Authors: GUSTAVO FERRO AND LISANNE GROOTHUIS GUSTAVO FERRO CONSULTING
This publication is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents of this publication are the sole responsibility of the Producers to Markets Alliance Program and do not necessarily reflect the views of USAID or the United States Government. This publication contains information protected by intellectual property rights, therefore we request that its contents be used appropriately and, if possible, confidentially.
Index Introduction
7
1.
9
Trade statistics: Latin America >> Europe
1.1 Cocoa paste
10
1.2 Cocoa butter
12
1.3 Cocoa powder
13
1.4 Couverture 14
2.
Europe: market trends and profile
19
2.1 General
19
2.2 Health products
20
2.3 Chocolate confectionery and other food industries
24
2.4 Cosmetics
27
3.
Latin America: best practices in cocoa derivatives
3.1 Sector collaboration
30
3.2 National strategy
32
3.3 Product profiling
35
3.4 Quality
38
29
3.5 Market representation
40
3.6 Market integration
42
3.7 Best practices: lessons learned and applicability to colombia
44
3.8 Best practices: companies, producer organizations and cooperatives
51
4.
Product specifications / technical sheets
53
5.
Events, trade fairs and databases
57
6.
Conclusions and recommendations
61
6.1 Identity and country image
61
6.2 Quality management and product quality
61
6.3 Sustainability
62
6.4 Diversification of target segments and markets + market access
63
Introduction
4
Trade Statistics
The study THE EUROPEAN MARKET FOR COCOA DERIVATIVES FROM LATIN AMERICA: OPPORTUNITIES AND CHALLENGES FOR COLOMBIA is aimed at identifying market and product opportunities for cocoa and cocoa products in Europe for Colombian producers, producers’ organizations and exporters in the context of USAID’s Producers to Markets Alliance (PMA). This intervention is part of a 5-year program (2017-2022), which takes place in 2021-2022 in priority municipalities in the departments of Antioquia, Bolívar, Caquetá, Cauca, Córdoba, Meta, Nariño, and Valle del Cauca. PMA seeks to strengthen legal economies in Colombia’s conflict-affected territories by increasing the competitiveness and value addition of alternative products and markets for producers that currently engage in illicit activities. These territories are home to resilient communities and entrepreneurial human capital, which has long been plagued by illegal economies, violence, and underdevelopment. Precarious institutions and decades-long armed conflict have given rise to narco-trafficking, illegal mining, and trafficking in persons and arms, all which threaten stability, security, and peace. PMA improves the capacity of rural producers and enterprises to respond to the quality standards and volume requirements of licit markets in selected conflict-affected areas where success is key to advancing Colombia’s peace. PMA helps close business deals between producers and buyers to increase incomes and employment opportunities for smallholder farmers, including women heads of household, and members of minority ethnic groups. PMA supports high-potential value chains, including cacao. To support the development of the cacao value chain, the study was commissioned by the Producers to Markets Alliance (PMA) to assist in filling the information gap that exists in the cacao market by linking private sector buyers that are seeking new product sources and/or require product volumes of differentiated cacao profiles to Colombian suppliers. In its first section, the authors review and explore the trade flows and developments therein between Latin American suppliers and Europe (European Union + Switzerland) for cocoa derivatives, giving details on main supplying countries per derivative, main exporting companies and key factors that play a role in their competitive advantage. Section 2 highlights the general market trends that can offer opportunities to cocoa derivative suppliers to Europe, as well as some of the challenges that they pose. It also describes the structure of the European market, particularly the different sourcing models of European companies that purchase cocoa derivatives directly or indirectly from cocoa-producing countries, organized per each market segment. This section also contextualizes the specific market opportunities and threats to Colombian suppliers.
Trade Statistics
5
Section 3 elaborates on various best practices across Latin America in the development, profiling, support and marketing of cocoa derivatives. These cases focus on interesting business models around 6 areas: (1) Sector collaboration, (2) National strategy, (3) Product profiling, (4) Quality, (5) Market representation, (6) Market integration. Together, these different case studies bring in specific elements that future interventions in Colombia can learn from, or adapt within the local context. The fourth and fifth sections of the report focus on practical information, whereby section 4 brings examples of specification sheets for each cocoa derivative, with details per product, company and country, which can serve for Colombian companies as templates to adapt their product presentation. Section 5 lists several events and trade fairs in Europe where buyers and other interesting market actors can be contacted. The section highlights some of these main events and trade fairs per market segment, as well as interesting databases that can be used to compile comprehensive buyers’ lists. Finally, section 6 brings together the main findings of the study, both in terms of market trends, structure and trade flows as well as case studies from other Latin American countries, to draw on the main conclusions and provides a series of recommendations aimed at improving and propelling the cocoa and cocoa derivative sector in Colombia. It addresses conclusions and recommendations around some key areas:
6
Trade Statistics
Identity and Country Image
Quality Management and Product Quality
Sustainability
Diversification of Target Segment and Markets + Market Access
1. Trade Statistics: Latin America >> Europe This section highlights the trade flows and developments therein between Latin American suppliers and Europe (European Union + Switzerland) for cocoa derivatives. The HS codes used correspond to the selection done in the study carried out for the Dutch Centre for the Promotion of Imports from Developing Countries (CBI): The European market potential for semi-finished cocoa products,1 with the exception of HS code used for Couverture [HS code 1806(…)]. HS codes 180620, 180632 and 180690 are most commonly used by Latin American exporters to register high-quality couvertures.
HS CODE*
DESCRIPTION
1803
Cocoa paste, whether or not defatted
1804
Cocoa butter, fat and oil
1805
Cocoa powder, not containing added sugar or other sweetening matter
180620**
Chocolate and other food preparations containing cocoa, weighing more than 2 kg
180632**
Chocolate and other food preparations containing cocoa, in blocks, slabs and bars, weighing less than 2 kg
180690**
Chocolate and other food preparations containing cocoa, in containers or immediate packings, weighing less than 2 kg
*Cocoa nibs do not have a specific HS code. The product falls under 1801: Cocoa beans, whole or broken, raw or roasted. **Couverture, but HS code 180690 is also the general category for chocolate in bars.
1
https://www.cbi.eu/market-information/cocoa-cocoa-products/semi-finished-cocoa-products/market-potential
Trade Statistics
7
1.1. Cocoa Paste European imports of cocoa paste in 2019 amounted to USD 3.3 billion, of which USD 10 million (0.3%) sourced in Latin America. The largest importers from Latin America in 2019 were the Netherlands (48%), Spain (20%), Germany (17%) and the United Kingdom (5%).
Table 1. Cocoa paste: European imports, total and from Latin America, in value, USD thousand 2015
2016
2017
2018
2019
Share, in %
Cocoa paste European imports
3,297,597
3,576,082
3,365,301
3,210,499
3,299,618
-
10,608
9,649
7,688
6,146
10,243
0.3%
Brazil
31
95
147
2,283
4,174
41%
Peru
465
1,092
1,527
1,292
2,872
28%
8,043
6,048
3,256
1,043
2,177
21%
Colombia
564
433
576
468
561
5%
Dominican Republic
776
1,192
1,302
350
202
2%
Other
729
789
880
710
257
3%
Netherlands
981
1,104
1,388
3,136
4,928
48%
Spain
304
1,128
440
3,61
2,061
20%
6,450
4,305
1,743
718
1,719
17%
527
824
667
644
475
5%
2,346
2,288
3,450
1,648
1,060
10%
from LATAM Main suppliers
Ecuador
Main destinations
Germany United Kingdom Other
Source: ITC Trademap and Eurostat, 2020
Brazil is Latin America’s largest supplier of cocoa paste to Europe, at USD 4.1 million in 2019. The largest contributor to Brazil’s position as a supplier to Europe is Joanes Industrial, located in the Brazilian state of Bahia, and part of the OLAM Group.2 Brazil’s cocoa sector has a particularity: it has adopted a drawback policy by exempting cocoa bean imports from tariffs, thereby encouraging industries
2
8
to engage in the processing of cocoa derivatives. The drawback policy allowed companies to import cocoa beans from producing countries like Ivory Coast and Ghana more cheaply, creating possibilities for blending – which in turn led to consistent products and lower risk in terms of raw material sourcing. On the other hand, it discouraged local production due to lower domestic demand and prices, and led to a
https://www.olamgroup.com/products-services/olam-food-ingredients/cocoa/cocoa-ingredient-brands/joanes.html
Trade Statistics
highly concentrated sector mainly dominated by multinationals Barry Callebaut, Cargill and OLAM / Joanes Industrial.3 Peru was the second largest supplier to Europe, at USD 2.9 million. Peru’s largest supplying companies are led by Machu Picchu Foods4, which accounted for the bulk of Peruvian exports of cocoa paste in 2019.5 The company is a leading processor and exporter of cocoa products and confectionery. Other Peruvian companies that led exports in 2019 were Villa Andina6, Exportadora Romex7 and Eco Andino.8 Peru’s cocoa production has been growing consistently in the last decade, at a rate of nearly 13%.9 In 2019, production reached 135,900 tonnes,10 compared to 64,281 tonnes in Colombia in 2019/2020.11 One important competitive advantage for Peru, which is further described in section 3, is the strong focus on organic cocoa production. Peru’s organic production area is one of the largest worldwide, at nearly 37,000 hectares in 201812 (more than 25% of total cocoa production). With the support of a clear market entry and promotional strategy led by PromPeru,13 organic certification has allowed Peru to access specific niche markets for cocoa beans and derivatives. Ecuador also played an important role, at USD 2.1 million in exports of cocoa paste to the European Union. Some of Ecuador’s largest exporting companies in this category and other derivatives are Cafiesa,14 COFINA15 and Eco Kakao,16 highly experience cocoa and cocoa-processing companies with high food-safety standards and strong linkages to the
market. Among the multinationals processing and supplying derivatives from Ecuador is Agroarriba, part of the ECOM Group17. Ecuador is the largest producer of cocoa beans in Latin America, thus having a wide availability of raw material and a competitive advantage in this respect. Ecuadorian production amounted to 345,000 tonnes in 2020.18 In addition, Ecuador is the largest producer of fine flavour cocoa in the world, having built tradition, market reputation and a processing industry around cocoa beans and derivatives, supported by a sector-specific association, the Asociación de Exportadores de Cacao (Anecacao).19 Colombia is a smaller supplier to Europe compared with other Latin American suppliers, with USD 561 thousand of cocoa paste exported to the European Union in 2019. Casa Luker, one of Colombia’s largest cocoa-processing companies, accounts for the bulk of these exports. The main destinations are Belgium, Germany and the United Kingdom, countries where Casa Luker has warehousing, representative offices and/or marketing and distribution activities. Apart from Colombia, the Dominican Republic also features among the top exporters of cocoa paste to Europe, at USD 202,000 in 2019. The Confederación Nacional de Cacaocultores Dominicanos (CONACADO),20 an agro-industrial organization for small and medium-sized producers, is one the largest cocoa and cocoa derivative exporter in the country. The organization has its own processing facility for the extraction and marketing of cocoa butter and cocoa paste mainly. Other Dominican companies
https://www.researchgate.net/publication/317421597_A_IMPORTACAO_E_EXPORTACAO_DE_CACAU_EM_AMENDOAS_E_DERIVADOS_ CONTEMPLADOS_PELO_SISTEMA_DRAWBACK 4 https://www.mpf.com.pe 5 https://www.agrodataperu.com/category/exportaciones/cacao-pasta-exportacion 6 http://www.villaandina.com 7 https://romex.pe 8 https://ecoandino.com 9 https://www.redagricola.com/pe/produccion-de-cacao-en-grano-crecio-126-al-ano-en-la-ultima-decada 10 https://repositorio.minagri.gob.pe/bitstream/MINAGRI/757/1/Commodities_cacao_enero-mar_2020.pdf 11 https://www.agronegocios.co/agricultura/el-ano-cacaotero-2019-2020-registro-un-crecimiento-de-10-llegando-a-64281-toneladas-3089992 12 https://www.fibl.org/fileadmin/documents/shop/5011-organic-world-2020.pdf 13 https://www.gob.pe/promperu 14 http://www.cafiesa.com 15 https://cofinacocoa.com 16 http://www.eco-kakao.com.ec 17 https://www.ecomtrading.com 18 https://www.eluniverso.com/noticias/2020/12/27/nota/8993653/cacao-record-exportacion-produccion-2020 19 http://www.anecacao.com 20 https://conacado.com.do 3
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9
supplying cocoa derivatives are Rizek Cacao21 and Biocafcao.22 The Dominican Republic is the largest producer of organic cocoa beans in Latin America and worldwide, with more than 81,000 hectares (more than half of its total production),23 having a wide availability of raw material for cocoa-processing into derivatives and stability in supplies. A long tradition in organic, often in combination with fair trade certification, has facilitated the access of producer-led organizations such as CONACADO to large-scale retail markets as well as niche markets for both cocoa beans and derivatives.
1.2. Cocoa Butter European imports of cocoa butter in 2019 amounted to USD 5.7 billion, of which USD 113 million (2.0%) sourced in Latin America. It is the product group for which Latin America has the largest contribution in terms of supply value. The largest importers from Latin America in 2019 were Germany (48%), the Netherlands (34%), France (5%) and the United Kingdom (1%).
Table 2. Cocoa butter: European imports, total and from Latin America, in value, USD thousand 2015
2016
2017
2018
2019
Share, in %
Cocoa butter European imports
5,274,679
5,365,430
5,343,494
5,511,786
5,705,259
-
68,287
131,641
103,630
128,189
113,492
2%
Peru
27,124
31,682
25,622
38,391
46,301
41%
Mexico
16,515
19,746
22,495
33,182
32,440
29%
Ecuador
8,555
27,823
19,398
21,342
13,503
12%
Colombia
4,148
12,129
4,152
10,974
10,407
9%
Dominican Republic
3,249
5,235
4,695
5,698
4,182
4%
Other
8,696
35,026
27,268
18,602
6,659
6%
Germany
11,729
44,354
53,215
60,379
65,620
58%
Netherlands
25,434
55,140
30,491
52,107
38,514
34%
3,317
8,745
5,100
10,792
5,812
5%
27,173
17,922
11,163
2,090
1,500
1%
634
5,480
3,661
2,821
2,046
2%
from LATAM Main suppliers
Main destinations
France United Kingdom Other
Source: ITC Trademap and Eurostat, 2020
https://rizekcacao.com http://biocafcao.com 23 https://www.fibl.org/fileadmin/documents/shop/5011-organic-world-2020.pdf 21 22
10
Trade Statistics
Peru was the leading Latin American exporter in 2019, supplying USD 46 million-worth of cocoa butter to Europe. Machu Picchu Foods was once again one of the leading exporters, followed by Exportadora Romex and Compañia Nacional de Chocolates de Perú, part of the large Group Nutresa.24 Mexico and Ecuador also feature among the largest exporters of cocoa butter to Europe. In the case of Mexico, processing takes place at a large scale by Agroindustrias Unidas de Cacao, part of the ECOM Group.25 The company sources cocoa beans from Mexico and other countries in the region, including Colombia, and processes them into derivatives. It’s also possible that AAK Mexico,26 part of the AAK Group, large supplier of vegetable oils and fats, plays a role in Mexico’s cocoa butter supplies as well. Ecuador’s position is reinforced by the companies that also play a strong role in cocoa paste. Colombia is also among the leading suppliers of cocoa butter to the European Union, at USD 10 million, accounting for around 9% of total European imports
from Latin America. Germany and the Netherlands are by far Colombia’s main target markets, dominated by the companies Casa Luker and Compañia Nacional de Chocolates, the country’s main cocoa processors. The Dominican Republic also supplies a considerable amount of cocoa butter to Europe, totaling USD 4.2 million in 2019, where the role of CONACADO as a supplier of cocoa butter to European companies like Lush (cosmetics) is prominent. As mentioned previously, other companies such as Rizek Cacao and Biocafcao also play a role in Dominican exports.
1.3. Cocoa Powder European imports of cocoa powder in 2019 amounted to USD 2.4 billion, of which USD 14 million (0.6%) sourced in Latin America. The largest importers from Latin America in 2019 were the Netherlands (48%), Germany (4%), France (34%) and Poland (2%).
https://gruponutresa.com/grupo-de-alimentos/chocolates http://www.agroindustriascacao.com 26 https://www.aak.com/contact 24 25
Trade Statistics
11
Table 3. Cocoa powder: European imports, total and from Latin America, in value, USD thousand 2015
2016
2017
2018
2019
Share, in %
Cocoa powder European imports
2,114,352
2,526,595
2,449,455
2,405,115
2,389,476
-
9,820
13,453
15,414
11,210
13,795
1%
Brazil
6,976
10,218
11,768
8,466
11,302
82%
Peru
1,270
1,630
2,355
1,618
1,187
9%
Dominican Republic
632
405
498
407
711
5%
Bolivia
136
237
81
35
263
2%
Ecuador
712
690
440
363
122
1%
94
273
272
321
210
2%
6,704
10,157
11,346
8,322
11,317
82%
Germany
458
197
681
531
565
4%
France
441
152
247
291
506
4%
Poland
237
414
612
607
271
2%
1,980
2,533
2,528
1,459
1,136
8%
from LATAM Main suppliers
Other Main destinations Netherlands
Other
Source: ITC Trademap and Eurostat, 2020
Brazil is Latin America’s largest supplier of cocoa powder to Europe, at USD 11 million in 2019. The largest contributor to Brazil’s position as a supplier to Europe is Joanes Industrial, located in the Brazilian state of Bahia, and part of the OLAM Group.27 The company’s cocoa powder has a wide range of profiles, both natural and alkalised, for various industrial applications. Peru, holding the second position at USD 1.2 million, has companies Machu Picchu Foods, Exportadora Romex, Eco Andino, Nutry Body28 and Villa Andina as largest exporters of cocoa powder. Dominican Republic, Bolivia and Ecuador complete the list; in Bolivia, the association of cooperatives El Ceibo29 plays an important role in supplying cocoa powder to Europe and other international markets.
1.4. Couverture The profile of the European imports for couverture under HS codes 180620, 180632 and 180690 varies significantly in terms of suppliers and target markets. Imports of HS code 180620 amounted to nearly USD 2.6 billion in 2019, of which USD 3.54 million (0.1%) supplied by Latin American exporters. HS 180632 amounted to USD 4.9 billion in 2019, of which only USD 1.7 million (0.03%) from Latin America. HS code 180690 recorded European imports of nearly USD 14 billion, of which USD 4.1 million from Latin America. Spain, France, Germany, the Netherlands, the United Kingdom, Belgium and Portugal were important importers for these categories.
https://www.olamgroup.com/products-services/olam-food-ingredients/cocoa/cocoa-ingredient-brands/joanes.html http://nutrybody.com 29 http://www.elceibo.com 27 28
12
Trade Statistics
Table 4. Couverture: European imports, total and from Latin America, in value, USD thousand 2015
2016
2017
2018
2019
Share, in %
Couverture HS code 180620 European imports
2,141,949
2,328,657
2,320,047
2,504,562
2,553,557
-
2,817
3,423
4,658
5,136
3,407
0.1%
Colombia
741
1,114
2,036
3,322
2,522
74%
Dominican Republic
919
1,126
1,247
1,188
483
14%
Ecuador
142
118
16
44
164
5%
Peru
914
882
1259
455
148
4%
Other
101
183
100
127
90
3%
United Kingdom
556
637
1,401
2,111
1,529
45%
Germany
617
495
532
504
678
20%
1,318
1,616
2,298
1,703
615
18%
73
0
262
688
394
12%
253
675
165
130
191
6%
4,181,499
4,310,879
4,467,214
4,611,509
4,905,319
-
1,182
2,719
1,341
1,493
1,704
0.03%
Ecuador
437
786
438
415
663
39%
Colombia
238
1415
306
440
427
25%
Mexico
65
67
91
154
132
8%
Peru
88
87
117
72
129
8%
Other
354
364
389
412
353
21%
Spain
113
244
398
337
455
27%
France
125
115
98
235
396
23%
97
133
147
136
163
10%
Netherlands
375
707
312
195
142
8%
Other
472
1,520
386
590
548
32%
from LATAM Main suppliers
Main destinations
France Belgium Other Couverture HS code 180632 European imports from LATAM Main suppliers
Main destinations
Germany
Trade Statistics
13
Table 4. Couverture: European imports, total and from Latin America, in value, USD thousand 2015
2016
2017
2018
2019
Share, in %
Couverture HS code 180690 European imports
12,493,857
12,720,868
13,037,355
14,056,484
13,766,175
-
3,763
4,225
3,782
4,087
4,121
0.03%
116
87
145
195
1,107
27%
2,121
2,017
2,107
1,683
967
23%
Brazil
542
803
482
520
598
15%
Colombia
161
143
196
305
403
10%
Ecuador
504
578
614
544
370
9%
Other
319
597
238
840
676
16%
1,890
1,782
2,211
1,744
1,169
28%
United Kingdom
331
271
148
170
1,100
27%
Portugal
163
263
273
412
482
12%
Spain
307
360
330
210
280
7%
Other
1,072
1,549
820
1,551
1,090
26%
from LATAM Main suppliers Mexico Argentina
Main destinations Netherlands
Source: ITC Trademap and Eurostat, 2020
Ecuador is among the largest exporters in all couverture categories, having companies such as Pacari,30 Hoja Verde31 and To’ak32 already exporting couverture to Europe. Mexico, Argentina and Brazil feature among the largest exporters of HS code 180690, which are likely related to chocolate products, not couvertures. As for Peru,33 companies Machu Picchu Foods, Compañia Nacional de Chocolates de Perú, as well as other confectionery companies such as Molitalia34 and Arcor de Perú35 lead exports. The Dominican Republic is supplier of couvertures under HS code 180620, for which the main exporters
are possibly companies such as Cortés Hermanos36 and Munné,37 some of the country’s largest chocolate manufacturers. Colombia is by far the largest supplier of couvertures under HS code 180620, and only behind Ecuador in exports of couverture belonging to HS code 180632. It is among the main Latin American suppliers of HS code 180690. In all categories, Casa Luker is Colombia’s dominant exporter. As mentioned previously, the company has warehousing, representative offices and/or marketing and distribution activities in
https://www.pacari.com https://hojaverdechocolate.com 32 https://toakchocolate.com 33 https://www.agrodataperu.com/2018/04/chocolate-peru-exportacion-2018-marzo.html 34 https://www.molitalia.com.pe 35 https://www.arcorencasa.pe 37 https://chocolatecortes.com 37 https://www.munnerd.com 30 31
14
Trade Statistics
its main target markets in Europe, United Kingdom, Germany and Belgium – these are also the main destinations for the company’s couverture exports. Other Colombian companies do not have a structured market presence for couvertures, and exports are small
and erratic to Europe. In addition, most Colombian chocolate confectionery companies, which are outside of the scope of this study, find interesting and more scalable markets in Latin America, the United States and Japan.
Trade Statistics
15
16
Trade Statistics
2. Europe: Market Trends and Profile This section highlights the general market trends that can offer opportunities to cocoa derivative suppliers to Europe, as well as some of the challenges that they pose. It also describes the structure of the European market, particularly the different sourcing models of European companies that purchase cocoa derivatives directly or indirectly from cocoa-producing countries, organized per each market segment. The information presented in this section was gathered through a combination of secondary sources such as annual reports of European companies, their product offer at trade fairs, their marketing materials such as websites and social media pages, news articles as well as primary sources, where selected interviews were conducted with key companies (traders, manufacturers, brands) in the value chain of cocoa and cocoa derivatives, and sector experts. Next to this report, a list of potential buyers was delivered to the project team, ranked according to different parameters indicating their level of interest to Colombia. This list was compiled according to the interviews conducted for this study as well as to the existing market knowledge of the study’s authors.
room for companies in developing economies to process their cocoa products further as a means for value addition at origin.
• An example of a European company adhering to this business model is ethical trading company Gepa38 (Germany), which buys cocoa beans and cocoa butter in Latin America and West Africa directly. Another example is trader Saldac39 (France), which outsources the processing of cocoa butter to a small chocolate factory in Lima.
• The European market also experiences different investment models for further processing of cocoa at origin. These models often facilitated by impact investment funds and development banks, such as in the case of Chocolatemakers (Netherlands), which supported the Peruvian cooperative Norandino in building a cocoa-processing facility with own funds as well as Rabobank loans and support from alternative trading companies Equal Exchange40 (USA) and Ethiquable41 (France/Belgium).
• Based on the movements in the European mar-
2.1. General TRENDS Sourcing cocoa products from origin is propelled by the beyond fair trade trend A small number of ethical companies that handle cocoa products increasingly follows the idea of beyond fair trade. This implies that ethical companies give
ket, some organizations have also taken on the mission to promote and market products fully produced in origin countries, including chocolates. Examples are the French Agency for the Valorisation of Agricultural Products (AVPA),42 organising a yearly contest for chocolates produced at origin.43 There are also some distributors of chocolates that have tree-to-bar products in their assortment, such as the online shops Chocoladeverkopers44 and Clear Chox45 (Netherlands).
https://www.gepa.de/produkte/schokolade-snacks-honig/schokolade-kakao.html?tabbed=1 https://saldac.com/boutique/chocolats/beurre-de-cacao-cru-en-morceaux-bio 40 https://equalexchange.coop 41 https://www.ethiquable.coop 42 https://www.avpa.fr/home-en 43 https://www.avpa.fr/chocolats-enz 38 39
Europe
17
Sustainability certifications: Fairtrade and organic certified cocoa products gaining popularity in Europe In the European food market, the demand for and sales of Fairtrade and organic-certified cocoa and chocolate products have gone up in recent years. The growing importance of sustainability and ethical sourcing in Europe, brings opportunities for the export of Fairtrade and organic-certified cocoa products from origin.
• The sales of Fairtrade and organic-certified chocolate products have grown all over Europe. Some popular brands have strongly positioned themselves in this segment, such as French / Belgian brand Ethiquable.46 Several large European retailers have also committed to chocolate products with double certification, for instance Aldi47 (Germany) with its Just Organic chocolate line.
• The popularity of double certification is underlined by the fact that large chocolate manufacturers/brands Cocoa Barry48 (Belgium) and Valrhona49 (France) both have organic and fair trade certified couvertures in their assortments.
• Cooperatives and companies in some producing countries have already latched onto this trend by offering double certified (organic + fair trade) cocoa derivatives to the European market. An example is Peruvian company Organic Crops.50
2.2. Health Products TRENDS Cocoa derivatives consolidate their position on the European health market European consumers are increasingly drawn to the health benefits of cocoa. In 2014, the European Food Safety Authority (EFSA) approved a health claim related to cocoa.51 A health claim substantiates a product’s nutritional properties, which has helped to consolidate and strengthen the positioning of cocoa within the European health market. Cocoa nibs and cocoa powder have especially been positioned well in the market. Hence, most opportunities in the European health market are found for these products.
• Many European health brands have both cocoa nibs and cocoa powder in their assortment. Examples of brands offering both products include: Navitas,52 Naturya53 and the Raw Chocolate Co54 (United Kingdom). Cocoa nibs and powder are mainly marketed as ingredients to add to oatmeal, granola, yoghurts or smoothies. Nibs are also promoted as a nutritious snack, and cocoa powder as the ingredient to make hot chocolate.
• The health benefits and properties of cocoa are linked to their flavonoids. The health benefits associated to flavonoids in cocoa include lower blood pressure, improved blood vessel health and improvement in cholesterol levels.55 Research also suggests that cocoa’s properties can provide stronger protection against influenza-virus infection.56
https://chocoladeverkopers.nl/en/shop https://clearchox.com 46 https://www.ethiquable.coop/gamme/chocolat-issu-commerce-equitable-lagriculture-bio 47 https://www.aldi.com.au/en/groceries/pantry/just-organic/just-organic-detail/ps/p/just-organic-dark-chocolate-100g 48 https://www.cacao-barry.com/en-OC/chocolate-couverture-cocoa/chd-o734bnfzl/chocolat-de-couverture-noir-biologique 49 https://us.valrhona.com/chocolate-culture-article/organic-fair-trade-range 50 http://organiccrops.net 51 https://efsa.onlinelibrary.wiley.com/doi/epdf/10.2903/j.efsa.2014.3654 52 https://navitasorganics.com/collections/cacao 53 https://naturya.com/single-ingredients 54 https://www.therawchocolatecompany.com/collections/make-your-own 55 https://www.sciencedaily.com/releases/2015/09/150910110832.htm 56 https://pubmed.ncbi.nlm.nih.gov/25847473/ 44 45
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• The EU approved health claim is as follows: “Cocoa flavanols help maintain the elasticity of blood vessels, which contributes to normal blood flow.” The authorised conditions of use of the claim are: “Information shall be given to the consumer that the beneficial effect is obtained with a daily intake of 200 mg of cocoa flavanols. The claim can be used only for cocoa beverages (with cocoa powder) or for dark chocolate which provide at least a daily intake of 200 mg of cocoa flavanols with a degree of polymerisation 1-10.”57
• An example of an European chocolate brand using the EU approved health claim on its labels is Lavle, by The Good Chocolate Company58 (Belgium).
• Not all associated health benefits of cocoa are officially approved health claims by the EU. That means that statements relating to these benefits may not be used on final product labels. Still, health brands actively promote the benefits of using cocoa products by revealing their nutritional profile. For instance, Naturya (United Kingdom) lists on its website the following benefits of cocoa nibs: “Source of magnesium to nourish mental wellbeing; Rich in copper to support immunity; Copper & magnesium help to energise the body”.59 Cocoa powder benefits listed by the Natural Health Market (United Kingdom) are: “Vitamins C & K, along with the mineral magnesium, phosphorus and potassium help boost the immune system, reduce oxidative stress that can reduce premature ageing”.60
• The global consumption of cocoa nibs as final products is expected to grow at an average annual growth rate of 8.1% between 2020 and 2027.61
Organic certification often a pre-condition to enter the health segment Most of the cocoa nibs and cocoa powder destined for the end-consumer health market are organic-certified. Given that organic certification is an important market requirement to enter the health segment in Europe, gaining organic certification may facilitate market access of Colombian cocoa nibs and cocoa powder. However, always keep track of how the health market in Europe is developing to adopt market entry strategies accordingly.
• Organic certification in the health segment is increasingly important, as organic products are considered healthier, safer and of better quality than conventional food products. They are also associated to better traceability, another important market trend in Europe.
• Examples of organic end-consumer cocoa nibs and cocoa powder are those of supermarket brand Albert Heijn62 (the Netherlands), Ecolife63 (Spain), the Natural Health Market64 and Naturya65 (United Kingdom).
Less processing is a trend in some European markets Next to organic, a growing trend in the health segment is the consumer demand for less processed ingredients. One food supplement company interviewed indicated, for example, that consumers are currently looking for natural cocoa powders, and sales of alkalized cocoa powder in this segment is experiencing a decrease. However, this will vary per market as well. In the United Kingdom, for example, consumers have a preference for roasted cocoa nibs due to the stronger taste, while Dutch consumers tend to prefer raw cocoa nibs.
https://efsa.onlinelibrary.wiley.com/doi/epdf/10.2903/j.efsa.2014.3654 https://thegoodchocolatecompany.com 59 https://naturya.com/superfood-snacks/cocoa-nibs 60 https://www.thenaturalhealthmarket.co.uk/collections/cocoa-coconut/products/organic-cocoa-powder 61 https://www.grandviewresearch.com/industry-analysis/cocoa-nibs-market 62 https://www.ah.nl/producten/product/wi470033/ah-biologisch-cacao-nibs 63 https://ecolifefood.com/idiomas/en/cacao-nibs-250-g 64 https://www.thenaturalhealthmarket.co.uk/collections/cacao-coconut/products/organic-cacao-powder 65 https://naturya.com/superfood-snacks/cocoa-nibs 57 58
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SOURCING Cocoa products for the health market mainly enter the European market through ingredient importers, often specialised in organic assortments. Examples of these include Rhumveld Winter & Konijn,66 Health Ingredients Trading67 and DO-IT68 (the Netherlands), Super Nutrients69 (United Kingdom) and Acanchia,70 Naturkost Übelhör71 and CARE Naturkost72 (Germany); alternative trading company Saldac73 (France) is another example. These importers deal with a large variety of ingredients – dried fruit, grains and seeds, coconut products, etc. The larger importers will have as many as 4,000 ingredients in their portfolios. Health product companies and brands are usually too small to import directly from origin. According to a food supplement company interviewed, each cocoa ingredient only commands annual sales volumes of 2-4 tonnes; it is thus not cost-effective for brands to source directly in producing countries, and it can be risky from a business perspective. As such, they source cocoa derivatives from ingredient importers – who facilitate pre-finance, logistics and other risks
https://rhumveld.com https://www.healthingredientstrading.com 68 https://www.organic.nl/ingredients 69 https://www.supernutrients.co.uk 70 https://www.acanchia.com/en-gb 71 https://www.organic-germany.com/index.php?Home 72 https://www.care-natur.de/?lang=en 73 https://saldac.com 66 67
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such as food safety (microbiological, chemical, heavy metals) and currency exchange. If companies are able to source full containers from trusted suppliers, direct relationships could become interesting. Some details on accessing the health segment through importers:
• The requirements of importers are quite strict, both in terms of volume as well as quality. Most importers will start business at minimum 1 full container (~13.2 tonnes) – which can consist of various consolidated products, not only cocoa derivatives. Cocoa butter, if not transported in a reefer container (so that it doesn’t reach a melting point), needs to be placed in a cool box within a regular / ambient container consolidated with other ingredients.
• A highly important aspect when consolidating containers is to strictly separate organic from conventional ingredients so as to avoid cross-contamination.
• Orders can happen as frequently as every 3 months, which is the average storage period in an importer’s warehouse, due to product rotation requirements. According to a trader of organic ingredients interviewed, importers may operate with volumes of around 300 tonnes of cocoa derivatives per year, of which more than half consists of cocoa nibs.
• It is important for suppliers to have a wide assortment of cocoa varieties and qualities. Even though some consumers and segments do value derivatives made exclusively from Criollo cocoa, for example, volumes are not sufficient to fuel the entire market – and prices are higher than for non-specialty varieties. Still, many importers and brands will communicate to consumers that the derivative is made from Criollo cocoa beans or, for example, from Ecuador’s Arriba Nacional variety.
• In terms of quality, importers increasingly require high-level food safety standards. The same organic ingredient trader indicated that the industry has been moving from HACCP-only to Global Food Safety Initiative (GFSI)74-recognized standards IFS Food75 and British Retail Consortium (BRC).76
ly competitive. The importing company has its own processing facility, the Crown of Holland78, with a cocoa-processing capacity of ~ 10,000 tonnes per year. TradIn’s organic-certified cocoa is sourced largely from Dominican Republic, Peru and Sierra Leone, and processed into cocoa nibs, butter, paste and powder. Interestingly, further-processed derivatives, as opposed to natural ones, such as deodorized cocoa butter or alkalized cocoa powder will be sourced from within Europe, possibly due to food safety and technical / consistency requirements. Most raw cocoa nibs, for example, will be sourced directly from producing countries, mainly Peru. The websites of Dutch company DO-IT79 and German CARE Naturkost,80 for example, show the origins of their cocoa derivatives. According to a buyer of health ingredients interviewed, health companies may also choose to adopt a hybrid sourcing model, where different cocoa derivatives may come from different companies due to preferences in origin, quality and business relations.
RELEVANCE FOR COLOMBIA
when it comes to cocoa derivatives due to its sustainability track record. Sourcing from West Africa can be risky for an importer due to sustainability problems such as child labour and modern slavery.
The health segment could represent an interesting market for very specific Colombian suppliers already inserted into niche markets, especially organic. As highlighted above, organic certification is often a pre-requisite in this market. This is still a clear limitation for Colombia, since the availability of certified raw material is low in the country. For example, the Dominican Republic has an organic cocoa production of over 81,000 hectares (53% of total cocoa production) and Peru reached nearly 37,000 hectares (26% of total cocoa production) in 2018 – compared to 381 hectares in Colombia, at 0.3% of total cocoa production.81
Alternatively, health product companies also source from European processors. Within the health segment, TradIn Organic77 (Netherlands) is high-
At the same time, companies such as Fruandes,82 which have a clear focus on organic cocoa (beans) and other traditional products of Colombian biodiver-
• The main mycotoxin and cadmium contamination risks lie in cocoa nibs and cocoa powder, and less in cocoa butter.
• South America is generally a preferred region
https://mygfsi.com https://www.ifs-certification.com/index.php/en 76 https://brc.org.uk 77 https://www.tradinorganic.com 78 https://www.crownofholland.com 79 https://www.organic.nl/ingredients/various/cocoa-and-carob 80 https://www.care-natur.de/wp-content/uploads/2020/02/CARE_Sortimentsliste_2020_web.pdf 81 https://www.fibl.org/fileadmin/documents/shop/5011-organic-world-2020.pdf 82 https://fruandes.com/es 74 75
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sity could find success in the health market due to their general profile and product focus. Such companies could have an advantage in terms of their track record on the market, existing linkages to buyers, and possibilities to diversify their target markets with a combination of various organic-certified ingredients. Another pre-requisite lies in food safety; buyers increasingly expect their suppliers of ingredients, among which cocoa derivatives, to be processed in manufacturing plants complying with advanced standards, preferably recognized by the Good Food Safety Initiative (GFSI): IFS, BRC, FSSC2220.83 In addition to supply stability, compliance with product specifications and logistics, food safety requirements can make it even more difficult for producer organizations to access the market directly, creating a strong need for collaboration with existing industries that have such capacities.
2.3. Chocolate Confectionery and Other Food Industries TRENDS Early trend: interest in single-variety and single-estate couverture and cocoa powder Origin has become increasingly important in the food and ingredient sector,84 both for taste as well as for marketing ends. Statements about ‘single origin’ have become so widespread, that chocolate products with these claims are now found across all quality categories. Chocolate makers and pastry chefs in the higher-end segments of the market are therefore increasingly looking for ways to differentiate their products. This has resulted in an upcoming interest in single-variety and single-estate cocoa products like couverture, and in a lesser extent also cocoa powder and paste.
• There is a rising demand from pastry chefs and bakers for high-quality cocoa ingredients. As a response, Olam Group, for instance, has started to sell high-quality cocoa powder in kilo-packages directly to this segment. Previously, Olam only sold cocoa powder in large quantities of several tonnes.85 It is too early to predict whether this provides opportunities or threats for other suppliers. On the one hand, the general trends of large companies are often followed by smaller companies, providing opportunities. On the other hand, it could be a threat because Olam taps into opportunities that could otherwise be seized by smaller companies.
• Some companies have tapped into the trend of offering single-estate cocoa powder, such as Willie’s Cocoa86 (United Kingdom). They offer, for instance, cocoa powder from a single estate in Medellin. Again, also the market for single-estate cocoa powder is a small niche market, though it might grow further, as the offering of single-origin cocoa powder has started to take off.87
• The market for single-variety and single-estate couverture is also very niche and strongly orientated to the highest-end segments. Single-variety and single-estate couverture are gaining popularity because they allow for traceability and unique flavour profiles. These elements are increasingly important on the European market and are especially valued in the higher-end segments.
• Chocolaterie de l’Opéra88 (France) is an example of a European company active in this market segment – they have a specific product line of single-variety couvertures.
https://mygfsi.com https://www.foodingredientsfirst.com/news/storytelling-winning-with-words-leads-innova-market-insights-top-trends-for-2020.html 85 https://www.foodingredientsfirst.com/news/olam-cocoa-launches-venture-for-chefs-bakers-and-patissiers.html 86 https://www.williescacao.com/buy-chocolate-online/cooking-chocolate 87 https://www.magzter.com/article/Business/Food-Marketing-Technology-India/Why-Single-Origin-Cocoa-Ingredients-are-on-the-Rise 88 https://www.chocolateriedelopera.com/en/the-range/les-pures-plantations 83 84
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SOURCING CHOCOLATE CONFECTIONERY Supplying cocoa derivatives to chocolate companies may be challenging, remarkably to bean-to-bar makers. These are companies that control the entire creative process of the product, and will source the cocoa beans directly from origin or via specialized importers such as Dutch company Daarnhouwer.89 However, not all chocolate manufacturers or chocolate makers will produce chocolate from the bean, and will demand cocoa derivatives – mainly cocoa paste and butter and, in some instances, couverture. According to an importer and distributor of cocoa beans and derivatives, selling cocoa derivatives to chocolate companies is very challenging. Larger chocolate companies require large and consistent volumes, and will use derivatives from suppliers such as Cargill, OLAM and Barry Callebaut, as well as other European manufacturers like ICAM (Italy),90 CÉMOI91 (France) and Tradin Organic (the Netherlands) – the latter for organic derivatives. These companies can offer a wide assortment at accessible prices and standardized/consistent quality, with the possibility of blending different origins. Smaller chocolate makers in markets such as Switzerland and Belgium will also mainly source derivatives from European manufacturers such as Felchlin and Barry Callebaut. Alternative access to the market will mostly happen through importers (as highlighted in the previous section) or through specialized representatives / importing agents in the European market. In addition to direct distribution to chocolate makers and manufacturers, cocoa derivatives are also made available via e-commerce platforms such as Chocolats de
Luxe,92 Terra Elements93 (Germany), HB Ingredients,94 Chocolatiers95 (UK), among other.
• There are specialized importing agents such as Campo Lindo96 and Cocoa Supply (vertically integrated to Ecuadorian manufacturer Cafiesa)97 (the Netherlands) distributing cocoa derivatives to chocolate manufacturers and smaller chocolate makers in Europe. The business model is similar to that of the Colombian company Casa Luker; while manufacturing takes place in Colombia, the storage and distribution activities happen in Europe to increase efficiency, market presence and competitiveness.
• Delivering small quantities to chocolate companies requires logistics capacity. Most of these agents will therefore use third-party warehousing and logistics services.
• According to an importer of cocoa derivatives, the frequency of orders from clients is very variable. Small and medium chocolate makers will mostly purchase ingredients every couple of months and will change suppliers often. The market for derivatives is very price-sensitive and buyers will make infrequent orders.
• The specific derivative demanded will depend a lot on what the end-user is making. Chocolate makers will sometimes request 2-3 origins for the cocoa liquor / paste from Latin America, and order cocoa butter from cheaper and lower-quality West African origins.
https://www.daarnhouwer.nl https://www.icamcioccolato.com/en 91 https://group.cemoi.com 92 https://www.chocolats-de-luxe.de 93 https://www.terraelements.de 94 https://hbingredients.co.uk 95 https://www.chocolatiers.co.uk 96 https://www.campolindocacao.com 97 https://cocoasupply.eu 89 90
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• In this respect, natural cocoa butter from high quality origins is a particularly promising product that still faces a latent market. This is because it is possible to mix natural high-quality butter with liquor that is not of very high quality to improve the taste profile of the chocolate. According to a distributor handling various cocoa beans and derivatives from Latin America, European chocolate makers do not understand that well yet, and fail to see the difference between deodorized and natural butter. Most European pastry chefs and chocolatiers buy their couverture from the two largest manufacturers: Callebaut and Valrhona. Both typically offer couvertures that are a blend from multiple origins and varieties. Callebaut,98 however, also included a single-variety couverture in its assortment: the Arriba Nacional couverture of beans from Ecuador.99 Other companies that have presence in this market are Felchlin100 (Switzerland), Bonnat101 and Michel Cluizel102 (France). Keep in mind that many pastry chefs and chocolate makers may not be keen on switching brands as they will have worked with their couverture brands for years and changing implies adapting to new textures and flavour profiles – a cost that those not active in the highest-quality segment may not be willing to make.103 Some companies at origin found innovative solutions to handle this hurdle:
• An example of a company at origin that has launched a single-variety couverture (of the Mayan Red variety) is Xoco Gourmet104 (Honduras / Denmark). Their couverture has been developed in consultation with chocolatiers and pastry chefs in consuming markets around the globe. Xoco Gourmet has an office in Eu-
rope (Copenhagen, Denmark), which facilitates the sales of couvertures in small volumes on the continent. Read more about this case in the section LATIN AMERICA: BEST PRACTICES IN COCOA DERIVATIVES.
• Ingemann105 (Nicaragua) also offers cocoa products of single-estate and single-variety. The company has a direct exclusive distributor for its cocoa products in Europe: Crafting Markets,106 while its couverture and chocolates are manufactured in its Danish-based factory Ingemann Chocolate.107 Read more about this case in the section LATIN AMERICA: BEST PRACTICES IN COCOA DERIVATIVES.
OTHER FOOD INDUSTRIES As in the case of larger chocolate companies, food industries will require large and consistent volumes. In the food industry, accessible prices and standardized/consistent quality are crucial. Food industries will mainly use derivatives (remarkably cocoa powder) from suppliers such as Cargill, OLAM and European manufacturers like ICAM (Italy),108 CÉMOI109 (France) and TradIn Organic (the Netherlands), for organic derivatives. Because cocoa is just one of the ingredients in food products, food companies are often not able to manage several value chains and, because the cocoa value chain presents several risks, manufacturers will prefer to externalize these risks to importers / importing processors in Europe.
RELEVANCE FOR COLOMBIA The confectionery segment is where Colombia is most active for both cocoa beans and derivatives. In derivatives, specifically, Casa Luker dominates Colombian
https://www.callebaut.com https://www.callebaut.com/en-OC/chocolate-cocoa-nuts/chm-q415ar/arriba 100 https://www.felchlin.com 101 https://bonnat-chocolatier.com 102 https://www.cluizel.com 103 https://www.thechocolatejournalist.com/blog/craft-chocolate-couverture 104 https://xocogourmet.com 105 https://ingemann.com.ni 106 https://www.craftingmarkets.com 107 https://ingemannchocolate.com 108 https://www.icamcioccolato.com/en 109 https://group.cemoi.com 98 99
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exports due to its European representation model, with activities like warehousing, marketing, distribution, etc. carried out in the destination market, which allows the company to handle small orders / volumes from smaller-scale chocolate makers, confectionery and other food industry players – the market is very fragmented. In order for other Colombian companies to reach high volumes and a certain level of success in this market, working according to similar business models or in collaboration with existing companies may be needed. A market representative may be an agent, an entire company or a branch / office in Europe. More details about this business model (Market Representation) are given in section 3 of this study. A reason as to why Colombia has opportunities to expand its presence on the European confectionery market has to do with marketing and the existing market linkages of Colombian suppliers. Colombia has strong potential in promoting its regional cocoa profiles, and the chocolate market is strongly oriented towards storytelling. In fact, Colombia has shown increasing presence in bean-to-bar chocolates in Europe, with regions such as Tumaco and Sierra Nevada and communities such as Arhuacos gaining buyer and consumer recognition. In short, there is potential to convey similar messages through derivatives within the chocolate market and to optimize its existing contacts / channels with chocolate makers. Colombia is also indirectly involved in larger food industries, with processing happening in third countries like Mexico and Malaysia, which are large buyers of Colombian cocoa beans. However, these are segments with little value addition, especially for the producer, and for which Colombia may not be able to compete successfully in terms of volume.
2.4. Cosmetics TRENDS Sustainability and naturalness fuel the market for cocoa butter in cosmetics The market for natural and organic cosmetics is growing. In Europe, sales of natural and organic cosmetics have grown at an average of +7% per year over the past five years and are expected to reach 5 billion euros by 2023.110 European consumers are increasingly demanding high-quality and organic ingredients. Besides, consumers are concerned about the social and environmental impact of ingredients used in cosmetics brands, hence demand greater transparency. Fair trade certification is also associated to impact, and has also been growing in several cosmetics ingredients, including cocoa butter. Every year a growing number of cosmetics products containing cocoa is launched on the market. In 2014, an estimated 1,251 new products were introduced to the market, while in 2018 an estimated 2,130 products entered the market. An estimated 51% of these product launches in 2018 classified as ethical-ecological, for which the USA and United Kingdom are the largest markets.111 The main categories are body care (38%), facial care (9%) and lip care (9%). Cocoa butter is by far the main cocoa ingredient used in cosmetics. Cocoa butter is listed on EU’s official database for cosmetic ingredients (CosIng), with INCI Name THEOBROMA COCOA SEED BUTTER. Its functions listed are: fragrance, skin conditioning, skin emollient and skin protecting.112 Cocoa butter is a common ingredient in lotions, creams, and lip balms. Many skin care products contain cocoa butter, including moisturizers and anti-aging creams. One competing product, however, is shea butter – which has gained visibility through large natural cosmetics companies such as. Body Shop and Lush (United Kingdom) as well as L’Occitane (France).
110 111 112
https://www.premiumbeautynews.com/en/natural-and-organic-cosmetics-a,15606 http://sistemas.procomer.go.cr/DocsSEM/5A52A4C7-2FAF-4D5B-9940-9F36381AEC3B.pdf https://ec.europa.eu/growth/tools-databases/cosing/index.cfm?fuseaction=search.details_v2&id=60291
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A growing trend in natural ingredients for cosmetics is the strong growth in certification, as a support to cosmetic companies’ sustainability mission and story-telling, as well as consumer safety (organic certification).
SOURCING Cocoa butter for the cosmetic industry is mainly imported in the form of cocoa beans and then processed in Europe by large companies, such as TradIn Organic (Netherlands), ICAM (Italy) and Nederland SA (Spain), or enter as crude cocoa butter, and is then further refined and/or deodorized by specialized vegetable oil and fat companies such as Henry Lamotte113 and Gustav Heess114 (Germany). The European market also consists of companies such as JS Cocoa115 (Netherlands), specialized in producing cocoa products (butter and powder) for the cosmetics and pharmaceutical segments. Cosmetics companies may also choose to source from European importers such as CARE Naturkost, DO-IT and other companies highlighted in previous sections. Nonetheless, natural cosmetics companies, notably LUSH (United Kingdom), do source cocoa butter directly from specific origins. LUSH is involved in long-term partnerships and in sourcing quality cocoa butter from origin, purchasing 55 tonnes of organic, fair trade deodorized cocoa butter yearly from the Dominican Republic (CONACADO) and other few origins in Latin America.116 Read more about the case of CONACADO in the section LATIN AMERICA: BEST PRACTICES IN COCOA DERIVATIVES. Because LUSH has an annual demand of hundreds of tonnes of cocoa butter, it also sources the ingredient from other origins in a hybrid model. For instance, LUSH’s cocoa butter from the Comunidad de Paz de San José de Apartadó in north-west Colombia117 is actually sourced as cocoa beans, which are then shipped to Europe, to be processed into butter and other cocoa derivatives.
https://www.lamotte-oils.de/en https://www.heessoils.com/en 115 https://jscocoa.com 116 https://uk.lush.com/article/ethical-buying-policy 117 https://uk.lush.com/article/peace-pioneers 113 114
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RELEVANCE FOR COLOMBIA Within the European cosmetics segment, there is significant demand for cocoa butter, particularly in the bulk market. As pointed out above, Colombia may not be able to compete successfully in terms of volume with other global suppliers, and the prices paid within this market may not particularly favor producers. It is not a market that aims at the highest quality cocoa with a significant premium. At the same time, the market for certified (organic, fair trade) cocoa butter might provide an interesting window of opportunity, especially among natural / ethical cosmetics companies in Europe whose value proposition lies in sustainable impact and story-telling. For these companies, direct contact with producer organizations is very important, and may be a requirement for collaboration (i.e. not via traders). As described above, there is already existing collaboration between cosmetics brands and producer organizations in Latin America for cocoa butter supplies (example: Dominican Republic), thus it is a feasible business model. Nonetheless, Colombia has a fairly underdeveloped producer organization structure for cocoa processing, and certification is still rare, except for unique cases such as Chocolate Colombia. At the same time, it is possible to optimize existing relationships with cosmetics companies that already source cocoa beans from Colombia, and to support the capacity building of producer organizations that have potential to supply more technical value-added products – including, for example, deodorized cocoa butter. One existing threat in the cosmetics market, which is not true to confectionery, is the competition from other ingredients, such as shea butter (BUTYROSPERMUM PARKII BUTTER) and copoazu butter (THEOBROMA GRANDIFLORUM SEED BUTTER), with similar properties as cocoa butter and increasingly used by European cosmetics companies in their formulations.
3. Latin America: Best Practices in Cocoa Derivatives This section elaborates on various best practices across Latin America in the development, profiling, support and marketing of cocoa derivatives. These cases focus on interesting business models around 6 areas: (1) Sector collaboration, (2) National strategy, (3) Product profiling, (4) Quality, (5) Market representation, (6) Market integration.
small scale, but which are innovative and have scaleup potential.
Together, these different case studies bring in specific elements that future interventions in Colombia can learn from, or adapt within the local context. These cases do not focus entirely on the volume of cocoa derivatives traded, but rather on smart and innovative solutions that have allowed Latin American market players to access niche and high-quality markets, resulting in sustainable and long-term engagement with the European and other international markets. It therefore excludes operations and activities of large-scale, multinational groups. In addition, note that this section highlights some cases, particularly in Central America, that were not visible in the TRADE STATISTICS section due to their
Benchmarking Overview - Case Studies (1) SECTOR COLLABORATION
(2) NATIONAL STRATEGY
APPCACAO – PERU SUPERFOODS STRATEGY - PERU UNOCACE - ECUADOR AMACACAO AND MESOCACAO – CENTRAL AMERICA (4) QUALITY SANCHEZ / HISPANIOLA – DOMINICAN REPUBLIC SINEACE / NORMAS DE COMPETENCIA PARA LA POST COSECHA Y LA CATA DE LICOR O PASTA DE CACAO - PERU AMACACAO / CUNAKAKAW QUALITY SEAL – CENTRAL AMERICA
PLAN DE MEJOR COMPETITIVA (PMC) DEL CACAO Y DERIVADOS ECUADOR (5) MARKET REPRESENTATION XOCO GOURMET – HONDURAS / CENTRAL AMERICA INGEMANN - NICARAGUA
(3) PRODUCT PROFILING MAYAN RED AND XOCO GOURMET – HONDURAS / CENTRAL AMERICA CHUNO AND INGEMANN - NICARAGUA ARRIBA NACIONAL - ECUADOR
(6) MARKET INTEGRATION NORANDINO – PERU CONACADO – DOMINICAN REPUBLIC
COCOA SUPPLY – ECUADOR PACARI - ECUADOR
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3.1. Sector Collaboration Cocoa is produced mainly by small-scale producers, often organized into producer organizations, cooperatives and other forms of associativity. Associativity is a crucial aspect in reaching scale, optimize capacities and improve market access in the cocoa market. This section describes associativity models that led to sector collaboration among producers’ groups but also companies across Latin America.
APPCACAO: PERU The Asociación Peruana de Productores de Cacao (APPCACAO)118 is Peru’s national association of smallscale cocoa producers, founded in 2004. The initiative was formed by producers themselves, and consists of members that are part of associations or cooperatives. Among the services offered by APPCACAO are the strengthening of production systems, the institutional strengthening of cooperatives and associations, the development of human resources within those organizations, as well as a platform for marketing of cocoa beans and derivatives. Some interesting aspects in the business model of APPCACAO are:
• APPCACAO divides its cooperative portfolio into regions: Piura and Tumbes, Amazonas and Cajamarca, San Martín, Huánco, Ucayali and Pasco, Junín and Lima, and Ayacucho, Cusco and Puno. Within each of these regions, APPCACAO offers a well-organized and complete directory of each cooperative’s offer,119 in terms of: contact information, number of collaborators, main products produced (cocoa beans, derivatives and others – such as coffee), as well as volumes available. While most cooperatives focus on cocoa beans only, larger producer organizations such as Norandino120 also focus on derivatives.
• Another interesting characteristic of several Peruvian producer organizations that are part of APPCACAO is their multi-product focus, particularly coffee, since some of them are originally coffee-oriented organizations. For example, organizations such as CEPROAA, CACVRA, APROAFCH and ALTO URUBAMBA also offer coffee in addition to cocoa, while PANGOA has an even larger assortment of marmalades, plantain and yuca flour and fresh fruit.121 A multi-product approach also means market and income diversification for producers and their organizations.
• An element of APPCACAO which leverages its commercial alternatives is the fact that its members are not only linked to international buyers, but also to domestic ones and to each other. For example, the Cooperativa Central de Productores Agrarias de Amazonas (CEPROAA)122 is linked to Norandino,123 while Oro Verde124 supplies Machu Picchu Foods.125 This allows each cooperative, small or large, to supply to different markets and buyers according to their volume and quality capacities. Some of the buyers each cooperative are linked to are highlighted below:
• Norandino: Equal Exchange (USA), Valrhona (France), Chocolat Bernrain (Switzerland), Rapunzel (Germany), Ethiquable (Belgium / France), Gepa (Germany), Valrhona (France), Chocolatemakers (Netherlands)
• APROCAM: Qantu (Canada), ICAM (Italy), PRONATEC (Switzerland)
• Oro Verde: K’ul (USA), Raaka (USA), Tcho (USA), Equal Exchange (USA), Zotter Chocolate (Austria), Koawatch (Germany), PRONATEC (Switzerland), Guittard (USA), Chocolat Bernrain (Switzerland), TradIn Organic (Netherlands), Machu Picchu Foods (Peru)
http://APPCACAO.org http://APPCACAO.org/wp-content/uploads/2020/05/Copia-de-DIRECTORIO-SOCIOS-COMPLETA.xlsx-SOCIOS-1.pdf 120 https://coopnorandino.com.pe 121 http://APPCACAO.org/wp-content/uploads/2020/05/Copia-de-DIRECTORIO-SOCIOS-COMPLETA.xlsx-SOCIOS-1.pdf 122 http://APPCACAO.org/ceproaa 123 https://coopnorandino.com.pe 124 https://oroverde.com.pe 125 https://www.mpf.com.pe 118 119
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• El
Quinacho: PRONATEC Zotter Chocolate (Austria)
(Switzerland),
• Alto Urubamba: Cocoas Juntos (Peru), Original Beans (Netherlands / Switzerland), Maraná (Peru), Campo Verde (Peru)
UNOCACE: ECUADOR The Unión de Organizaciones Campesinas Cacaoteras del Ecuador (UNOCACE) is an organization of Ecuadorian cocoa associations and farmers, working in a system collective marketing company. The organisation is focused on producing, collecting and marketing of specialty cocoa. The organization consists of twenty associations and individual farmers, good for about 1,900 producer members with 6,340 hectares of cocoa. UNOCACE’s cocoa export reached 2,100 tonnes in 2019, of which 15 tonnes were cocoa derivatives.126 What makes the business model of UNOCACE stand out is the following:
• UNOCACE mainly focuses on exporting and marketing cocoa from the Arriba Nacional variety. By strongly positioning its cocoa as a single variety, it opens up niche markets. Buyers in Europe and the USA use this for their origin (single-variety) claim, something that is increasingly important on the consumer market.
• UNOCACE has positioned itself well on the international market with a range of sustainability standards. It holds certification of: Fairtrade, SPP, and different organic standards depending on destination market (i.e. Certificación Orgánica Ecuador, USDA Organic, Organic EU, Biosuisse, Canada Organic).
• The largest share (83%) of sold UNOCACE cocoa holds double certification of Fairtrade and organic. This has given UNOCACE a competitive advantage, facilitating access to the international market. The Fairtrade and organic-certified cocoa is, for instance, used by Halba Chocolats (Switzerland) to produce the Ecuadorian origin of the private label chocolate range of Coop Naturaplan.127
• The premiums gained by selling organic and Fairtrade certified cocoa maintain and further strengthen the positioning of UNOCACE. The organisation is, for instance, investing its Fairtrade premiums in building a new warehouse and in providing traineeships to young people in administration, certification and consulting.128
• UNOCACE is also actively engaged in projects with its buyers. For instance, together with AlterEco, UNOCACE is involved in an agroforestry project aimed at increasing cocoa farm productivity and bean quality.129 Together with Halba Chocolats (and funds from Swisscontact) it is also involved in a project to increase cocoa production, by means of intensive tree care and biodiversity, complementing farms with fruit trees, timber and other plats, avoiding the use of agrochemicals.130
• By uniting several cocoa associations, UNOCACE reached enough scale to diversify its offer and its buyers. This in turn helps to secure loans as it lowers risks for investors. The Dutch social impact investor Oikocredit lent US$300,000 to UNOCACE in 2014 so the association could provide its farmers with technical training to boost their crops, as well as pre-export finance.131
https://www.unocace.com/es/ https://www.coop.ch/en/food/sweets-snacks-superfoods/chocolate-confectionery/chocolate-bars/dark/naturaplan-organic-fairtrade-70-arriba-cocoa-chocolate-bar/p/5841046 128 https://chocolatshalba.ch/files/chocolatshalba_2012/downloads/Nachhaltigkeit/Chocolats%20Halba%20Sunray_2018%20Sustainability%20Report.pdf 129 https://www.alterecofoods.com/pages/unocace-co-op 130 http://clac-comerciojusto.org/en/2019/08/proyecto-finca-foresteria-integral-con-cocoa/ 131 https://www.oikocredit.coop/en/what-we-do/partners/partner-detail/22068/union-nacional-de-organizaciones-campesinas-cocoateras-del-ecuador 126 127
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AMACACAO/MESOCACAO: CENTRAL AMERICA Meso-American Association of Fine Cacao and Chocolate (AMACACAO) is the original organization representing the collective interests of several businesses involved in the fine cocoa and chocolate sectors in Central America, focusing on the Mayan cocoa tradition and origin.132 AMACACAO has been working alongside the most important companies and cooperatives in each of the regions in Central America to identify and study each terroir and other differentiations related to genetics, soil, climate and processes. AMACACAO was established with support from the Center for the Promotion of Imports from Developing Countries (CBI)’s Agro Food Programme in Central America 2012-2017, and has the main objective to create a mechanism to certify the origin, quality and traceability of the final product, in order to increase international positioning and increase exports. The regional association has created a quality protocol through the CUNAKakaw brand133 (Read more under QUALITY). The organization and its collective brand were presented as a unit during industry events under the support of CBI during the Agro Food Programme, notably at the Salon du Chocolat (Paris)134 and Chocoa (Amsterdam). While individual members of AMACACAO such as Fedecovera (Guatemala),135 Coagricsal (Honduras)136 and La Campesina137 (Nicaragua) individually export cocoa beans to several international markets, the processing and marketing of derivatives has been mostly concentrated into the activities of Chocolate del Caribe138 / MESOCACAO139 which recently moved operations from Honduras to Costa Rica. This safeguards not only consistency in the products (nibs, liquor, butter, powder and couverture), but also food safety, due to the high standards
adopted in the processing facility. MESOCACAO highlights the single-origin aspect of its derivatives, its focus on high-quality Trinitario varieties, as well as it’s intended target market: artisan chocolatiers and pastry chefs. One of the difficulties faced in Central America regarding derivatives is the availability of high-quality raw material (cocoa beans) for processing. Not only is production relatively small, but there is competition from international buyers such as Chocolats Halba (Switzerland)140 and Ritter Sport (Germany)141 as well as from regional companies. This requires MESOCACAO to pay high prices to producers and producer organizations, reportedly 41% to 149% more than local market alternatives.142
3.2. National Strategy Having an enabling framework, whether in terms of branding, marketing or regulation, is an important contributing factor to the strategies of different countries to engage in further-processed products such as cocoa derivatives. This section highlights the cases of Peru and Ecuador, whose enabling environment has been addressed in two different, but complementary ways.
SUPERFOODS STRATEGY: PERU Peru’s successful entry into the market for cocoa derivatives was drawn in the framework of its natural ingredients strategy. PromPeru, the country’s export promotion agency, has been involved in this strategy as the main operational arm of the country’s branding and marketing of natural ingredients. In this strategy, specific natural ingredients have been consistently
https://www.cunakakaw.com https://www.cbi.eu/sites/default/files/multisectoral_vca_ca_-_final_report.pdf 134 https://www.cbi.eu/news/fine-mayan-cocoa-chocolate-cunakakaw-paris-salon-du-chocolat 135 https://fedecovera.com 136 https://www.coagricsal.hn 137 https://www.facebook.com/cooperativacocoateralacampesina 138 https://www.facebook.com/Chocolate-del-Caribe-577948475665902 139 https://www.MESOCACAO.com 140 https://chocolatshalba.ch/de/startseite.html 141 https://www.ritter-sport.de/en 142 https://www.MESOCACAO.com 132 133
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highlighted and brought forward to consumers and buyers through an educational campaign. In its brochures and other marketing materials, PromPeru has repeatedly drawn emphasis to the properties, applications, growing regions, harvesting periods and other characteristics of natural ingredients like lúcuma, camu-camu, sacha inchi, maca, tara and other.143 This strategy initially did not include cocoa. When Peru launched its Super Foods144 campaign, cocoa and its derivatives were included within the group of natural ingredients with high nutrient content and health benefits.145 The campaign was launched by the MINCETUR in 2017 at the Fruit Logistica trade fair (Berlin, Germany). Including cocoa and derivatives as one of the Super Foods allowed for:
• Integrating cocoa into the food ingredients strategy, which meant attendance to food trade shows such as Biofach,146 Anuga147 and SIAL148 and diversification of outlets and markets to trade cocoa as a food and health ingredient. Prior to that, cocoa was mainly highlighted at cocoa and chocolate trade fairs like Chocoa149 and Salon du Chocolat.150
• Involving and creating a platform for food/ confectionery and food ingredient companies with high capacities, food safety standards (FSSC 22000, IFS, BRC, etc.), laboratory infrastructure and export experience such as Machu Picchu Foods, Ecoandino, Algarrobos Orgánicos del Perú, Villa Andina and Nutry Body to engage in cocoa and cocoa derivatives. This has increased the cost-effectiveness of exporting cocoa derivatives specifically, since they could be processed in the same manufacturing plants and traded in containers that were more easily consolidated with
others (super) food ingredients by the same companies and often to the same importers. Because cocoa derivatives still command low market volumes, shipments of single products can be very cost-intensive. For example, Nutry Body supplies French alternative trading company Saldac151 with quinoa, cocoa powder and cocoa butter, which are shipped together with other super foods / food ingredients in 20 tonne-containers.
• Product and market diversification also allows for producers and cooperatives that are part of the value chain of these food companies to diversify their natural ingredient production and offer, creating a potential for income diversification and risk mitigation. Particularly in the case of companies such as Villa Andina, located in proximity to farmers in the northern Andes, the availability of processing facilities has created the possibility for over-production and surpluses to be absorbed.152
• Aligning the Super Foods market entry strategy to Peru’s strong positioning in the organic cocoa market. Peru is currently the 2nd largest supplier of organic cocoa beans to Europe (~13,000 tonnes in 2019, 20% of total EU imports of organic cocoa beans),153 behind the Dominican Republic, and 4th largest producer worldwide, with nearly 37,000 hectares (25% of its total cocoa bean production area).154 Because Super Foods target health markets in which organic certification is either a competitive advantage or often a pre-requisite, Peru has a head start in this segment by having a wide availability of certified raw material and processors that can manufacture derivatives in organic-compliant facilities.
http://www.peru.org.tw/web/data/file/userfiles/files/natural%20products/PERU-NATURAL-PRODUCTS.pdf https://myperuglobal.com/tag/superfoods 145 https://issuu.com/promperu/docs/catalogo_superfoods_ingles 146 https://www.biofach.de/en 147 ttps://www.anuga.com 148 https://www.sialparis.com 149 https://www.chocoa.nl 150 https://www.salon-du-chocolat.com 151 https://saldac.com 152 http://www.villaandina.com/our-products 153 https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/market-brief-organic-imports-june2020_en.pdf 154 https://www.fibl.org/fileadmin/documents/shop/5011-organic-world-2020.pdf 143 144
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• An important aspect to mention is also the focus on high-quality cocoa varieties that are used to produce cocoa derivatives. Some companies such as Nutry Body emphasize the use of Porcelana varieties such as Piura, Chuncho and Criollo from producers in the departments of Ucayali, San Martín y Junín.155 The high-quality proposition, on top of organic certification, opens up access to specialty segments such as chocolatiers, and adds a differential to the Peruvian offer compared to other origins. The branding and marketing of Peru’s Super Foods follows Peru’s country brand in terms of style and image,156 allowing the campaign to capitalize on the exposure and success of the country brand – and vice versa. It also brought attention to Peru’s unique characteristics as a producer and exporter of super foods, namely its: biodiversity (and its different biomes), export capacity, traceability and innovation, ancient knowledge, gastronomy and investment potential.157 The Super Foods brands is used in the various activities and events in the food sector158 organized by the MINCETUR worldwide.
PLAN DE MEJORA COMPETITIVA DEL CACAO Y DERIVADOS: ECUADOR In 2018, the Ecuadorian government requested the support of the European Union for the elaboration of the Plan de Mejora Competitiva de la Cadena del Cacao y sus Derivados. In July 2019, the plan became policy (through a national decree) and will require an investment of USD 605 million in the next 10 years. Collaboration between the public and private sectors will be key in implementing it.159 The main aims of the policy are to:
• Increase associativity in the cocoa sector • Reduce production costs
• Develop the agro-tourism and industrial sectors, creating 72,000 jobs related to agri-business and 10,000 related to tourism
• Benefit more than 12,000 fine flavor cocoa producers.160
• Double Ecuadorian exports, from USD 760 million to USD 1,400 million until 2030 – in volume, from 312,000 MT to 500,000 MT, 20% of which finished products and cocoa derivatives. The prioritization of the cocoa value chain by the Ecuadorian government goes in line with the importance of the product for Ecuador, but also to support the country in meeting the UN Sustainable Development Goals (SDGs) up until 2030.161 Because the policy has been recently established by decree, there are no specific details on the exact implementation activities for Ecuador’s PMC. It is recommended that, in the framework of this benchmarking, the researchers keep up-to-date on the future activities implemented by the Ecuadorian government, the European Union and private sector within the PMC.
http://nutrybody.com/nutrybody/nutrybody.html https://issuu.com/fabrica.de.ideas/docs/dossier_superfoods_2017_final_issuu 157 https://www.slideshare.net/kathys22/la-marca-superfoods-per-y-su-impacto-en-la-agroexportacin-peruana 158 http://mk-group.com.pe/index.php/articulos-categorias/tecnico/140-la-deficiencia-de-boro-puede-producir-caidas-de-flores-y-frutos 159 https://www.comunicacion.gob.ec/ecuador-eleva-a-politica-publica-el-plan-de-mejora-competitiva-para-desarrollo-agroindustrial-de-la-cadena-de-cocoa-chocolate 160 https://es.republicadelcocoa.com/blogs/news/ecuador-establece-un-plan-de-mejora-competitiva-del-cocoa-y-derivados-pmc 161 https://www.planificacion.gob.ec/gobierno-nacional-analiza-elevar-a-politica-publica-el-plan-de-mejora-competitiva-del-cocoa-y-chocolate 155 156
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3.3. Product Profiling Product profiling has been an essential element in various cocoa-producing countries to add value to cocoa beans from specific origins and varieties, as well as to market their derivatives to Europe and other international markets by articulating unique or differentiating characteristics.
ARRIBA NACIONAL: ECUADOR There is a strong marketing and profiling of Arriba Nacional cocoa from Ecuador. The geographical indication (GI) for this variety is a marketing tool for exporters of both cocoa beans and derivatives. Arriba Nacional is a protected GI in the EU.162 Nacional is the cocoa variety, while Arriba refers to the name of the growing region.
• Arriba Nacional is a traditional and emblematic product of Ecuador. In 2000, the Ecuadorian Ministry of Agriculture started the process to preserve the variety characteristics by setting up rules and applying for geographical indication for Arriba as a denomination of origin. As of 2011, the Ecuadorian government has prioritised and much invested in the fine flavour cocoa sector to promote its positioning in the international market.163
• The GI is registered and protected within Ecuador and in several of its export markets. The GI is used by the cocoa sector as a tool to preserve the quality of fine flavour cocoa, as well as to promote its international trade.164 Although final cocoa products made of Nacional Arriba cocoa will taste different, the variety claim is recognisable for consumers/clients,
and to many communicates quality and traceability.
• European companies offer cocoa products made of the Arriba Nacional variety. For instance, the social enterprise The Ayni Way (United Kingdom) offers Arriba Nacional cocoa paste.165 And the representative office of Ecuadorian company Cafiesa166 - Cocoa Supply in Netherlands (and USA) offers organic cocoa nibs highlighting the Arriba Nacional variety.167 The Ecuadorian chocolate company Pacari offers couvertures to the (international) market with Arriba Nacional single variety.168
• Arriba Nacional is used by many companies to give an origin claim to their product. However, craft chocolate makers further profile their products by, apart from mentioning the variety, also referring to more specific variety or origin claims. For instance, Domori (Italy) sells single-estate (Hacienda Victoria) Arriba Nacional cocoa mass.169 High-end chocolate company To’ak specifies that their organic cocoa powder is made of ‘Heirloom Nacional cocoa’, specifying that it is 100% pure Nacional, and not a Nacional hybrid.170
MAYAN RED (INDIO ROJO)/XOCO GOURMET: HONDURAS/CENTRAL AMERICA Mayan Red is a cocoa hybrid variety, a cross between a cocoa originating from Honduras and a Criollo Antiguo bean from Guatemala. The pod has a very recognizable bright red color, whose cocoa bean has a distinct flavor as well, with notes of fruits and honey.
• The fermentation (and drying) protocols were developed specifically for this variety
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/food_safety_and_quality/documents/list-gis-non-eu-countries-protected-in-eu_en.pdf 163 http://www.cocoaconnect.org/sites/default/files/publication/Market%20study%20of%20fine%20flavour%20cocoa%20-%20revised%20version.pdf 164 http://www.anecocoa.com/en/quienes-somos/cocoa-nacional.html 165 https://theayniway.com/products/organic-ceremonial-cocoa-paste?pr_prod_strat=copurchase&pr_rec_pid=4358511493193&pr_ref_ pid=4358511394889&pr_seq=uniform 166 www.cafiesa.com 167 https://cocoasupply.eu/collections/cocoa-nibs-beans/products/organic-cocoa-nibs-biologisch-cocoa-nibs?variant=12132348854346 168 https://www.chocolatedistrict.com/shop/chocolate/pacari-organic-raw-70-dark-chocolate-couverture-ecuador-200gr/ 169 https://domori.com/en/the-origins/149-ecuador-arriba-cocoa-bar-100-50g.html 170 https://toakchocolate.com/products/single-origin-100-organic-cocoa-powder 162
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by Belgium-based company Zoto.171 These protocols are still being implemented by company Xoco Gourmet, based in Honduras.
• Mayan Red was one of the winners at the International Cocoa of Excellence Awards in 2013,172 which propelled the interest in, and market value for, this variety. The sample was submitted by Xoco Gourmet.
• On the production side, Xoco Gourmet preserves the Mayan Red variety by making use of grafting techniques in production areas of different countries under its own farms: Honduras, Guatemala, Belize and Nicaragua. The company maintains close relations and frequent visits to producers and producers’ organizations in these countries in order to implement the correct production, harvest and post-harvest processes and maintain high and consistent cocoa bean quality. Fermentation is done in a centralized facility within Xoco Gourmet-managed farms; in some instances, Xoco Gourmet also works under exclusive agreements with external farmers.173 The company emphasizes that flavor and aromatic profile consistency is only possible through the control of these steps.
• The company also implements strict traceability protocols, which go alongside the protection of the Mayan Red single-variety profiling. The cocoa beans can be traced back to the specific farm it was sourced from. The couvertures produced by Xoco Gourmet have a QR code which allows for the product to be traced by end-users.
• Xoco Gourmet has been profiling Mayan Red as a single-variety cocoa bean, but also as a high-quality couverture produced from a single-variety and carefully-selected cocoa bean. Xoco Gourmet markets this concept as “A couverture that you can always rely on. By monitoring the entire process from grafted trees to chocolate, we make sure to deliver you transparency and consistency in every single block of couverture. You only have to unleash your imagination”.174 Single-Variety cocoa beans have complete flavor consistency, and the same aromatic profile every time you use them.
• Targeting the right market segment is also an element for success in this case study. In the case of Xoco Gourmet’s couvertures, there’s a clear orientation towards the gourmet market in Europe and elsewhere (example: Colombia): pastry chefs and artisanal chocolate makers. The different gourmet creations are used by Xoco Gourmet to highlight the product, and share in its website and Facebook pages. The company also has an in-house chocolate maker that creates and adapts couverture recipes based on market demand and feedback.
• Another important aspect is having a wide product portfolio: Xoco Gourmet offers couvertures at different cocoa % (100, 85, 70, 48), as well as white chocolate and derivatives such as butter and powder.
• High-quality couvertures command a low volume, high quality market, whereby or-
https://zoto.be/order/honduras-mayan-red-60-dark-milk-chocolate http://www.cocoaofexcellence.org/producers-of-excellence/2013-edition 173 https://www.xocogourmet.com/story#own-farms 174 https://www.facebook.com/xocogourmet/posts/these-are-the-mayan-red-pods-we-are-currently-growing-in-honduras-and-guatemala-/2259573681040002 171 172
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ders are small and frequent. Logistics are a challenge, and are only possible because Xoco Gourmet has a representative office in Copenhagen, Denmark.175 This allows the company to sell smaller quantities to various end-users directly, without compromising logistical efficiency or product quality.
CHUNO/INGEMANN: NICARAGUA Nicaraguan / Danish company Ingemann has profiled Chuno as one of its main fine cocoa varieties. These varieties are assigned names to function as “brands”:176 Chuno®, Nicalizo®, Rugoso®, etc. Chuno® is one of the cocoas characterized as Heirloom cocoa by the Heirloom Cocoa Preservation Fund (HCP); there are only 13 cocoa varieties worldwide classified as such - Nicalizo®, of Ingemann, is also one of them. Heirloom cocoa varieties are those that are “endowed with a combination of historic, cultural, botanical, geographical, and most importantly flavor value”.177 For each variety, Ingemann also experiments different fermentation protocols and offers these different flavor and aroma ranges to clients.
• The classification of Chuno® as Heirloom cocoa adds uniqueness and market value to the variety. In the specialty market, value is a combination of flavor, aroma, but also of uniqueness / market availability.
• Along with Ingemann’s flagship Chuno®
• Ingemann also offers derivatives, through an innovative and promising business model: a tree-to-bar concept where:
• The cocoa beans are sourced in the country of origin, and subsequently transported to the destination market (Europe), where they are further processed and turned into derivatives and finished products at an European processing plant. It is a tree-to-bar concept because the entire chain is managed under one company, even if in different continents.
• This safeguards food safety, freshness, efficient and competitive distribution and, most importantly, that production is carried out according to market demand – in terms of volumes and taste profiles. Ingemann has its own processing plant in Denmark (Ingemann Chocolate),178 where it is able to offer derivatives / couvertures and private-label chocolate bars. Having all operations within the same company also means that the profits from retail sales can be distributed along the company, thus bringing the financial benefits back to the origin of the cocoa beans.
• This concept is also translated into a high-quality chocolate at an accessible price – thus, wider exposure and marketing possibilities; for example, through supermarkets.
variety, other products in the company’s assortments have attracted much interest from bean-to-bar makers and other specialty market segments. Ingemann’s cocoa beans have exclusive distribution in Europe through specialty Dutch cocoa importer Daarnhouwer for small orders, so as to increase efficiency competitiveness in distribution to bean-tobar chocolate makers. The company, however, deals itself with Full Container Loads (FCLs).
https://www.xocogourmet.com/contact https://www.facebook.com/IngemannFineCocoa 177 https://ingemann.com.ni/2019/02/06/heirloomcocoa 178 https://ingemannchocolate.com 175 176
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3.4. Quality The European and other international markets are becoming more and more stringent when it comes to quality standards required for the market access of cocoa beans, derivatives and generally for food products. In cocoa derivatives, suppliers in producing countries compete directly with European-based industries, making it extremely important to also comply with the highest quality requirements to remain competitive. This section looks at various quality-management models in cocoa and cocoa derivatives that support the market access of suppliers in different countries in Latin America.
SINEACE - NORMAS DE COMPETENCIA PARA LA POST COSECHA Y LA CATA DE LICOR O PASTA DE CACAO: PERU The Peruvian Sistema Nacional de Evaluación, Acreditación y Certificación de la Calidad Educativa (SINEACE), through the Dirección de Evaluación y Certificación de Educación Básica y Técnico Productiva-DEC EBTP published in 2017 the Normas de competencia del especialista en proceso de post cosecha de cacao and the Normas de competencia del catador de pasta o licor de cacao. The publication is to be used as a reference document for the knowledge, capacities and skills required from someone who has to perform such quality processes and assessments. The norms have been compiled, evaluated and consensually agreed on by industry professionals, specialists and other sector stakeholders. This process has safeguarded its legitimacy and recognition in Peru. The norms are certifiable, and such certification can be granted to individuals that successfully complete the modules.
• The norms allow for a harmonized understanding of cocoa quality in Peru, both for the beans as well as derivatives, and for better
quality management along the chain. Because these standards are based on international guidelines and references such as the CAOBISCO-European Cocoa Association-Federation of Cacao Commerce Ltd. (2015). Cacao en grano: requisitos de calidad para la industria del chocolate y del cacao,179 international market access and legitimacy are also improved.
• The Asociación Peruana de Productores de Cacao (APPCACAO) is the SINEACE-authorized entity granting the certificates to individuals that successfully complete the modules related to 3 different competences: (1) Productores de plantones cacao, (2) Especialista en proceso de post-cosecha de cacao, (3) Catadores de pasta y licor de cacao.180 The certificate has a 5-year validity.
• APPCACAO was incorporated into the Registro Nacional de Entidades Certificadoras in 2014,181 - 182 and since then it has been able to deliver professional competences to people located in remote rural areas who often did not have access to basic education.
• Certified quality assessors have better employment opportunities in the cooperatives, producers’ associations and companies that require this technical expertise.183 These are also professionals that have the capacity to contribute with better production and productivity in the cocoa sector, and to disseminate a culture of quality for the cocoa beans and derivatives.
• The certified professionals are centralized in a virtual database on the SINEACE website,184 so that producers’ organizations, cooperatives, companies and other stakeholders can easily find, contact and check for their accreditation.
http://www.cocoaquality.eu https://noticiasresponsables.com/conoce-las-tres-ocupaciones-en-produccion-del-cacao-en-las-que-te-puedes-certificar 181 https://www.sineace.gob.pe/senati-y-app-cacao-ya-pueden-certificar-competencias-profesionales 182 https://busquedas.elperuano.pe/normaslegales/oficializan-acuerdo-mediante-el-cual-se-autoriza-a-la-asocia-resolucion-no-388-2017-sineacecdah-p-1570168-3 183 https://www.sineace.gob.pe/24-catadores-de-cacao-de-selva-central-se-certifican-para-elevar-calidad-de-los-derivados-del-grano 184 https://app.sineace.gob.pe/buscador/certificacion.aspx 179 180
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CUNAKAKAW: CENTRAL AMERICA Meso-American Association of Fine Cocoa and Chocolate (AMACACAO), whose activities are described under SECTOR COLLABORATION has created a quality protocol through the CUNAKakaw brand.185 The CUNAKakaw brand is applicable to all its members; it’s a sine qua non condition to being a member.
• CunaKakaw was created to regenerate cocoa and chocolate production in Meso-America together with a guarantee for quality products, managed under a strict Internal Control System and supported by post-harvest protocols and laboratory analysis186. This is an example of an innovative solution to the harmonization of quality standards across an entire region.
• The CunaKakaw standard addresses several quality issues that are directly linked to quality assessment and quality understanding of the international market – one of the reference documents used is the Guide to Chocolate & Cocoa Industry Quality Requirements by ECA/Caobisco/FCC.187 Through a simple manual along the following subjects: 1) Quality, Traceability and Origin Profile, 2) Cocoa bean lot quality and 3) Quality control, the standards are easily implementable on the field, and can be followed by farmers’ organizations and cooperatives alike. The manual focuses on cocoa beans, and in safegarding raw material quality for optimal processing of derivatives further in the chain.
• The standard also targets derivatives and fin-
• Couverture or Final products (Confectionery): only made with beans or liquor that comply with CunaKakaw criteria; a minimum cocoa / cocoa liquor content; no other vegetable oils; particle size or fineness < 20 microns; 100% produced in the country of origin.
• AMACACAO also has a set of Social and Enviromental Responsbility standards.
• AMACACAO was one of the precursors of the discussions on the harmonization of international quality standards for cocoa. In 2017, the organization was part of the first consultation for the development of standardized procedures and language around assessing cocoa bean quality by a Working Group coordinated by coordinated by the Alliance of Bioversity International and CIAT. The first consultation was carried out in Managua (Nicaragua), 19 – 21 September 2017, followed by one in Paris during the Salon du Chocolat (October 2017)189.
SANCHEZ / HISPANIOLA: DOMINICAN REPUBLIC The Dominican Republic exports two different types of cocoa, known as Hispaniola and Sanchez, both from the Trinitario cocoa plants. The two types are segmented by quality - where Hispaniola is the high-quality variety, and Sanchez the conventional variety – which has allowed the Dominican Republic to preserve its high-quality profile and reputation.
ished products with incremental protocols:188
• Most of the cocoa produced in the Domini-
• Cocoa Liquor: only made with beans that
can Republic is the Sanchez variety. Beans of this variety are unfermented and sold to commodity markets. Because of their mainstream quality the Sanchez beans are much used for making cocoa butter and other derivatives.
comply with CunaKakaw criteria; mild roasting; compliance with microbiological norms adopted by the industry; Good Manufacturing Practices.
https://www.cbi.eu/sites/default/files/multisectoral_vca_ca_-_final_report.pdf https://www.cunakakaw.com/wp-content/uploads/2018/08/Manual-CUNAkakaw.pdf 187 http://www.cocoaquality.eu 188 https://www.cocoaqualitystandards.org/fileadmin/templates/CocoaQuality/Uploads/Documents-and-reports/REVIEW-Cocoa_Quality_Flavour_Standards_-_Darin_SUKHA_sans_Appendices-12May2016-ENGLISH.pdf 189 https://www.cocoaqualitystandards.org/initiative-background 185 186
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These beans are mainly exported to the United States. Hispaniola cocoa makes up only 4% to 10% of the harvest in the Dominican Republic. Beans of this variety are fermented and then sun dried, resulting in a fine flavour bean destined to high-quality markets (mainly in Europe).190 This segmentation has allowed the Dominican Republic to engage in cocoa butter processing in large volumes without compromising its high-quality varieties.
• The Comisión Nacional de Cacao is responsible for quality control for exported cocoa products. In addition, a large share of exported cocoa is organic (and Fairtrade) certified, resulting in a quality and compliance control by international standards.
• A good analogy of this segmentation of quality is the classification of Excelso coffee beans for export in Colombia. Colombia’s coffee sector is highly regulated, and has quality control mechanisms focused on protecting Colombian coffee’s origin. Exporters must comply with the quality-control resolutions. The reputation of Colombian coffee’s quality in international markets is protected, as only higher-quality Excelso coffees are allowed to carry the Café de Colombia logo. This is Colombia’s Protected Geographic Indication (PGI) for coffee, registered and protected within Colombia and in several of its export markets.
3.5. Market Representation The European market for cocoa derivatives does not have an established distribution structure, and depends heavily on the different business models and partnerships that producer organizations and companies in producing countries set out to access the market. Apart from an indirect but common route of distribution through an European importer (elaborated in the section EUROPEAN MARKET), some com-
panies in producing countries have successfully established representation offices / distribution in target markets. In some cases, companies also engage in manufacturing in the target market, thus reaching sufficient competitiveness to face the European industry.
• Market representation allows companies to sell smaller quantities to various end-users directly, without compromising logistical efficiency or product quality. In addition, it allows these companies to be the legal representative of their products in destination markets (which would otherwise be in the hands of external importing companies), and to develop customer services and support.
• The integration of activities allows the two arms of the company to coordinate production according to demand and to transfer product ownership to end-clients without externalising risk.
XOCO GOURMET: HONDURAS Xoco Gourmet’s market representation model is explained under the section PRODUCT PROFILING. Its main elements consist of:
• Xoco Gourmet has a representative office in Copenhagen, Denmark.191 This allows the company to sell smaller quantities of couvertures to various end-users directly, without compromising logistical efficiency or product quality. Knowledge and close contact with customers regarding their specific quality and volume requirements allows the company to feed this information directly into its production in the Honduran processing plant, so as to plan and adapt production accordingly. The model is similar to the one implemented by Casa Luker (Colombia), whose warehouse (in Belgium192) and representation office (in Germany)
https://www.bohnkaf-kolonial.de/products-quality/dominican-republic/?lang=en https://www.xocogourmet.com/contact 192 https://www.dnb.com/business-directory/company-profiles.casa_luker_europe.36d072546f8c199770685110163c1da4.html 190 191
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Due to the full control of the value chain, and competitive processing at the destination market, Ingemann is able to offer a high-quality chocolate at an accessible price – thus, wider exposure and marketing possibilities; for example, through supermarkets.
COCOA SUPPLY: ECUADOR
through company Dillicious193 - though Xoco Gourmet’s representation is done from within the same company.
INGEMANN: NICARAGUA Ingemann’s business model has also been highlighted in the section PRODUCT PROFILING. Its main characteristics are: The company introduced a tree-to-bar concept whereby the cocoa beans are sourced in the country of origin, and subsequently transported to the destination market (Europe), where it is further processed and turned into derivatives and finished products at an European processing plant in Denmark: Ingemann Chocolate.194 This makes Ingemann as competitive as other European cocoa processors because the company can fully control traceability, food safety, freshness, efficient and competitive distribution. In addition, that production is carried out according to market demand – in terms of volumes and taste profiles. Ingemann offers derivatives / couvertures and private-label chocolate bars. Having all operations within the same company also means that the profits from retail sales can be distributed along the company, thus bringing the financial benefits back to the origin of the cocoa beans.
Cocoa Supply is the representative arm of Ecuadorian manufacturer Cafiesa,195 one of the country’s main processors and exporters of cocoa derivatives. The company has representation in both the USA and European markets, and offers a wide range of cocoa derivatives: nibs, powder, butter, liquor / mass (and cocoa beans), highlighting the Arriba Nacional variety – an aspect which differentiates it from other suppliers in the market.
• The company offers competitive prices, quality and traceability by keeping strong ties to small farmers and producers in Ecuador, through a vertically-integrated business model.
• Not only does the country have own offices and distributions in its target markets, but also own warehouses.
• The company keeps strict food safety and sustainability standards in operations, being able to access several markets and market segments:
• Food safety: Cafiesa-Cocoa Supply’s operations are compliant with HACCP, ISO 22000, Kosher, Halal, as well as EU and USDA Organic.
• Sustainability: Prices paid to farmers are ~10% higher than international market prices. Advice and open operations to farmers to market of other local crops, such as vanilla beans, plantains, lucuma, tea, etc. Collaboration with international organizations such as Dutch SNV, to develop inclusive business with farmers. Following SEDEX
https://dillicious.eu/marken/casa-luker https://ingemannchocolate.com 195 www.cafiesa.com 193 194
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standards196 to monitor fair labor practices in the farms and in the processing facility.
PACARI: ECUADOR Ecuadorian company Pacari,197 known for its high-quality chocolates using the Arriba Nacional variety, as well as ingredients from the Ecuadorian biodiversity, also supplies couvertures to the European and other international markets. Pacari has a representative marketing and distribution office in the United Kingdom, through which the company can reach several online shops, specialized chocolate shops and consumers directly.198 The company has a special appeal to the European market, having strongly marketed its sustainability proposition. Not only is Pacari one of the only B-Corporation chocolate companies in Latin America, but it also has social and ecological certifications such as EU and USDA Organic, Fair trade and Demeter. It is also part of other sustainability initiatives such as the One Tree Planted Initiative. Pacari’s products are also Kosher and Vegan-certified, which increases its market outreach.
partnerships with chocolate manufacturers and brands in the USA and European markets for its cocoa beans, such as Equal Exchange (USA), Valrhona (France), Chocolat Bernrain (Switzerland), Rapunzel (Germany), Ethiquable (Belgium / France), Gepa (Germany), Valrhona (France) and Chocolatemakers (Netherlands). It was with the support of Dutch chocolate company Chocolatemakers that Norandino engaged in cocoa derivatives. Chocolatemakers has been working directly with Norandino since 2011 but, since 2016, it has been planning and building a cocoa liquor / paste factory in collaboration with the cooperative in Peru.
• The project was made possible in part by Rabobank Foundation, Stichting Doen and the Private Sector Investment Program (PSI). It also received investments largely from the cooperative itself, and partners like Ethiquable and Equal Exchange. The Norandino manufacturing plant is largely owned by the farmers’ cooperative itself and partly by the Dutch organic chocolate brand Chocolatemakers.
• The engagement of Norandino into cocoa pro-
3.6. Market Integration This section highlights different business models through which producer organizations / cooperatives engaged directly with European buyers, and have succeeded in exporting their cocoa beans and derivatives to this market.
cessing has been encouraged by long-term partners buying cocoa beans which were willing to also purchase derivatives directly from the cooperative. Companies such as Alce Nero (Italy), Original Beans (Netherlands) and Ethiquable (France) process cocoa beans in Switzerland, which is an expensive activity200. The factory provides a cheaper alternative, with a social impact mission.
• In addition to supplying the international mar-
NORANDINO: PERU The Cooperativa Norandino is an association of smallscale coffee producers in northern Peru, spreading across coastal, mountainous and jungle regions of the departments of Piura, Tumbes, Amazonas, Cajamarca and San Martín.199 Since its foundation in 2005, Norandino has created several long-term and strong
ket with its 3,000 to 5,000 tonne production capacity, Norandino’s machinery and processing facilities can be rented out to local companies, so as to forest domestic consumption as well. These chocolates are processed in a mini processing plant with the capacity of 150 kg/batch; this safeguards quality or traceability.
https://www.sedex.com www.pacari.com 198 https://home.pacarichocolates.uk 199 http://producersdirect.org/centre-of-excellence/norandino 200 http://www.cooperativasinfronteras.net/index.php/en/norandino-to-sell-cocoa-paste 196 197
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• The organization has its own ISO-22000-certified processing plant providing them with diversified product opportunities. The plant’s capacity is 26 thousand tonnes per year, and produces nibs, mass (or liquor), butter and cocoa powder. CONACADO’s processing plant with high food-safety standards was implemented as a result of the USAID Co-operative Development Program (CDP)203, which gave access to the strictest markets and buyers worldwide.
CONACADO: DOMINICAN REPUBLIC The Confederación Nacional de Cacaocultores Dominicanos (CONACADO) represents nearly 10,000 cocoa farmers, and does so through its three entities: 1) Agroindustrial, which is responsible for collecting, processing, transforming, marketing or exporting the cocoa; 2) NGO, responsible for providing technical and social assistance; and 3) Coopnacado, the cooperative branch offering financial services.
• CONACADO is the largest cocoa exporter of the Dominican Republic, with approximately 25% of total cocoa exports. Between October 2018 and September 2019, exports amounted to 15 thousand tonnes201. Over 75% of the cocoa they sell is organic certified, and of the high-quality Hispaniola variety202.
• CONACADO holds certifications of Rainforest Alliance/UTZ, Fairtrade, Fair for Life and several organic standards. The NGO branch of the organisation is responsible for the constant implementation of improvements to guarantee the certifications obtained and also to apply for others that different/new markets require. This strong focus on certified cocoa opened up the access to international markets.
• CONACADO has been working closely with the Ministry of Agriculture, and is actively engaged in the continuous improvement of the productive processes of cocoa, linked to ongoing education to producers. The renovation projects were supported by the USAID Co-operative Development Program (CDP)204, as well as by the Fair Trade Premiums that the organization directly invested in these pilots. Their numerous buyers have often been involved in these projects.
• CONACADO has several direct buying partners for both cocoa beans and derivatives, including Café Direct205 (United Kingdom), Icam206 (Italy) and Rapunzel207 (Germany). Lush Cosmetics208 (United Kingdom) buys cocoa butter from CONACADO. Equal Exchange209 (United States) was a strong supporter of CONACADO’s cocoa derivative program, and has been purchasing cocoa powder directly from the organization since 2010210. Equal Exchange also brought in capacities for CONACADO associates to be able to carry out sensory analysis of its products, thus equipping them to meet strict organoleptic requirements of markets like the USA and Europe211.
https://conacado.com.do/en/agroindustrial/ https://conacado.com.do/en/productos/ 203 https://equalexchange.coop/sites/default/files/CoopProfile_CONACADO.pdf 204 https://equalexchange.coop/sites/default/files/CoopProfile_CONACADO.pdf 205 https://www.cafedirect.co.uk/about/the-farmers/ 206 https://www.icamcioccolato.com/en/company/storia-icam 207 https://www.rapunzel.de/en/bio-kakao-dominikanische-republik-conacado.html 208 https://uk.lush.com/article/bittersweet-story-cocoa 209 https://equalexchange.coop/our-partners/farmer-partners/conacado 210 https://equalexchange.coop/sites/default/files/CoopProfile_CONACADO.pdf 211 https://equalexchange.coop/sites/default/files/cdp_eval_web_rev_finalreport.pdf 201 202
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3.7. Best practices: Lessons Learned and Applicability to Colombia The current market context for cocoa derivatives in Europe provides limited possibilities, but Latin American / Colombian suppliers that managed to find specific segments and business models have succeeded in consolidating their position. The table below summarizes the main lessons learned from the different success cases across Latin America analyzed in this study, and provides insights and recommendations in the context of the Colombian cocoa sector, per intervention area:
Lessons learned from cases in Latin America
Applicability to the Colombian context
(1) SECTOR COLLABORATION APPCACAO (Peru) • Division of cooperatives into regions to facilitate identification and creating a common regional image. • Multi-product focus, not only cocoa and derivatives. • Cooperatives are not only linked to international buyers, but also to domestic ones and to each other. Each cooperative, small or large, is able to supply different markets and buyers according to their volume and quality capacities. UNOCACE (Ecuador) • Strong focus and identity with emphasis on exporting and marketing the Arriba Nacional variety. • The organization holds a wide range of sustainability standards, which strengthen its position in sustainable markets. • Investment of Fairtrade premium in infrastructure and social projects. • Execution of projects with buyers, such as agroforestry, cocoa farm productivity and bean quality. • Clustering of several associations allows the organization to reach enough scale to diversify its offer and its buyers. This in turn helps to secure loans as it lowers risks for investors. AMACACAO / MESOCACAO (Central America) • Collective interests of several businesses involved in the fine cocoa and chocolate sectors in Central America, focusing on the Mayan cocoa tradition and origin.
212
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https://chocolatecolombia.com
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The existing structure of the Red Cacaotera allows for a segmentation of cooperatives / producer organizations into regions, and still under a common image characterizing Colombian cocoa. The division into regions, microclimates, communities and other socio-geographical indicators is more suitable for Colombia than a common identity on the basis of specific cocoa varieties, as is the case with Arriba Nacional in Ecuador. The Red also has the potential to channel resources and implement projects with buyers related to agroforestry, gender, productivity, climate change and other subjects that are on the international development agenda – comparable to the role of UNOCACE, in Ecuador. In terms of marketing at a sector level, PROCOLOMBIA can play an increasingly important role in creating a common brand for Colombian cacao to be presented at events and trade fairs, and linking up the two main organizations working under the sector’s umbrella: FEDECACAO and Red Cacaotera, as well as the independent industrial players that process cocoa into derivatives. However, differently from the case of Peru, very few producer organizations in Colombia are actually engaging in the processing of cocoa beans into derivatives. One of the few examples is Chocolate Colombia212 (also a member of Red Cacaotera), which functions as an union of various producer organizations in Nudo de Paramillo (departments of Córdoba and Antioquia) and has infrastructure to carry out processing – and already offering nibs, paste and couverture. It is also one of the few players in Colombia holding a fair trade certification for cocoa, and able to access certain market segments requiring certification.
Lessons learned from cases in Latin America
Applicability to the Colombian context
(1) SECTOR COLLABORATION • Identification of each terroir and other differential elements related to genetics, soil, climate and processes. • Mechanism to certify the origin, quality and traceability of the final product, in order to increase international positioning and increase exports. • Creation of a collective brand which was presented at trade fairs like Salon du Chocolat and Chocoa. • The processing and marketing of derivatives has been mostly concentrated into the activities of Chocolate del Caribe / MESOCACAO. • Focus on single origin and high-quality Trinitario varieties, with an intended target market consisting of artisan chocolatiers and pastry chefs. • High prices paid to producers and producer organizations, reportedly 41% to 149% more than local market alternatives. As such, selling high-quality cocoa beans in the local market is often as profitable as exporting them.
Besides that, it is Casa Luker the one company dominating cocoa processing and exports of cocoa derivatives in Colombia, followed by Compañia Nacional de Chocolate, part of the Nutresa Group – though with a focus on low-quality confectionery. These two companies purchase a high share of cocoa beans produced in Colombia. Other industrial players such as Cacao Pacifico213 and Gironés214 play a less prominent role, and exports to Europe are still insignificant. Within the specialty segment, Cacao Hunters is a relevant player, but mainly active in chocolate as a finished product to markets like Japan – though the company has realized exports to Europe too. Compared to other cases, for example in Central America, where selling to some local processors is attractive for producers in terms of prices (depending on quality), the export market for high-quality cocoa beans in Colombia poses strong competition to local processors. In addition, reaching high volumes of high-quality beans for further processing remains a challenge in the country – also considering that part of Colombian production is compromised by high cadmium levels215.
https://cacaopacifico.com/es https://www.girones.com.co 215 Context: In 2014, the European Union announced the regulation of cadmium levels permitted in cacao sub-products, which is a heavy metal known to be present in the soil both naturally and anthropogenically, that is absorbed and accumulated by the cacao tree. The regulation, (EU) No. 488/2014, came into force on January 1st, 2019, establishing the maximum levels of cadmium permitted in cacao sub-products such as chocolate and cacao powder, among others. Cadmium levels in some of Colombia’s regions are believed to be higher than permitted both in the soil and in cacao bean, hindering access to the European market. For this reason, cadmium presence in soils, cacao plants, leaves and pods is now one of the key research areas related to cacao in several national and international research institutions. Source: https://ufdc.ufl.edu/AA00077718/00001 213 214
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Lessons learned from cases in Latin America
Applicability to the Colombian context
(2) NATIONAL STRATEGY • Clear Super Foods strategy highlighting cocoa derivatives among other natural ingredients with high nutrient content and health benefits. • Strong marketing and education of the industry and consumers. • Branding and marketing of PromPeru’s Super Foods aligned with country brand in terms of style and image. • Diversification of market: cocoa as a food and health ingredient. • Common platform for food/confectionery and food ingredient companies with high capacities, food safety standards, laboratory infrastructure and export experience to engage in cocoa and cocoa derivatives. • Cost-effectiveness in manufacturing and consolidation of containers. • Income diversification and risk mitigation for producers. Possibility for over-production and surpluses to be absorbed. • Super Foods aligned with Peru’s strong positioning in the organic cocoa market. Wide availability of certified raw material and processors that can manufacture derivatives in organic-compliant facilities. • Focus on high-quality cocoa varieties, providing access to specialty segments such as chocolatiers and differentiating the Peruvian offer compared to other origins. Plan de Mejora Competitiva de la Cadena del Cacao y sus Derivados (Ecuador) • Specific policy (through a national decree) with the support of the European Union targeted at the improvement and further industrialization + job creation within the cocoa, derivatives and chocolate sector.
There is an increasing synergy in Colombia between cocoa production, processing, marketing and exports. Among the main organizations are Red Cacaotera, FEDECACAO and PROCOLOMBIA, supported by a number of initiatives such as those headed by Swisscontact and the Swiss Import Promotion Programme (SIPPO), as well as USAID. In 2019 and 2020, PROCOLOMBIA started branding the cocoa sector in Colombia, and promoting it around a country brand “Colombian Cacao – As exciting as its origin”, sub-divided into Amazon Region, Andean Region, Caribbean Region, Orinoquia Region and the Pacific Region – as well as its sub-regions. The branding strategy attracted further attention and exports of Colombian cocoa beans (and chocolate), but a further focus (and linkage to) derivatives is needed. In addition, there is room to focus on segments other than confectionery and chocolate, thereby exploring events, trade fairs and other commercial activities in segments such as health, cosmetics, fine foods, etc. This study lists some of the main events to be explored. In terms of policy and policy implementation, Colombia relies mainly on the Consejo Nacional Cacaotero, which focuses mainly on production and productivity at the agricultural level. Two other platforms that provide room to discuss industrialization and value addition within the cocoa sector are the Plan Nacional de Cacao and the Cacao BioAndino.216 The alignment of future activities in this realm with Colombia’s SDGs can increase their visibility and impact (measurement). As in the case of Ecuador, there’s great potential for Colombia to combine activities in the cocoa sector with eco-tourism and existing processing industries, especially in light of cocoa derivatives. This can also contribute to the diversification of crops and income of producers, since these can be better linked to different processing industries, as experienced in Peru.
• Collaboration and synergies between the public and private sectors, including agro-tourism and industrial sectors. • Clear targets, with a projected increase of Ecuadorian exports and a greater share of derivatives and finished products within those exports (20% minimum). • Alignment with Ecuador’s UN Sustainable Development Goals (SDGs) up until 2030. 216
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(3) PRODUCT PROFILING Arriba Nacional (Ecuador) • Traditional and emblematic product of Ecuador. • Geographical indication for Arriba Nacional as a denomination of origin, registered and protected within Ecuador and in several of its export markets. • European companies offer cocoa products made of the Arriba Nacional variety and contribute to its marketing and quality profiling. Mayan Red – Xoco Gourmet (Central America) • Mayan Red is a cocoa hybrid variety, whose fermentation (and drying) protocols were developed specifically for this variety. • Mayan Red was one of the winners at the International Cocoa of Excellence Awards in 2013. • Xoco Gourmet preserves the Mayan Red variety by making use of grafting techniques in production areas of different countries under its own farms. • Close relations and frequent visits to producers and producers’ organizations. • Fermentation is done in a centralized facility with strict traceability protocols. • High-quality couverture produced from a single-variety and carefully-selected cocoa bean. The couvertures produced by Xoco Gourmet have a QR code which allows for the product to be traced by end-users.
Although Colombia has interesting varieties which could be competitive on the international market, its great strength and uniqueness compared to other countries lies on its regions and sub-regions, as already marketed by PROCOLOMBIA, as well as by companies such as Casa Luker (offering couvertures according to origins such as Arauca, Tumaco, Santander, Huila and San Martín217 and Cacao Hunters (Tierras del Cacao: Tumaco, Arhuacos, Boyacá, Arauca, Magdalena, Sierra Nevada)218. There are specific regions and communities that have more appeal to specialty chocolate makers, such as those clearly linked to special geographical and social / indigenous elements and impact: e.g. Arhuacos, Tumaco. There is potential, from the side of grassroots organizations, as is the case of Red Cacaotera, to collaborate with PROCOLOMBIA in improving the authenticity and better profiling of these regions on the international market, by linking them to elements of nature, health and social impact on the one hand, and to channelling these concepts through existing industrial players / cocoa processors on the other hand. The capacity-building, quality improvement and further strengthening of Chocolate Colombia and other producers’ organizations with existing capacities to process cocoa into derivatives could also contribute to creating an authentic product for international markets.
• Clear orientation towards the gourmet market in Europe and elsewhere: pastry chefs and artisanal chocolate makers. • In-house chocolate maker that creates and adapts couverture recipes based on market demand and feedback. • Wide product portfolio: Xoco Gourmet offers couvertures at different cocoa %, as well as white chocolate and derivatives such as butter and powder. Chuno – Ingemann (Nicaragua) • Nicaraguan / Danish company Ingemann has profiled Chuno® as one of its main fine cocoa varieties. These varieties are assigned names to function as “brands”. • For each variety, Ingemann also experiments different fermentation protocols and offers these different flavor and aroma ranges to clients. • The classification of Chuno® as Heirloom cocoa adds uniqueness and market value to the variety. • Tree-to-bar concept whereby the cocoa beans are sourced in the country of origin, further processed and turned into derivatives and finished products at an European processing plant. 217 218
https://lukerchocolate.com/products-services/ingredients/casaluker-origins https://www.cacaohunters.com
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(4) QUALITY SINEACE - Normas de competencia para la post cosecha y la cata de licor o pasta de cacao (Peru) • The norms have been compiled, evaluated and consensually agreed on by industry professionals, specialists and other sector stakeholders. • The norms are certifiable, and such certification can be granted to individuals that successfully complete the modules. • The norms are based on international guidelines and references . International market access and legitimacy are improved. • APPCACAO was incorporated into the Registro Nacional de Entidades Certificadoras in 2014, delivering professional competences to people located in remote rural areas who often did not have access to basic education. • Certified quality assessors have better employment opportunities in the cooperatives, producers’ associations and companies that require this technical expertise CUNAKAKAW (Central America) • Guarantee for quality products, managed under a strict Internal Control System and supported by post-harvest protocols and laboratory analysis • Directly linked to quality assessment and quality understand of the international market • Easily implementable on the field, and can be followed by farmers’ organizations and cooperatives alike. The manual focuses on cocoa beans, and in safegarding raw material quality for optimal processing of derivatives further in the chain. • Social and Environmental Responsibility standards. Sanchez/ Hispaniola (Dominican Republic) • The Dominican Republic exports two different types of cocoa, known as Hispaniola (high quality) and Sanchez (low quality). • Quality differentiation allows industries to engage in cocoa-butter processing in large volumes without compromising its high-quality varieties. • The Comisión Nacional de Cacao is responsible for quality control for exported cocoa products.
219
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https://www.icco.org/fine-or-flavor-cocoa
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In Colombia, quality is one of the challenging subjects within the cocoa sector. Although 95% of Colombia’s exports of cocoa beans is considered to be fine flavour219, the vast majority of cocoa production is purchased and processed domestically, at relatively low qualities – and consequently low price levels. In spite of the effort of extension services such as those of FEDECACAO, and isolated success cases such as Cacao Hunters, there is still a quality of culture to be developed in the cocoa sector. Without high-quality raw materials, controlled by specific and stepwise protocols, and qualified professionals to control and assess their implementation, it will be difficult for the industry in Colombia to mimic the success cases experienced in other Latin American countries. As such, the implementation (and possible officialization) of internationally-recognized standards, both for the raw material as well as for derivatives, could benefit the Colombian cocoa sector. As shown in the case of the Dominican Republic, not all cocoa beans produced, processed, and exported by the country must be of high quality, as long as there is a robust grading and classification mechanism which distinguishes lower and higher qualities. As mentioned previously, this can serve to protect the origin as well; a good analogy of this segmentation of quality is the classification of Excelso coffee beans for export in Colombia versus other lower-quality beans that are used domestically or exported under other quality grades.
(5) MARKET REPRESENTATION Xoco Gourmet (Honduras / Denmark) • Xoco Gourmet has a representative office in Copenhagen, Denmark. This allows the company to sell couvertures and other derivatives in smaller quantities to various end-users directly, without compromising logistical efficiency or product quality. • Knowledge and close contact with customers regarding their specific quality and volume requirements, so that the company can plan and adapt production accordingly. Ingemann (Nicaragua / Denmark) • Tree-to-bar concept whereby the cocoa beans are sourced in the country of origin, further processed and turned into derivatives and finished products at an European processing plant. • Traceability, food safety, freshness, efficient and competitive distribution. In addition, that production is carried out according to market demand – in terms of volumes and taste profiles. • The profits from retail sales can be distributed along the company, thus bringing the financial benefits back to the origin of the cocoa beans. • Full control of the value chain, and competitive processing at the destination market, Ingemann is able to offer a high-quality chocolate at an accessible price Cocoa Supply (Ecuador) • Representation in both the USA and European markets (UK representative office), and offers a wide range of cocoa derivatives: nibs, powder, butter, liquor / mass (and cocoa beans), highlighting the Arriba Nacional. • Own warehouses. • Competitive prices, quality and traceability by keeping strong ties to small farmers and producers in Ecuador, through a vertically-integrated business model.
Similarly to Xoco Gourmet, Cocoa Supply and Pacari, Colombia’s main cocoa derivative company Casa Luker already has consolidated representation, warehousing and distribution activities in its main destination markets: Belgium, Germany and the United Kingdom. The model is successful: it allows the company to compete in a level playing field with European manufacturers in terms of logistics, marketing, customer support, etc., especially when it comes to supplying smaller volumes to small and medium sized manufacturers around Europe. It is challenging for other companies to establish themselves at the same level on the European market without this type of representation and support, unless this is outsourced to an existing representative in Europe, such as an agent or importer. Support from PROCOLOMBIA in this respect, through its European offices, could be an important asset to exporters of derivatives – along with a possible diversification of markets and segments, as mentioned previously. Nonetheless, Colombian entrepreneurs need to explore, benchmark and market their value propositions – the European market is saturated and requires innovation. The model of Ingemann, whereby a manufacturing plant is established in Europe, requires high investment and market knowledge, and it is not yet aligned with the possibilities of Colombian SMEs engaged in cocoa processing – unless, again, it is done in partnership with existing European manufacturers, in specific cost and profit-sharing arrangements. Possibilities within private-label manufacturing in Colombia for European companies and retailers can also be explored – though are likely limited due to distribution and other logistical and quality impediments. There are not many cases in this model that evidence success.
• Strict food safety and sustainability standards. • Prices paid to farmers are ~10% higher than international market prices. Pacari (Ecuador) • Representative marketing and distribution office in the United Kingdom. Chocolate and couvertures highlighting the Arriba Nacional variety ingredients from the Ecuadorian biodiversity. • Sustainability proposition: B-Corporation, and social and ecological certifications such as EU and USDA Organic, Fair trade and Demeter. Also part of other sustainability initiatives such as the One Tree Planted Initiative. Pacari’s products are also Kosher and Vegan-certified, which increases its market outreach.
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(6) MARKET INTEGRATION Norandino (Peru) • Long-term and strong partnerships with chocolate manufacturers and brands in the USA and European markets for its cocoa beans. • Support of existing customers Chocolatemarkers, Ethiquable and Equal Exhange, as well as Rabobank Foundation, Stichting Doen and the Private Sector Investment Program (PSI) to engage in derivatives. • Market / purchases of derivatives safeguarded by existing customers. • Factory provides a cheaper alternative for European companies to process cocoa beans into derivatives, aligned with a social impact mission. • Machinery and processing facilities can be rented out to local companies, so as to forest domestic consumption as well. CONACADO (Dominican Republic) • Largest cocoa bean exporter in the Dominican Republic and focus on certified cocoa, thus a wide customer base. • Own ISO 22000-certified processing plant with wide product assortment and production capacity. • Actively engaged in the continuous improvement of the productive processes of cocoa, linked to ongoing education to producers. • Fair Trade Premiums directly invested in pilot projects • Several direct buying partners for both cocoa beans and derivatives. • CONACADO’s associates able to carry out sensory analysis of its products, thus meeting strict organoleptic requirements of markets like the USA and Europe.
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Latin America
Strong relationships with buyers in cocoa beans is an important foundation to develop market volume, investment capital and trust / reputation to develop ties in cocoa derivatives as well. As shown in the case of Norandino and CONACADO, a large part of the investment in the cocoa manufacturing plant was done by the cooperatives themselves, with an already-existing clientele base. Few Colombian cooperatives have direct and consolidated relationships with international buyers of cocoa beans. There is an important role for the Red Cacaotera especially to further develop these relationships on behalf of their ~100 producers’ associations. As mentioned previously, one of the players in Colombia with such potential is Chocolate Colombia which, in addition aggregating various producers’ organizations, holds a fair trade certification – whose premium fund could be used to invest in food safety, product improvement, etc. Other investment capital alternatives would have to be explored, with possible collaboration with impact investment funds and domestic credit lines / grants. Another possible channel is to connect existing cooperatives and producers’ organizations with a robust clientele for cocoa beans, and interest in derivatives, to Colombia’s cocoa-processing industries that already contain advanced food safety, technology, etc. – to whom the manufacturing of derivatives could be outsourced.
3.8. Best practices: Companies, Producer Organizations and Cooeratives The list below highlights the companies, producer organizations and cooperatives mentioned in this study, as well as other examples of entities in Latin America that have interesting products and/or business models within cocoa derivatives. The list is non-exhaustive, but provides a diverse and broad compilation across different countries in the region. It excludes multinationals.
NAME
COUNTRY
TYPE
Norandino
Peru
CONACADO
Confederation, Cocoa beans, Cocoa powder, Dominican agro-industrial Cocoa liquor / paste, Cocoa Republic organization butter
Chocolate del Caribe / MESOCACAO
Costa Rica
Machu Picchu Foods
Ingemann
Peru
Nicaragua
Cooperative
PRODUCTS Cocoa beans, Cocoa paste
Company
Cocoa nibs, Cocoa butter, Cocoa paste / liquor, Cocoa powder, Couverture
Company
Cocoa nibs, Cocoa butter, Cocoa paste / liquor, Cocoa powder, Cocoa cake, Raw cocoa products Chocolate and other confectionery
Company
Ingemann (Nicaragua): Cocoa beans, Cocoa nibs, Cocoa butter, Cocoa paste / liquor, Cocoa powder, Cocoa cake
WEBSITE https://coopnorandino.com.pe https://conacado.com.do https://www.mesocacao.com https://www.facebook.com/Chocolate-del-Caribe-577948475665902 https://www.mpf.com.pe
https://ingemann.com.ni
Ingemann Chocolate (Denmark): Couverture, Chocolate Xoco Gourmet
Villa Andina
Honduras
Peru
Company
Cocoa beans, Couverture
https://www.xocogourmet.com
Company
Cocoa beans, Cocoa nibs, Cocoa powder, Cocoa butter, Cocoa paste / liquor
http://www.villaandina.com
Other: Andean grains, Raw dried super foods
Algarrobos Orgánicos
Nutry Body
Peru
Company
Cocoa beans, Cocoa nibs, Sweetened cocoa nibs, Cocoa liquor/paste, Cocoa butter, Cocoa powder
https://www.algarrobosorganicos.pe
Other: Native fruits, Grains and seeds, Herbs, Roots and tubers
Peru
Company
Cocoa powder, Cocoa liquor / paste, Couverture and Chocolate Other: Coffee, Dried fruits, Cereals and Seeds, Other Super Foods
http://nutrybody.com
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NAME
Exportadora Romex
COUNTRY
Peru
TYPE
Company
PRODUCTS Cocoa beans, Cocoa nibs, Cocoa cake, Cocoa butter, Cocoa powder, Cocoa liquor / paste, Couverture
WEBSITE
https://romex.pe
Other: Coffee Organic Crops Peru
Company
Cocoa beans, Cocoa nibs, Cocoa powder, Cocoa liquor/ paste, Cocoa butter
http://organiccrops.net
Other: Super Foods Amazon Andes Export
Eco Andino
Peru
Peru
Company
Company
Cocoa beans, Cocoa nibs, Cocoa liquor / paste Other: Super Foods, Herbs, Resins Raw cocoa beans, Cocoa nibs, Cocoa butter, Cocoa powder, Cocoa liquor/paste
https://www.amazon-andes.com
https://ecoandino.com
Other: Andean grains and Other Super Foods COFINA
Ecuador
Company
Cocoa beans, Cocoa nibs, Cocoa butter, Cocoa liquor / paste, Cocoa powder, Cocoa cake
https://cofinacocoa.com
Pacari
Ecuador
Company
Couverture, Chocolate
https://www.pacari.com
Cocoa beans, Cocoa nibs
http://www.cafiesa.com
Cafiesa
Ecuador
Company
Coagricsal
Honduras
Cooperative
El Ceibo
Bolivia
Association of cooperatives
Cocoa powder, Cocoa paste / liquor, Cocoa butter
https://elceibo.com
To’ak
Ecuador
Company
Couverture and Chocolate
https://toakchocolate.com
Rizek Cacao
Dominican Company Republic
Cocoa beans, Cocoa liquor / paste, Cocoa butter, Cocoa powder
https://rizekcacao.com
Biocafcao
Dominican Company Republic
Cocoa beans, Cocoa nibs, Cocoa liquor / paste, Cocoa butter, Cocoa powder
http://biocafcao.com
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Cocoa liquor / paste, Cocoa powder, Cocoa butter Cocoa beans, Chocolate Other: Coffee, Allspice
https://www.coagricsal.hn
4. Product Specifications: Technical Sheets Find below examples of specification sheets for each cocoa derivative, with details per product, company and country. Observe the different parameters used for each one of the derivatives, and take note of the different applications and end-markets they are destined to. Some suppliers prefer to give more extensive product specifications, while others limit their specification sheets to the minimum parameters. Suppliers of cocoa derivatives are always advised to consult with their potential buyer(s) regarding exact product specifications and any other specific requirements. These specification sheets are also available as an attachment to this report, as a .ZIP file “Product Specification and Technical Sheets – Cocoa derivatives”.
COCOA NIBS PRODUCT NAME
COMPANY
COUNTRY
LINK
Raw cacao nibs
Organic Crops
Peru
http://organiccrops.net/bin/OC_Prod_Cacao-NibsRaw_09_EN.pdf
Roasted cacao nibs
Organic Crops
Peru
http://organiccrops.net/bin/OC_Prod_Cacao-Nibs-Roasted_09_EN.pdf
Cocoa nibs
Cafiesa
Ecuador
http://www.cafiesa.com/uploads/1/6/6/6/16668520/cafiesa_cocoa_nibs.pdf
Nibs de Cacao sin Tostar Bulk
COFINA
Ecuador
http://cofinacocoa.com/wp-content/uploads/2018/07/ EAC-005-Nibs-de-Cacao-sin-tostar-Bulk-5.pdf
Organic cocoa nibs raw
DO-IT Organic
Netherlands
https://www.organic.nl/static/default/files/media/pdf/ product-info/54100_7.pdf
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COCOA PASTE / LIQUOR There may be variations in required parameters between defatted and natural cocoa paste / liquor. Take a look at the examples below and take note of the different products and applications.
PRODUCT NAME
COMPANY
COUNTRY
LINK
Cacao liquor / paste
Organic Crops
Peru
http://organiccrops.net/bin/OC_Prod_Cacao-Paste_09_ EN.pdf
Natural Cocoa Liquor / Paste
Cafiesa
Ecuador
http://www.cafiesa.com/uploads/1/6/6/6/16668520/ natural_liquor_cafiesa.pdf
Licor de cacao natural
COFINA
Ecuador
http://cofinacocoa.com/wp-content/uploads/2018/07/ EAC-005-Licor-de-Cacao-Natural.pdf
NATURAL COCOA LIQUOR / MASS
Eco Kakao
Ecuador
http://www.eco-kakao.com.ec/pdf/cacaolicor.pdf
COCOA MASS
Rizek Cacao
Dominican Republic
https://rizekcacao.com/wp-content/themes/nametheme/_uploads/docs/rg-pr-009-12-specification-sheetcocoa-mass.pdf
Cocoa liquor (cocoa paste)
Francesca Brandt Swiss
Switzerland
http://francescabrswiss.ch/wp-content/uploads/2018/10/Specification-Sheet-Cocoa-Liquor.pdf
COCOA BUTTER There may be variations in required parameters between natural and deodorized cocoa butter, crude vs. refined cocoa butter, as well as between cocoa butter destined to food and/or cosmetics applications. Take a look at the examples below and take note of the different products and applications.
PRODUCT NAME
COMPANY
COUNTRY
APPLICATION
LINK
Cacao Butter
Organic Crops
Peru
Food and cosmetics
https://organiccrops.net/bin/OC_Prod_Cacao-Butter_06_EN.pdf
Deodorized Cacao Butter
Organic Crops
Peru
Food and cosmetics
http://organiccrops.net/bin/OC_Prod_Cacao-Butter_Deo_03_EN.pdf
Natural Cocoa Butter
Casa Luker
Colombia
Food
https://dillicious.eu/wp-content/uploads/2016/04/Kakaobutter.pdf
Natural Cocoa Butter (Pure Prime Pressed)
Cafiesa
Ecuador
Food
http://www.cafiesa.com/uploads/1/6/6/6/16668520/natural_cocoa_butter.pdf
Deodorized Cocoa Butter
Cafiesa
Ecuador
Food
http://www.cafiesa.com/uploads/1/6/6/6/16668520/deodorized_ butter_cafiesa.pdf
Manteca de cacao
COFINA
Ecuador
Food
http://cofinacocoa.com/wp-content/ uploads/2018/10/EAC-005-Manteca-deCacao.pdf
NATURAL COCOA BUTTER
Rizek Cacao
Dominican Republic
Cosmetics
https://rizekcacao.com/wp-content/themes/ nametheme/_uploads/docs/rg-pr-009-11specification-sheet-cocoa-butter.pdf
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PRODUCT NAME
COMPANY
COUNTRY
APPLICATION
LINK
Manteca de cacao refinada
Gustav Heess
Germany
Cosmetics
https://www.gustavheess.com/wp-content/uploads/2017/11/1604esp.pdf
Cocoa Butter Conventional or Organic
PRAAN Naturals
USA
Cosmetics
http://www.praannaturals.com/product-literature/NS_info_cocoa_butter.pdf
Cocoa Butter
Nederland SA
Spain
Cosmetics
http://www.chocoweb.com/en/pdf_ epecif_productos/cocoabutter2.pdf
Cacao Butter Crude, Organic
NHR Organic Oils
UK
Food and Cosmetics
https://www.nhrorganicoils.com/uploads/20180528153634e_Cocoa_Butter_Spec.pdf
COCOA POWDER There may be variations in required parameters between natural and alkalized cocoa powder, as well as between natural and defatted cocoa powder. Take a look at the examples below and take note of the different products and applications.
PRODUCT NAME
COMPANY
COUNTRY
LINK
Cacao powder 10/12
Organic Crops
Peru
http://organiccrops.net/bin/OC_Prod_Cacao-Powder12_09_EN.pdf
Gran Extra-Dark Alkalized Cocoa Powder
Cafiesa
Ecuador
http://www.cafiesa.com/uploads/1/6/6/6/16668520/cafiesa_alk_10-12_conv_specs.jpg
10/12 Natural Cocoa Powder
Cafiesa
Ecuador
http://www.cafiesa.com/uploads/1/6/6/6/16668520/10-12_nat_cafiesa_spec.pdf
Polvo de cacao natural
COFINA
Ecuador
http://cofinacocoa.com/wp-content/uploads/2018/10/ EAC-005-Polvo-de-Cacao-Natural.pdf
NATURAL COCOA POWDER
Rizek Cacao
Dominican Republic
https://rizekcacao.com/wp-content/themes/ nametheme/_uploads/docs/rg-pr-009-15-specification-sheet-natural-cocoa-powder.pdf
Organic Cocoa powder 20/22 Alkalized (Theobroma Cacao)
DO-IT Organic
Netherlands
https://www.organic.nl/static/default/files/media/pdf/ product-info/20221_14.pdf
COUVERTURE PRODUCT NAME
COMPANY
COUNTRY
LINK
Chocolate
Organic Crops
Peru
http://organiccrops.net/bin/OC_Prod_Chocolate70_01_ EN.pdf
Dark chocolate 58% Cacao
Casa Luker
Colombia
https://liveorder.valleybakers.com:8080/valweb45/Images/VBASpecSheets/24604.pdf
55% Dark Couverture
Infinity Foods
UK
https://www.infinityfoodswholesale.coop/all-products/coffee-subs-malt-drinks-carob-and-cocoa/infinity-foods-chocolate/55-dark-couverture
Trade Statistics
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5. Events, Trade Fairs and Databases There are several events and trade fairs in Europe where buyers and other interesting market actors can be contacted. This section highlights some of these main events and trade fairs per market segment, as well as interesting databases that can be used to compile comprehensive buyers’ lists. Note that the websites of events and trade fairs can also be used as databases, since they all contain lists of exhibitors and/or member companies. Suppliers do not need, and must not, visit all of them. Before considering attending these events, it is recommended that Colombian suppliers and their support agencies firstly check the profile, size and target segments of these events, as well as exhibitors’ lists and general relevance to them.
HEALTH PRODUCTS Food Ingredients / Health Ingredients Europe:220 This fair is the largest food and beverage ingredients platform, held biennially in a major European city. At this fair, leading food and beverage suppliers and specialists in research and development, production and marketing will showcase very diverse ingredients and services. In a regular edition, the fair receives about 27,000 visitors and 1,700 exhibitors over three days. Next edition: 30 November – 2 December 2021 in Frankfurt, Germany. Vitafoods Europe:221 This fair is a buying and sourcing event for the global nutraceutical industry. It is located in Geneva, Switzerland, with an estimated 1,250 exhibitors and 25,000 visitors attending the show every year. Four sectors of the nutraceutical industry are represented: ingredients & raw materials, branded & finished products, contract manufacturing & private label and services & equipment. Next edi-
tion: 5-7 October 2021 (in-person event) and 4-8 October 2021 (virtual event). Natural and Organic Products Europe:222 This is Europe’s biggest trade show for natural products, health food and organic industries. The fair takes place annually in London, United Kingdom, and generally welcomes every edition over 700 exhibitors and 10,500 visitors of around the globe. This fair might be interesting for organic certified final chocolate products given its focus on innovative products, where a large selection of the latest natural, organic, vegan, free-from, sustainable and eco-friendly products are exhibited. Next edition: to be determined. Biofach:223 This is the most important international exhibition for organic food and fair trade products, held every year in Nürnberg, Germany. The fair had nearly 3,800 exhibitors and about 50,000 visitors in 2020.224 This fair is relevant for companies handling cocoa beans and cocoa derivatives that already hold organic certification, or those that want to get certified. At this fair you will find buyer profiles that you are unlikely to find at other fairs, given the interaction between the food (Biofach) and health/personal care sector (Vivaness). Vivaness and Biofach are a trade fair duo, and at international fairs like this there is much room to diversify your potential target segments and buyer profiles. Next edition (virtual): 2022. An interesting database for the organic sector specifically is Organic-Bio,225 which is an international directory of organic food wholesale and supply companies. Within this database, the use can search per specific ingredient in the “Cocoa and its preparations” category: beans, butter, chocolate, powder, paste, etc.
www.figlobal.com/fieurope www.vitafoods.eu.com 222 www.naturalproducts.co.uk 223 www.biofach.de 224 https://www.fruit-processing.com/2020/02/biofach-and-vivaness-2020-combined-trade-fair-hits-new-high-of-3792-exhibitors/ 225 www.organic-bio.com 220 221
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CONFECTIONERY Cocoa and Chocolate Chocoa:226 this is an annual event held in Amsterdam, the Netherlands, bringing together all stakeholders in the cocoa and chocolate industry: from cocoa producers, traders, chocolate makers to consumers. The fair aims to boost production and consumption of sustainable cocoa and chocolate. The fair always includes a specific Chocolate Makers’ Forum, discussing the most recent trends and topics in the craft chocolate industry, and guaranteeing the presence of many chocolate makers. As such, this fair is highly interesting for exporters which can showcase an offer of sustainably-produced cocoa and cocoa derivatives. Next edition (virtual): 2022. Salon du Chocolat:227 This is the world’s largest fair dedicated to only chocolate and cocoa, with about 700 exhibitors, of which many are chocolatiers, pastry chefs, confectioners and professionals from the chocolate industry. Also producing countries pavilions and individual exporters exhibit at the fair, while the fair is open to all public. The main event is held every year in Paris, but Salon du Chocolat also has smaller events in Belgium, Italy and the United Kingdom. The Paris event hosts the International Cocoa Awards every two years, which is part of the Cocoa of Excellence Program;228 this competition showcases and celebrates high-quality cocoa and diversity. Next edition: 28 November – 1 December 2021. COTECA:229 This is an international business-to-business trade fair for coffee, tea and cocoa in Hamburg, Germany, held every two years. In its last edition in 2018 it hosted 200 exhibitors and 3,600 visitors. Next edition: to be determined, 2022. An interesting database within the specialty cocoa and chocolate market is the Make Mine Fine Marketplace,230 which is an online marketplace, listing a www.chocoa.nl www.salon-du-chocolat.com 228 http://www.cocoaofexcellence.org/ 229 www.coteca-hamburg.com 230 www.makeminefine.com 231 https://www.finechocolateindustry. 232 www.ism-cologne.com 233 www.anuga.com 234 www.sialparis.com 235 www.foodmatterslive.com 226 227
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number of chocolate makers and chocolatiers (mainly in the USA). This marketplace is an initiative of the Fine Chocolate Industry Association (FCIA).231
Other ISM:232 ISM is the world’s largest trade fair for sweets and snacks, held biannually in Cologne, Germany. Many private label players, brands, and confectionery manufacturers and traders exhibit and visit this fair. Cocoa derivative producers and exporters will find ISM an interesting fair, given the several segments in the food industry using cocoa products. In last fair’s edition, a total of 1,774 exhibitors and 37,000 visitors were at the event. Next edition: 30 January – 2 February 2022.
FOOD INDUSTRIES Anuga:233 This is the world’s leading food fair for the retail trade and the food service and catering market, with more than 7,500 exhibitors and 165,000 visitors. It includes some of the largest ingredient buyers / importers and end-user industries, thus potentially interesting for suppliers of all cocoa derivatives. It is held every two years in Cologne, Germany. Next edition: 9-13 October 2021. Salon International de l’Alimentation (SIAL):234 SIAL is, together with Anuga, one the world’s largest food exhibitions, encompassing a number of food ingredients and final products, including chocolate manufacturers. SIAL is held every two years in Paris, France. The 2018 edition had 7,200 exhibitors from 119 countries, and around 310,000 visitors. Next edition: 15-19 October 2022. Food Matters Live:235 At this event, innovative ingredient suppliers meet UK and international based manufacturers. Exhibitors and visitors include brands, as well as retailers and foodservice companies. This
is a yearly event, taking place in London, United Kingdom. Next edition (virtual): 2022. Private Label Manufactures Association (PLMA) World of Private Label:236 This event is focused on the private label industry, bringing together both manufacturers and buyers from many countries. PLMA has more than 2,700 exhibiting companies from around 60 different countries, held every year in Amsterdam. Next edition: to be determined, 2022. Specialty and Fine Food Fair:237 trade fair for fine food and drinks in the United Kingdom, with an estimated 700 exhibitors and 10,000 visitors. The Great Taste Awards238 show is linked to the Specialty and Fine Food Fair. The Great Taste Awards have been important to the growth of the craft chocolate movement, for instance, in the United Kingdom. Registration and product entry for the Award is between 15 February. Next edition of the fair: 2022.
COSMETICS Vivaness:239 This trade fair is held annually in parallel with Biofach, in Nürnberg, Germany. Vivaness is the International Trade Fair for Natural and Organic Personal Care. This fair is especially interesting for cocoa butter producers which hold organic certification. In 2020, 292 natural and organic cosmetic exhibitors were present at the fair. Next edition (virtual): 2022. In-Cosmetics:240 This fair is the leading global event for personal care ingredients, thus an interesting fair for cocoa butter manufacturers. In 2019, the fair received 12,366 visitors and 843 personal care exhibitors. 2022.
www.plmainternational.com www.specialityandfinefoodfairs.co.uk 238 https://gff.co.uk/awards/great-taste-awards/ 239 www.vivaness.de 240 www.in-cosmetics.com 236 237
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6. Conclusions and Recommendations Based on the findings of the study, both in terms of market trends, structure and trade flows as well as case studies from other Latin American countries, this section draws on the main conclusions and provides a series of recommendations aimed at improving and propelling the cocoa and cocoa derivative sector in Colombia. It addresses conclusions and recommendations around some key areas:
• Identify and Country Image
could build on the existing slogan “COLOMBIAN CACAO – AS EXCITING AS ITS ORIGIN. EL CACAO DE COLOMBIA TIENE UN ORIGEN QUE EMOCIONA.”, validated and clearly relatable to producers and producers’ organization as well as other private sector actors. It is also important that the slogan can also encompass sustainability issues and be used in events that are not only related to cocoa, but to wider industries such as food, cosmetics and health.
• Quality Management and Product Quality • Sustainability • Diversification of Target Segment and Markets + Market Access
6.1. Identity and Country Image The different Latin American case studies for cocoa and cocoa derivatives reviewed in the context of this study revealed a strong orientation towards a common identity for the sector, built upon elements that different stakeholders can relate to. These are associated to specific varieties, functionality/health, quality and other elements that set specific suppliers apart from other global suppliers. A common identity and country image for the cocoa and cocoa derivative sector can contribute to a more unified market entry for Colombian exporters, and to strengthen the image of Colombia as a supplier of high quality and sustainable cocoa products.
Recommendation • Collaboration with PROCOLOMBIA, the Red Cacaotera and FEDECACAO in creating a common brand for Colombian cacao to be presented at events and trade fairs, covering both cocoa beans and derivatives. The common brand
6.2. Quality Management and Product Quality In Colombia, quality is one of the challenging subjects within the cocoa sector. Although 95% of Colombia’s exports of cocoa beans is considered to be fine flavour, the vast majority of cocoa production is purchased and processed domestically, at relatively low qualities – and consequently low-price levels. Without high-quality raw materials, controlled by specific and stepwise protocols, and qualified professionals to control and assess their implementation, it will be difficult for the industry in Colombia to assimilate and adapt the success cases experienced in other Latin American countries. At the same time, quality management is also an essential item in accessing specific target markets and market segments. Buyers increasingly expect their suppliers of ingredients, among which cocoa derivatives, to be processed in manufacturing plants complying with advanced standards, preferably recognized by the Good Food Safety Initiative (GFSI): IFS, BRC, FSSC2220.
Recommendations: • Support producers, producers’ organizations and companies in the implementation (and possible officialization through standardization
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agencies) of internationally-recognized standards and methodologies, both for the raw material (cocoa beans) as well as for derivatives and chocolate organized into training modules and certification programs. Collaboration can be sought with the International Standards for the Assessment of Cocoa Quality and Flavour (ISCQF)241 for capacity-building purposes. The existing protocols published by the ISCQF for cocoa beans and cocoa derivatives can be consulted on the website of this international initiative242.
• Publication of practical guides and guidelines, as well as support from training organizations (to be identified) for the implementation of Hazard Analysis and Critical Control Point (HACCP), based on the Codex Alimentarius243 standards, aimed at producers, producers’ organizations and companies active in cocoa-processing / production of derivatives. For companies with more advanced capacities and existing market experience, the program should consider technical and financial support in implementing more complex and stricter food safety standards / certificates such as FSSC 22000 / ISO-22000-based standards, IFS and BRC, which will grant these companies access to more sophisticated and stringent buyers and markets; for example: health products. This support should be given where market demand is clear, and certification will de facto lead to improved market access.
6.3. Sustainability Sustainability is an essential European market trend that cuts across several segments such as food (and confectionery), health and cosmetics. In order to follow market trends and comply with increasingly
stringent buyer requirements related to social, environmental and economic impact in the cocoa sector, Colombian suppliers must develop and comply with sustainability policies that are aligned to international standards and recognized by market players.
Recommendations • Support and provide technical assistance to producers, producers’ organizations and exporters in the elaboration of sustainability policies based on international standards that are recognized by European (and other international) market players. These policies must focus on issues such as Laws and Regulation, Human Rights, Child Labor, Decent Work, Health and Safety, Environment and Business Integrity. Some of the guidelines that can be used as reference points for the elaboration of these policies are:
• United Nations Guiding Principles on Business and Human Rights244
• United Nations Global Compact245 • Ethical Trading Initiative’s Base Code246 • Global Reporting Initiative (GRI)247 • Seek alignment with Colombia’s Sustainable Development Goals (SDGs) in project activities, which can be directly linked to specific impact areas, as well as to specific national policies that support the development of the cocoa sector. This will safeguard that these activities meet specific development goals at both the national and international levels.
• Ensure the alignment with the ISO 341011:2019 Sustainable and traceable cocoa248 for any sustainability standard developed at the sector level.
https://www.cocoaqualitystandards.org https://www.cocoaqualitystandards.org/protocols-for-review 243 http://www.fao.org/fao-who-codexalimentarius/en 244 https://www.ohchr.org/documents/publications/guidingprinciplesbusinesshr_en.pdf 245 https://www.unglobalcompact.org/what-is-gc/mission/principles 246 https://www.ethicaltrade.org/resources/eti-base-code 247 https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-spanish-translations 248 https://www.iso.org/standard/64765.html 241 242
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6.4. Diversification of Target Segments and Markets + Market Access The study identified opportunities and challenges within different market segments in Europe, which could be summarized as:
• The health segment represents an interesting market for very specific Colombian suppliers already inserted into niche markets, especially organic. Organic certification is often a pre-requisite in this market. This is still a clear limitation for Colombia, since the availability of certified raw material is low in the country. Companies which have a clear focus on organic cocoa (beans) and other traditional products of Colombian biodiversity, allied with high food safety standards, could find success in the health market due to their general profile and product focus.
• The confectionery segment is where Colombia is most active for both cocoa beans and derivatives. In derivatives, successful companies usually follow a model that relies on an European representative, with activities like warehousing, marketing, distribution, etc. carried out in the destination market, which allows the company to handle small orders / volumes from smaller-scale chocolate makers, confectionery and other food industry players. Colombia has strong potential in promoting its regional cocoa profiles, and the chocolate market is strongly oriented towards storytelling - Colombia has shown increasing presence in bean-to-bar chocolates in Europe, with regions such as Tumaco and Sierra Nevada and communities such as Arhuacos gaining buyer and consumer recognition. There is potential to convey similar messages through derivatives within the chocolate market and to optimize its existing contacts / channels with chocolate makers.
• Larger-scale food industries in mainstream markets provide with little value addition opportunities, especially for the producer, and for
which Colombia may not be able to compete successfully in terms of volume.
• Within the European cosmetics segment, there is significant demand for cocoa butter, particularly in the bulk market. Colombia may not be able to compete successfully in terms of volume with other global suppliers, and the prices paid within this market may not particularly favor producers because it is a commoditized market - it is not a market that aims at the highest quality cocoa with a significant premium. At the same time, the market for certified (organic, fair trade) cocoa butter might provide an interesting window of opportunity, especially among natural / ethical cosmetics companies in Europe whose value proposition lies in sustainable impact and story-telling. For these companies, direct contact with producer organizations is very important, and may be a requirement for collaboration (i.e. not via traders).
Recommendations: • Categorize the Colombian companies identified in the diagnosis process of the Producers to Markets Alliance (PMA) and in the PROCOLOMBIA database according to the various end-industries and segments, considering their product portfolios, production capacities, product quality, food safety standards / certificates, sustainability standards / certificates and other parameters that will allow for an adequate company selection for matchmaking activities and other events.
• Collaborate with PROCOLOMBIA, Chambers of Commerce and other export-promotion institutions in strategic marketing and matchmaking activities within the cocoa / chocolate, health, food and cosmetics sectors, and possibly within private-label manufacturing. These are organizations that have both the mandate and existing infrastructure to link up the private sector in Colombia with potential buyers in international markets; this should be leveraged in the context of cocoa derivatives.
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• Leverage the support from PROCOLOMBIA in
• Identify Colombian producers’ organizations
identifying and connecting exporters of cocoa derivatives to agents and distributing agents in Europe through their international representative offices.
with export experience in cocoa beans, advanced organizational capacities and existing processing activities, and leverage their relationships with their existing international buyers. Explore possibilities for collaboration in purchasing of cocoa derivatives and transferring of know-how. There is an important role for the Red Cacaotera especially to further develop these relationships on behalf of their ~100 producers’ associations.
• Invest in a collaborative platform between exporting companies for the consolidation of derivatives and other ingredients destined to exports, so as to create scale and diminish costs for exporters dealing with small (Less-than-Container) volumes.
• Connect existing cooperatives and producers’ organizations with a robust clientele for cocoa beans, and interest in derivatives, to Colombia’s cocoa-processing industries that already contain advanced food safety, technology, etc. – to whom the manufacturing of derivatives could be outsourced.
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Trade Statistics
• Explore investment capital alternatives, with possible collaboration with impact investment funds and domestic credit lines / grants.