of cocoa comes from the native names of the
Mesoamerican languages.

The Theobroma Cocoa species, from which the cocoa beans originate, has origins from South
America to the east of the Andes. The exact birthplace is still uncertain. Scientific claims have
exposed several in the areas of Central and South America. Based on the International Cocoa
Organization108, here are some of these assumptions:

 The Upper Amazon region: This tropical rainforest region is full of species diversity,
with water and mineral resources crucial to the growth of the fauna. The cocoa trees
probably appeared about 10,000 to 15,000 years ago
 The Upper Orinoco Region: The Upper Orinoco Region comprises of the Eastern part
of Colombia and western part of Venezuela. This region is plentiful of cacao genes,
which evidences suggest that the location could be the start from where wild cacao
spread
 The Andrean Foothills: Other large amounts of cacao genes were discovered at the
foothills of the Andes Mountain Chain, North-‐West of Colombia
 Central America: From southern Mexico with the Lacandon forest and the
Usumacinta river area to northern Guatemala, a region where cacao may have
spread

108 th
ICCO. FAQ. What is the Origin of the Cocoa Tree. March 26 , 2013. http://www.icco.org/faq/51-‐cocoa-‐
trees/114-‐what-‐is-‐the-‐origin-‐of-‐the-‐cocoa-‐tree.html
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1.2. Discovery

Archeological evidence around what is today Mexico and Costa Rica prove that the first
civilization to discover and consume cocoa is known as the Olmecs. According to the Ancient
History Encyclopedia, this mysterious civilization sprung from the grouping of ancient
villages along the coast of the Gulf of Mexico and established in San Lorenzo around 1200
BC109 . They expanded and prospered until 400 BC, spreading their influence and trade
activities of Cocoa, rubber, salt, gemstones and more up to Nicaragua. Anthropologist
Michael D. Coe found that they crushed the beans, mixed the powder with water and
species such as chilies and herbs.
PRINCIPAL SETTLEMENTS OF THE OLMEC CIVILIZATION IN MESOAMERICA110

Historians consider they are the subsequent forerunners to be of any Mesoamerican
cultures such as the Mayans and the Aztecs. The Mayans (400 BC) and the Aztecs (200 BC)
later developed ways to cultivate the cocoa beans. The beans were used as currency and
measuring units.

Although the cocoa trees’ cultivations expanded with the migration of people from both
civilizations throughout Mesoamerica, the consumption of the drink remained a privilege of

109 Ancient History Encyclopedia. Definition. Olmec Civilization. April 2014.
http://www.ancient.eu.com/Olmec_Civilization/
110 th
Ancient History Encyclopedia. Illustration. Principal Olmec Settlements. August, 28 , 2013.
http://www.ancient.eu.com/image/1409/
96


the upper classes and soldiers in battles. The invigorating and fortifying virtues became
progressively recognized and embraced111.

1.3. Discovery Continued & the Start of Commercialization

It’s in the 16th century that cocoa was first be commercialized. In 1502, the Italian explorer
and navigator Christopher Columbus tried out the cocoa drink on in Nicaragua, raising more
questions about how the “brown gold” reached Europe. The Spanish Conquistador
Hernando Cortez might have brought it back in 1528 on his first return to Spain, along with
necessary material to brew the beans in the process of making the drink. Furthermore,
Dominicans led by Spanish historian and friar Bartolomé De Las Casas had taken over a
delegation of Mayan nobles to visit Prince Philip in Spain in 1544 where the delicacy could
have been introduced. Amongst other things they brought were “receptacles of beaten
chocolate”112.
Following the downfall of the Aztec empire, Cortez intensified the cultivation of cocoa beans
in order to develop a lucrative trade in Europe. Spain progressively caught on the elixir
exclusivity, adapting its taste and adding other spices to the brewed mix such as cane sugar,
vanilla, cinnamon, and pepper. In 1585, the first cargo arrived on the Iberian Peninsula
launching the trade of cocoa beans and the implementation of the first shops in Europe.

th th
1.4. Expansion From the 17 to the 19 Century

Cocoa beans arrived by cargo to many different harbors in Europe, embraced rapidly by the
Italians and the French through the merchants’ trades. In 1650, chocolate arrived in the
United Kingdom. The first English chocolate house was opened by a Frenchman in
Bishopsgate – London, 1657 – on the instructions of King Charles II. In the following years,
several coffee houses started selling chocolate in Florence and Venice in the early 1700s.

111
Ancient History Encyclopedia. Definition. Olmec Civilization. April 2014.
http://www.ancient.eu.com/Olmec_Civilization/
112
Cocoa Hernando. Hernando Cortes: Discoverer of Cocoa? April 2014.
http://www.cocoahernando.com/hernando-‐cortes-‐discoverer-‐of-‐cocoa/
97


From pre-‐Hispanic times to the dawn of the industrial revolution, chocolate was largely
handmade. But with the new machineries and processes of the industrial age, and the
possibility to produce creamier, smoother chocolates as well as in the solid form ready for
consumption, chocolate production speed up and enabled manufacturer to produce it at
much a lower cost. Chocolate became progressively an affordable luxury to everyone.

Source: Barry Callebaut website

During the 1800s, chocolate was used particularly for its therapeutic qualities such as
preventing stomachaches. With the help of advanced machineries to produce the powder,
pharmacological uses of cocoa and cocoa by-‐products began a wide exploration.

By the end of the 19th century, chocolate became a consumer good legally protected against
the increasing amount of fraudulent manufacturers. Many manufacturers started producing
cheap chocolate – replacing cocoa, by cocoa shells and cocoa butter by other fats. In many
countries legislation authorized chocolate labeled and sold as so if only the content was
made out of at least 32% of pure cocoa. Strict control and legal prosecution of food forgers
led to an overall quality improvement of chocolate.

1.5. The 20th Century: a Mass Consumption

Until the 20th century, cocoa remained the exclusive privilege of a wealthy class. Cocoa
prices remained fairly high due to the high prices of production of the late 19th century. For
manufacturer and cocoa processers, the only possible way to grow their market laid in the
expansion of the high-‐income class.
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By 1900, two of the main ingredients to produce chocolate – cocoa and sugar – dropped in
prices thanks to the liberalization of trade and abolition of government taxes on cocoa. This
resulted in the growing number of consumers that in ten years time counted amongst them
middle class consumers.

In the meantime across Europe, the end of the 19th century and the beginning of the 20th
century saw the establishment of processing companies such as Barry Cabellaut who
produced chocolate for pastry chefs, bakers, and chocolatiers. The beginning of the 20th
century announced the boom of the industrialization of chocolate production all over
Europe and the US.

Belgium was the country at the forefront of innovation, with cutting edge fast production
methods and new marketing methods. For instance, the brand Leonidas created by the
Belgian family Kestekides sold their cheaper-‐priced pralines and chocolate confectionary
through window sales in the busiest streets of their cities, then in Europe, and nowadays
throughout the world.

In the late 1920s, another Belgian creation reduced the size of the widely renowned 150-‐
gram chocolate bar to smaller sizes of 30 grams to 40 grams. It allowed consumers to enjoy
chocolate bars as an individual indulging snack, with a more affordable price.

Another Belgium invention by Frans Cabellaut – one of the Cabellaut Company’s owners –
revolutionized this time the processing of cocoa. He revolutionized the process by
transporting the “brown gold” in liquid form. This practice lowered considerably the
chocolate production cost and allowed the integration of chocolate in a whole new range of
foodstuffs such as breakfast cereals, candy bars, filled bars and more.

The mass consumption trend seems to have started right after World War I. In 1923 the
American Frank Mars launched the Milky Way candy bar. Meanwhile, another American
chocolate producer – Milton Hershey – vastly expanded his chocolate sales through strong
99


marketing and advertising campaigns, capitalizing on the impulse purchases of chocolate in
main street grocery stores.
Historians say that lower and moderate-‐income families came to finally be introduced to
chocolate successfully during the inter-‐war of the 1930s to 1940s. Chocolate was the
cheapest foodstuff per kilocalorie compared to eggs and meat. Therefore chocolate became
widely popular, for it was a convenient foodstuff for workers to recuperate from heavy
labor.

During World War II, soldiers spread the love for chocolate even more. The popularity of
candy bars skyrocketed when each soldier was granted a bar as part of his ration for its
nutritive and nourishing characteristics.

After World War II and up to the 1980s, chocolate consumption became more integrated
into the daily dietary habits. Differences between consumption volumes and income groups
have almost completely disappeared. With the high level productions that we know today, a
global market in demand for more, and the wide range of product possibilities, the once
luxury cocoa products have become an affordable treat.

Since the 1990s, consumers’ habits have entered an era of wellness, fitness, and health.
Consumers are inclined to a more balanced attitude towards food in general. Still, chocolate
will has grown in popularity with its nutritional value, and its taste that makes it the ultimate
healthy pleasure when consumed moderately.

2.6. The 21st Century, a New Impulse for Chocolate

Nowadays trends tend to health-‐consciousness in several aspects. Health conscious
consumers will be looking for cocoa products with fewer calories, less sugar and fat.
Alternative options such as chocolate combination made out of fruits, herbs, spices, yogurt,
and others find popularity for their healthier benefits. Furthermore, sustainability has
become a more important part of buyers’ tendencies. More than ever consumers are
looking for fair-‐trade and sustainable certifications with organizational seals, etc.
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Check out sources

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2. History of Chocolate: Key Dates

1728: The family Fry sets up the first chocolate factory in Bristol, UK, using hydraulic
machinery and equipment to process and grind the cocoa beans.

1732: The French artisan Debuisson invents a table to grind cocoa. It still needs manpower
but it makes the processing more efficient and the hard work a little more comfortable.

1737: The cocoa tree gets an official Latin botanical name from Linnaeus: Theobroma Cacao.
The name refers to the mythical background of the tree and means literally: “cocoa, food of
the gods”.

1765: The introduction of chocolate in the United States did not occur until 1765 when John
Hannon brought the cocoa beans from the West Indies to Dorchester, Massachusetts, first in
terms of usefulness for medical purposes. Together with doctor James Baker, they started
the first chocolate factory in North America, manufacturing remedies for illnesses.

1778: In France, Doret built the first machine that automatically grinds cocoa beans.

1822: Global cocoa demand is on the rise as the world gets more and more excited about
chocolate. But political instability grows in Latin America and plantation workers become
scarce. Therefore cocoa traders seek new soil in which to grow the precious tree, which they
find in Ecuador, Brazil, Asia and Africa. It will take quite a few attempts, over decades, in
Africa though, before cocoa really becomes a success. As a consequence, the cocoa trade
gradually shifted from the ancient to the newer plantations.

1828: Dutchman Coenraad Van Houten invented the cocoa hydraulic press. The center of
the cocoa bean known as the “nib” contains an average of 54% of cocoa butter, a natural fat.
Van Houten’s machine reduced the cocoa butter fat by nearly half. The press makes it
possible to separate cocoa solids from cocoa butter. With this innovation Van Houten was
the first to establish a defatted cocoa powder that became much easier to dissolve in water
102


or liquids. In 1838 the patent expired, enabling others to produce cocoa powder and build
on Van Houten's success, experimenting to make new chocolate products. Casparus' son,
Coenraad van Houten, pioneered the alkalinisation of cacao, in order to modify its color, to
reduce its bitterness and give it a milder flavor and to enable it to dissolve better in aqueous
liquids.

1840: First pressed chocolate tablets, pastilles and figures are produced in Belgium by the
chocolate company Berwaerts. Or…

1846: British family Fry also claims to have molded and marketed the first solid chocolate
bar, suitable for consumption. Chocolate was originally consumed as a drink. Although
sometimes processed in confections, it never came by solid forms to be consumed on the
go. Halfway through the 18th century, chocolate in solid form still had a grainy, rough
texture, far from the smooth, refined chocolate we know today. It was Fry again who refined
the production process and so produced finer and more homogenous chocolate dough. The
quality of solid chocolate was improved in a major way.

1860: Ghirardelli, an Italian confectioner discovered how to produce almost completely fat-‐
free cocoa powder when one of his employees had put some leftover ground cocoa beans in
a cotton bag and left them overnight. The following morning Ghirardelli discovered that the
cocoa butter was absorbed by the bag and had seeped onto the floor. Ghirardelli later
engineered a way to extract cocoa butter from ground cocoa to create a very soluble cocoa
powder.

1865: In Italy, chocolate was first mixed with hazelnut paste. Also known as gianduja, it
became a very popular recipe that even led to the major success of “gianduietti”, small
bonbons of pure gianduja.

1875: The Swiss Daniel Peter first uses milk powder to create the first milk chocolate.
In the same period (1879), the Swiss Rudolphe Lindt also adds an important contribution to
the history of chocolate by engineering the first conching machine. In the conches, chocolate
103


is kneaded for hours until the warmth makes the last fluids and the unwanted, acidic aromas
of the chocolate evaporate. The result is fine tasting, creamy and rich chocolate with no off-‐
taste. Meanwhile, Henri Nestlé found a way to evaporate the liquid from milk and create
milk powder this way. A perfect invention that would rapidly lead to the creation of the first
milk chocolate tablets in Switzerland. It made them famous then and still does today.

With the new technologies making chocolate available to the masses, and for producers to
experiment other culinary creations, chocolate started to appear not only in the shape of the
candy bar, but became also more popular as an ingredient in confectionaries such as cakes,
pastries, and ice-‐creams.
104


3. Cocoa Main Three Varieties113

CRIOLLO

• Fine grade
• Large seeds
• Geography: Mexico, Central
America, Madagascar,
Indonesia
• World’s production: 5-‐10%

FORASTERO

• High yield and resistant to
diseases
• Flat-‐shaped seeds
• Geography: All over,
particularly in West Africa
• World’s production: 85%

TRINITARIO

• Fine grade
• Round or flat shaped seeds
• Geography: Caribbean,
Venezuela, Cameroon,
Papua New Guinea
• World’s production: 10-‐15%

113
Photo courtesy of Forest & Kim Starr. World Standards. The cocoa tree and its fruits. The World of
Chocolate. May 2014. http://www.worldstandards.eu/chocolate%20-‐%20cacao.html
105


4. Flow Chart: Transformation Process

FROM FERMENTATION TO FINISHED PRODUCT114

114
The Chocolate Review. International Cocoa Organization. Chocolate in the Making. May 2014.
http://thechocolatereview.com/where-‐does-‐chocolate-‐come-‐from-‐/where-‐does-‐chocolate-‐come-‐from.html
106


5. Production Of Cocoa Beans By Country115

115 ICCO Executive Committee. The World Cocoa Economy: Past & Present. London. Published in July 2010
107


6. Interview (1/3)
Phone Interview with Claire Castan, founder of the Castan Chocolaterie located in
Toulouse, France. Interview held on May 16, 2014

1. Depuis combien de temps êtes-‐vous artisan chocolatier ?
Nous existons depuis 1989, cela fait donc 15 ans cette année.

2. Comment vous fournissez-‐vous en cacao ? Pourriez-‐vous décrire les étapes du
processus d'approvisionnement?
Nous nous fournissons par les couverturiers français. C’est le cas de 95% des artisans
français. Il existe plusieurs couverturiers en France tels que Barry Callebaut, Valrhona, etc.
Bien entendu, je ne peux pas vous dire avec lesquels nous travaillons car les partenaires que
nous choisissons sont le reflet du cacao qui fait notre spécificité, ce qui va définir notre
qualité, respectabilité. Ce n’est donc pas directement mais à travers les couverturiers que
nous nous approvisionnons. Par ailleurs, le cacao que nous recevons de nos couverturiers est
déjà passé par des processus – fermentation, torréfaction, concassage, broyage, affinage –
que nous ne maîtrisons pas nous-‐mêmes (ou pas encore).

3. Choisissez-‐vous la provenance des fèves ? Si oui, comment, lesquelles et pour
quelles raisons ? Si non, pour quelles raisons ?
Oui, en fonction de leurs qualités gustatives, liées au terroir, aux cacaoyers typiques de
certains terroirs (cf. variétés des cabosses comme le Criollo, Forastero, National Equateur),
et de la filière (i.e. couverturiers et planteurs). La filière doit elle aussi être obligatoirement
de qualité, formée, et qui travaille pour les artisans chocolatiers.

4. Quelle est selon vous l'étape de la chaîne de valeur (de la production à la
distribution) qui génère le plus de valeur ? Celle qui en génère le moins ou est un
frein ?
L'étape la plus importante pour qualifier le chocolat, après la sélection du
lieu/cacaoyer/plantation est la fermentation (cf. notre tel sur la question 2). La
fermentation, c’est l’une des étapes du processus de transformation de la fève en cacao qui
108


va mettre en avant le goût du chocolat. C’est de là que vient son caractère acide. Mal
menée, cette fermentation peut déboucher sur la détérioration du goût du produit final de
toute une production. Il faut donc une certaine expertise et connaissance pour réaliser cette
étape dans le respect de l’art. Jusqu’à présent, cela est géré directement par les producteurs
de cacao, sur place.
Bien sûr, nous pourrions le faire nous-‐mêmes si nous avions nos propres plantations et ainsi
avoir une vue d’ensemble de la fève jusqu’à la barre de chocolat. Ce serait idéal ! Si nous ne
pouvons pas le faire nous-‐mêmes, c’est qu’il existe de nombreuses variables qui nous
limitent : les normes d'importations du pays, la taille de l'entreprise et son accès à
l’investissement, le savoir-‐faire lié à cette fermentation justement. Et aussi, plus nous
travaillons du cacao de provenances différentes, plus ces difficultés s’accumulent.

5. Etes-‐vous enclins à travailler avec des sociétés qui garantissent un respect et une
éthique de travail ? Si oui, lesquelles et pour quelles raisons ? Si non, pour quelles
raisons ?
Oui, je discutais d’ailleurs avec un de mes fournisseurs et lui proposait d’obtenir le label du
commerce équitable Max Havelaar pour sa production. Il correspond déjà aux standards
requis, puisqu’il rémunère ses fournisseurs de fèves au-‐dessus du prix minimum garanti de
2000 dollars la tonne de fèves achetées. Sa réponse était claire : « Max Haavelar est une
usine à gaz administrative ». Entre les chartes, certifications, et vérifications, les lourdeurs
administratives ont vite fait de décourager ceux qui s’y intéressent véritablement.

6. Fair Trade, cacao de l'agriculture biologique, et autres certifications et labels -‐ ont-‐ils
de l'importance, en faites-‐vous un avantage compétitif ? Qu'en pensez-‐vous ?
Le Fair Trade est parti de certains postulats très nobles notamment pour le café – où l’effort
de création de coopératives de planteurs a réellement fait progresser les systèmes de
production de café, de manière équitable – avec un prix d’achat garanti se situant au-‐dessus
du cours du café. Dans l’industrie du cacao, l’implémentation n’est pas aussi facile.
En termes de «Bio », pour biologique, il s’agit d’une production agricole qui s’abstient
d’usage de produits chimiques de synthèse). Soit ne pas utiliser de produits qui vont
impacter négativement la Terre (engrais et pesticides chimiques de synthèse, ainsi que des
109


OGM – Organismes Génétiquement Modifiés). Quoiqu’il en soit, le « Bio » est un principe de
production éthique pour une meilleure préservation de la terre. Un principe qui n’est
fondamentalement pas tourné vers le consommateur, ou le producteur.
Dans tous les cas, c’est difficile. Pourquoi : le Fair Trade, productions agricoles garanties Bio,
et autres certifications impliquent de se lier avec des producteurs à grande capacité pour de
grands volumes de cacao certifiés et vendus sur le marché. Les grands industriels tels que
Mars, Mondélez, Kraft peuvent financent ces projets qui bénéficient aux producteurs.
Cependant et contrairement aux artisans, la capacité de leurs installations permet la
transformation des volumes de fève de cacao en si grande quantité. C’est une affaire
d’échelle.
Ce qu’il faut retenir je pense, c’est que le label est bien entendu rassurant pour le
consommateur mais il ne fait pas la qualité du chocolat. L’avantage des artisans est que nous
avons une bonne perception et ressenti de ce qui se fait dans l’industrie – quelque soit le
label apposé sur les produits, nous pouvons facilement choisir avec qui travailler. Il n’y a pas
de bonne ou mauvaise façon de penser labels, chacun a sa propre voie. Au final, c’est le
consommateur qui décidera.

7. Quelle est votre perception de l'avenir après l'annonce de la pénurie de cacao d'ici à
2020 ?
Je ne suis pas inquiète. La pénurie annoncée est en fait une pénurie fictive qui ne concerne
que les grands groupes industriels. Pourquoi : avant tout, ils cherchent à faire de l'argent sur
tout. Après quelques études sur le marché asiatique notamment la Chine, ils se sont aperçus
que la consommation de chocolat par tête augmenterait de manière significative. Qu’à ce
moment-‐là seulement – soit quand chaque chinois se mettra à consommer du chocolat
comme peuvent le faire les Européens – le risque d’une demande plus grande que la
production sera réellement présente. C’est donc créer un manque que la Chine n'a pas.

Maintenant, c’est tout-‐à-‐fait leur droit de se préparer à cette éventualité. Il faut simplement
savoir que leur fonctionnement à des conséquences. Ce qui les intéresse, c’est de
développer des plants de variétés de cacao hybrides qui donnent une grande rentabilité aux
dépens du goût la plupart du temps. Avec une recherche en constante progression, la
110


pratique courante devient celle d'arracher les vieux arbres qui n’ont pas les propriétés de
rentabilité souhaitées. Il faut cependant savoir qu’on peut entretenir ces arbres qui pourront
continuer à produire grandement, au moyen de greffes. Celles-‐ci donneront d’ailleurs des
crus de cacao très intéressants au niveau gustatif. Mais cela ne correspond pas aux critères
de standardisation et rentabilité avec lesquels ils opèrent.

Je pense que la pénurie vient d’ailleurs. Elle est la conséquence de la pauvreté qui règne
dans les pays producteurs. Certains villages que j’ai pu visiter au cours de mes voyages en
Amérique du Sud n’ont pas l'eau courante ! Pour peu que les producteurs soient mieux
payés pour entretenir leurs cacaoyers avec par exemple l’utilisation d’engrais, les grands
industriels continuent de racler sur les prix.

Du côté des chocolatiers-‐artisans, de plus en plus ont l’envie d'aller vers les producteurs de
cacao et les aider à améliorer leur situation. Quelques-‐uns essaient de créer des partenariats
ce qui est à mon avis l’idéal pour avoir un peu plus de force et de moyens vis-‐à-‐vis des
grands groupes. Cependant c’est encore difficile à faire accepter car contrairement à ce que
l’on pourrait penser, il n’y a pas de confrérie entre artisans mais plutôt de la concurrence.
C’est dommage car réellement la compétition vient des supermarchés – ou le
consommateur ne partira pas sans sa barre de chocolat, et cela de septembre à mai tous les
ans. Tandis que le consommateur de chocolat artisan achètera du bon chocolat seulement
sur les périodes de Noël et Pâques. Les autres mois sont beaucoup moins accentués.
Alors finalement, je crois que le changement vient de chacun d'entre nous, de nos modes de
consommation, de ce que nous voulons pour nous-‐mêmes et pour la communauté.

8. Craignez-‐vous la pression des industriels tels que Mars, Nestlé, Mondélez en terme
d'approvisionnement, de rendements, de part de marché, ou autre ?
Non, il n’y a pas de pression. Des tensions surgiraient si et seulement si les artisans
chocolatiers français représentaient plus d’1% en volume de la vente de chocolat en France.
Mais nous n’en sommes pas là.

Si, parfois nous pouvons ressentir une sorte de pression quand par exemple au salon du
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chocolat pour professionnels – où sont présentés les grands crus entre autres, ils cherchent
à s’approprier la variété dans son intégralité en achetant toute la plantation et production.

9. Quelles sont selon vous les voies d'innovation et d'opportunités ?
Ce que l’on voit éclore de plus en plus, et que nous artisans ressentons particulièrement,
c’est cette période de changement profond qui commence à s’opérer. Il y a de plus en plus
d’artisans qui entrent sur le marché. Des artisans qui mettent en avant la richesse de
l’expérience gustative et la qualité intrinsèque du cacao. D’autres artisans, qui eux sont sur
le marché depuis une dizaine d’années, ont souhaité avoir leur propre plantation, comme le
maître chocolatier François Pralus qui possède 17 hectares de plantation à Madagascar. Il
livre notamment les maisons parisiennes Guy Savoy, Pierre Hermé, et Ladurée. Pierre
Marcolini, ce chocolatier belge fait lui-‐même ses couvertures ce qui lui permet de
sélectionner ses produits comme on peut le faire avec les grands crus des meilleurs vins. Ou
encore Stéphane Bonnat en Isère, France, qui conçoit chocolats et confiseries dans leur
totalité sur place dans la ville de Voiron.

C’est intéressant de voir que de grands noms de la cuisine étoilée comme Alain Ducasse
véhiculent de manière plus prononcée ce changement profond que nous observons. Avec
l’infrastructure et un financement assuré, ainsi qu’un nom mondialement reconnu, ils sont
un peu les porte-‐paroles des tendances innovantes d’aujourd’hui. La manufacture de
Ducasse est l’exemple parfait de ce dont on parle : les chocolatiers ‘intéressent maintenant à
maîtriser la chaîne de valeur de façon « Bean-‐to-‐Bar ».

De mon côté, le changement profond viendra certainement des enfants. Je trouve
particulièrement intéressant de leur apprendre d’où ce chocolat vient, la façon dont il est
transformé, et leur faire apprécier les variétés. Les enfants sont très réceptifs au chocolat de
qualité. J’ai eu beaucoup de retours de parents notamment qui me disaient que leurs
enfants ne voulaient pas de Kinder après avoir goûté au chocolat de chez nous ! Les enfants
sont certainement les vecteurs de ce changement profond et je pense qu’il faut continuer à
créer des expériences de découverte du bons chocolat pour eux.
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7. Interview (2/3)
Interview by email with Samuel Maruta, founder & Chairman at MAROU, Faiseurs de
Chocolat. Chocolate maker located in Ho Chi Minh City, Vietnam. May 20, 2014

Nous fabriquons notre chocolat depuis 2011, je ne suis pas sûr que nous nous définirions
comme 'artisan chocolatier'

2. Comment choisissez-‐vous la provenance des fèves ? Lesquelles et pour quelles
raisons ?
Notre concept est de faire du chocolat de la fève à la tablette avec des produits locaux, donc
tout notre cacao provient du Vietnam.

frein, une partie à améliorer ?
Question intéressante. Barry Callebaut le 1er fabricant de chocolat au monde a un CA moyen
de 5 Euros / kg de chocolat produit. Nous faisons un CA unitaire 3 fois plus élevé, avec bien
sûr des coûts unitaires plus élevés… mais je pense que la façon dont nous sélectionnons le
cacao et travaillons le cacao permet de générer plus de valeur ajoutée.

4. Quel est le volume de cacao dont vous avez besoin, pour quel niveau de production,
et quel volume de ventes ?
On produit environ 2t de chocolat par mois. Il nous faut un peu plus de 2t de cacao pour
produire cette quantité de chocolat.

5. Quels marchés importent vos produits ? Quel est le pourcentage d'export comparé
aux ventes sur place ? Est-‐ce que vous aimeriez que cela change ?
Nous réalisons les 3/4 de notre CA à l’export. Le pourcentage de ventes locales a peu de
chance d’augmenter.

113


6. Etes-‐vous enclin à travailler avec des sociétés qui garantissent un respect et une
raisons ?
Je vous invite à lire notre dernier post de blog sur ce sujet:
http://marouchocolate.com/post/85444522172/celebrating-‐world-‐fair-‐trade-‐day-‐our-‐way
“At the end of the day certification is by definition a bureaucratic exercise: a/ set norms,
b/put in place standards to verify the norms are being upheld, c/ be able to bury any query
under a ton of paper”116

Idem. Mais on s’intéresse plus aux principes (du Fair Trade) qu’aux labels; pour le bio, notre
attitude (pragmatique) est de travailler avec ce qu’on peut trouver de mieux sur place. Il n’y
a pas aujourd’hui de cacao certifié bio au Vietnam, mais s’il y en a bientôt il y a de fortes
chances pour que ce soit à cause de nous...

8. Que pouvez-‐vous dire de l'évolution du cours du cacao depuis ces dix dernières
années ? Cela impacte-‐t-‐il votre stratégie d'entreprise ?
Sur 10 ans je ne sais pas, mais depuis la crise ivoirienne en 2010-‐2011 les prix ont une
certaine tendance à flamber. On fait avec. Pour l’instant on essaie de limiter les
répercussions du prix du cacao sur nos prix de vente. Mais la corde ne peut pas se tendre
indéfiniment.

2020?
La pénurie (je préférerais parler d’un déséquilibre de l’offre et de la demande; c’est pas du
tout comme la disparition de certaines ressources halieutiques comme le caviar ou le thon
rouge …) va faire augmenter les prix du cacao et donc le prix du chocolat. Il y aura moins de
chocolat bon marché, et peut-‐être une offre plus diversifiée dans le chocolat haut de gamme
comme celui que nous produisons. Ca ne menace pas fondamentalement notre modèle de

116 th
Marou, Faiseurs de Chocolat. History. May 11 , 2014.
http://marouchocolate.com/post/55951688118/history
114


développement.

10. Avec l'augmentation certaine des coûts du cacao très prochainement, quelle
stratégie comptez-‐vous mettre en place ?
Prix de vente plus élevés, packaging plus petits, les trends qu’on voit déjà à l’œuvre.

11. Craignez-‐vous la pression des industriels tels que Mars, Nestlé, Mondélez en terme
Non, ils s’approvisionnent strictement au prix du marché, nous pouvons payer plus que le
prix du marché, parce que nous avons une véritable valeur ajoutée dans la sélection du
cacao et la production du chocolat.

12. Quelles sont vos plus grandes préoccupations ? Quelles sont selon vous les voies
d'innovation et d'opportunités ?
Nous travaillons le plus en amont possible pour garantir la qualité de nos
approvisionnements. Nous pensons que l’évolution du marché du chocolat vers un produit
plus diversifié vers le haut de gamme (à l’instar du vin) est porteur pour nous.

115


8. Interview (3/3)
Interview by email with Mathieu Alesi, Director at Puerto Cacao. Chocolate artisan located
in Paris, France. May 22, 2014

Puerto Cacao existe depuis 2007
2. Comment vous fournissez-‐vous en cacao ? Pourriez-‐vous décrire les étapes du

processus d'approvisionnement ?
Nous avions une filière d’importation directe de fèves de cacao du Venezuela. Mais depuis
2012, nous ne passons que par des importateurs français, puis par un transformateur en Ile
de France.
3. Choisissez-‐vous la provenance des fèves ? Si oui, comment, lesquelles et pour quelles
raisons ? Si non, pour quelles raisons ?
Oui nous imposons à notre transformateur une origine des fèves. C’est un vrai atout de
pouvoir proposer du chocolat fabriqué à partir d’un seul type de fèves. C’est comme les
millésimes dans le vin…
Nous travaillons avec des filières de Commerce Equitable donc l’origine est un élément
essentiel de la traçabilité que nous nous imposons.

frein ?
Comme souvent, ce sont les dernières étapes qui génèrent le plus de valeur, et cela au
détriment des producteurs de la matière première… Il s’agit donc de la transformation
chocolaterie fine (qui se fait en labo en France) et de la distribution (que nous gérons
intégralement).
5. Etes-‐vous enclin à travailler avec des sociétés qui garantissent un respect et une
116


raisons ? Est-‐ce une démarche difficile à acquérir et soutenir ?
Nous sommes une Entreprise Sociale. Nous travaillons à plus de 95% avec du cacao issu du
Commerce Equitable. Nous sommes une entreprise d’insertion et beaucoup de nos
partenaires et sous-‐traitants sont aussi entreprises d’insertion. C’est une démarche
compliquée, mais c’est clairement la raison d’être de Puerto cacao.
Nous travaillons essentiellement sur la transparence et la pédagogie. Nous avons environ

50% de nos produits labellisés Max Havelaar. Idem pour le Bio. Mais l’idée en Bio est de
parvenir à 100% de produits labellisés AB dès que possible.
7. Quel est le volume de cacao dont vous avez besoin, pour quel niveau de production,
et quel volume de ventes ?
Nous vendons environ 8 tonnes de chocolats (produit fini), dont 5 tonnes de chocolat brut.
Notre CA est de 500K€.
8. Que pouvez-‐vous dire de l'évolution du cours du cacao depuis ces dix dernières
années ? Cela impacte-‐t-‐il votre stratégie d'entreprise ?
Le prix du cacao monte, mais nous avons toujours travaillé avec des cacao fins, donc plus
chers que le marché. Nous ne sommes pas impactés par cette montée des cours.
2020?
Serein.
10. Avec l'augmentation certaine des coûts du cacao très prochainement, quelle
stratégie comptez-‐vous mettre en place ?
Rien de particulier à ce sujet.
117


11. Craignez-‐vous la pression des industriels tels que Mars, Nestlé, Mondelez en terme
Non.
12. Quelles sont vos plus grandes préoccupations ? Quelles sont selon vous les voies
d'innovation et d'opportunités ?
L’équilibre économique d’une PME est toujours compliqué à tenir.

118

The Cocoa Market in The 21 Century

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Table of Content

2. Evidences behind the Risk of Shortage ......................................................................... 32

3.2.1. Sharing a Sustainable Vision with Producers ..................................................................................... 71

Conclusion ....................................................................................................................... 88

2. History of Chocolate: Key Dates ........................................................................................... 102

a. A Better Understanding of the Cocoa Tree

d. Cocoa Tree Varieties

1.1.2. Harvesting, Fermenting, and Drying

1.1.3. Marketing, Trading, and Shipping

a. Distinction Physical and Futures Market

c. Export Warehousing, Stocking, and Grading

d. Packing & Shipping

1.1.4. Processing Cocoa

1.2. Cocoa-­‐nomics of the Supply Chain

1.2.2. International Cocoa Price Evolution from 2000 Onwards

concerns about cocoa supply for the year.

Average Internaaonal Cocoa Prices (in US$ per

Cocoa Price (in US$ per ton)

1.2.3. The Supply Chain Paradox

2. Evidences behind the Risk of Shortage

2.1. Actual Cocoa Market Structure: A Comprehensive Analysis

2.1.1. The Demand Side

obtain the product (i.e. Fair Trade or Max Havelaar seals of

Location to the perceptual concepts of traceability and clarity of all

processes from origin to final consumer. Original location and

2.1.2. The Supply Side

in each region are

b. Trade in Cocoa

2.2. A Forecasted Cocoa Shortage by 2020

2.2.1. What is a Shortage in the Cocoa Sector?

2.2.2. Causes of the Forecasted Shortage

a. El Niño / La Niña: Weather Disturbances

bring abnormally cooler temperatures across the globe49.

b. Aging Trees, Pests & Diseases

2.2.3. Implications on Worldwide Cocoa Supply

a. Inflation in Prices

b. Impact on Producing Countries

c. The Dependency Theory

THE GLOBAL SYSTEM ACCORDING TO THE DEPENDENCY THEORY72

Centers of Peripheries of

Centers of Peripheries of

3. The Emergence of Chocolate Artisans Worldwide: Drivers of Change

3.1. Understanding the Chocolate Artisan’s Phenomenon

3.1.1. What is a Chocolate Artisan

3.1.2. A Global Phenomenon?

3.1.3. Re-­‐Thinking the Supply Chain

3.2. Attributes of Success

3.2.1. Sharing a Sustainable Vision with Producers

a. Context within the Forecasted Shortage

b. Sources of Supply & Sustainable Management

3.2.2. Competitive Dynamics

3.3. Artisans: Drivers of Sustainable Development

3.3.1. The Creation of Shared Value

a. Empowering Farmers and Communities

b. Parallelism with Consumer Trends

3.3.2. The Prospective End of Standardization?

a. Why Location Matters

b. Valuing Heterogeneity over Standardization

1. Historical Context: From Origins to Today’s Consumption

1.1. First Appearances

1.3. Discovery Continued & the Start of Commercialization

1.5. The 20th Century: a Mass Consumption

1.2. Cocoa-‐nomics of the Supply Chain

3.1.3. Re-‐Thinking the Supply Chain

2. Comment vous fournissez-‐vous en cacao ? Pourriez-‐vous décrire les étapes du