Entering the European market for certified cocoa

The Rainforest Alliance is the most commonly used mainstream certification scheme for cocoa. Fairtrade and organic are growing on the specialty market and offer interesting opportunities for exporters, with high potential for double certification as well. As an exporter, you should certify according to market demand and buyer requirements, making sure that certification is economically viable to you and that it safeguards long-term commitments.

1. What requirements must certified cocoa comply with to be allowed on the European market?

You can only export cocoa to Europe if you comply with strict European Union requirements. For a complete overview of these standards refer to our study on buyer requirements for cocoa or consult the specific requirements for cocoa in the EU Trade Helpdesk. This section highlights the main requirements related specifically to certified cocoa.

Rainforest Alliance certification

On the mainstream cocoa market, the most widespread certification scheme is the Rainforest Alliance. You can consult the guide for farmers on how to get Rainforest Alliance certified here. If you are an exporting company, refer to this guide on how to get chain of custody certification. In June 2020, the Rainforest Alliance published its new certification programme for farmers and companies. Audits against this new standard will begin from July 2021.

Note that the Rainforest Alliance strengthened its cocoa certification programme with stricter audit rules in early 2020.

Organic certification

In order to market your cocoa as organic in the European market, it must comply with the regulations of the European Union for organic production and labelling. Note that the EU organic regulation will apply some changes as of 1 January 2021; the website of IFOAM describes these changes in detail and highlights the implications to suppliers outside of the EU.

An important change, already implemented as of February 2020, is that Certificates of Inspection (COIs) must be issued by control authorities prior to the departure of a shipment. If this is not done, your product cannot be sold as organic in the EU and will be sold as a conventional product. COIs can be completed by using the European Commission’s electronic Trade Control and Expert System (TRACES).

If you want to export to countries outside of the European Union (EU), check the required legislations for that country. For instance, Switzerland has its own Swiss Organic Law, and the Organic Products Regulations 2009 apply in the United Kingdom.

Before you can market your cocoa as organic, an accredited certifier must audit your growing and processing facilities. Refer to this list of recognised control bodies and control authorities issued by the EU, to ensure that you always work with an accredited certifier.

In addition to the EU organic logo, most European countries also have their own voluntary organic standards and labels. Examples are Bio-Siegel (Germany), AB mark (France) and the Ø logo (Denmark). Some countries also have private standards or labels, such as Naturland (Germany), Soil Association (United Kingdom), Bio Suisse (Switzerland), KRAV (Sweden) and Demeter (specific to biodynamic farming; the standard is not country-specific).

When exporting organic cocoa, be sure to label your cocoa batches with the name of the control body and the certification number. Labels of cocoa beans should be written in English.

Fair trade certification

Fairtrade International (FLO) is the leading standard-setting organisation for Fairtrade. After accreditation by an independent third party, you are allowed to put the Fairtrade logo on your product. Accredited certifiers for fair trade standards include Ecocert IMO and FLOCERT. Refer to this full guidance to learn more about how to become a Fairtrade producer.

Note that Fairtrade introduced new requirements for certification on 1 June 2020. These will require cocoa cooperatives and traders to have commitments in place for new Fairtrade sales volumes, which must be confirmed by the end buyer and validated by the respective national Fairtrade organisation.

Other fair trade standards used on the European market are Fair for Life and the Small Producers' Symbol (SPP). The World Fair Trade Organization (WFTO) also has a label, which recognises entire organisations that fully comply with fair trade practices.

Just as with organic cocoa, label your Fairtrade-certified cocoa batches with the name of the control body and the certification number.

Company-specific sustainability programs

The most common corporate sustainability programmes of private companies include Nestlé Cocoa Plan, Barry Callebaut’s Forever Chocolate and Mondelez’s Cocoa Life. Check their websites and/or consult your buyers to check their latest requirements.

2. What competition do you face on the European certified cocoa market?

The degree of competition on the market is generally high for certified bulk cocoa with low added value. This segment is mainly dominated by major suppliers and cooperatives that are able to deliver large quantities so they can compete on price. It is difficult for small and medium-sized companies to compete in this segment. The degree of competition is lower in the specialty cocoa market. This segment has a stronger focus on quality and taste, in combination with traceability and sustainability.

Largest bulk supplier of certified cocoa is Ivory Coast, followed by Ghana

The largest suppliers of certified cocoa beans to Europe are Ivory Coast and Ghana. These two countries mainly produce bulk cocoa and are the largest producers of Rainforest Alliance and Fairtrade-certified cocoa.

Ghana and Ivory Coast mainly produce Forastero cocoa beans, focusing on large volumes and lower quality.Both countries have well-established cocoa supply chains. Multinational processing companies (examples: OLAM and Cargill) have a large presence in these countries, to which small cocoa producers and cooperatives are strongly linked.

Given that UTZ and the Rainforest Alliance still operated as individual standards in 2018, the data given here are separated for both standards. UTZ-certified cocoa is produced in 18 countries, but most of it is produced in Ivory Coast. Ivory Coast supplied 67% of global UTZ-certified cocoa bean sales in 2018. Sales of UTZ-certified cocoa beans from Ivory Coast increased at an average annual rate of 21% between 2015 and 2018. Ghana supplied about 10% of UTZ cocoa bean sales, which increased at an average annual rate of 16% during the same period. Nigeria and Cameroon are the third and fourth-largest sellers of UTZ-certified cocoa beans to Europe.

Regarding Rainforest Alliance-certified cocoa sales, Ivory Coast accounted for approximately 71% of global Rainforest Alliance cocoa sales in 2018, and Ghana for 11%. Both countries dominated in the supply of bulk cocoa to the European mainstream chocolate industry. They were followed by Indonesia (6.5%), Ecuador (4.8%) and the Dominican Republic (3.7%).

Ivory Coast also accounts for the largest areas of Fairtrade-certified cocoa in the world, with an estimated share of 70% of total Fairtrade-certified cocoa sales in 2017. Ghana followed with a Fairtrade-certified cocoa sales share of 11%. They are followed by Latin American suppliers Peru (10%), the Dominican Republic (6.8%) and Ecuador (1.7%). These five countries combined account for over 99% of total Fairtrade-certified cocoa sales. They are also among the largest suppliers of cocoa beans to the European market.

Despite certification efforts, there are widespread sustainability concerns regarding the cocoa sector in Ghana and Ivory Coast. For instance, cocoa farming has been identified as a main driver of deforestation. As a response, industry players, donors and the governments of Ghana and Ivory Coast have launched the Cocoa and Forests Initiative. In addition, child labour in both countries is a returning concern, as an estimated 2.1 million children still work in the cocoa fields of Ghana and Ivory Coast.

In an attempt to tackle farmer poverty, the governments of Ghana and Ivory Coast have raised the minimum export prices for cocoa to USD 2,600 per tonne, with the addition of a fixed ‘living income differential’ on all their cocoa sales (at USD 400 per tonne), applicable from the 2020/2021 crop.

Latin America is the largest supplier of organic cocoa to Europe

When it comes to organic cocoa production, Ivory Coast and Ghana play a much less important role. The largest organic cocoa suppliers to Europe are the Dominican Republic and Peru. The Dominican Republic supplied an estimated 27 thousand tonnes of organic cocoa to the European Union in 2018, accounting for nearly 37% of total EU organic cocoa imports. The Dominican Republic registered the largest organic cocoa production area in the world in 2018, accounting for 25% of the total global organic cocoa area. A relatively large share of the cocoa produced in the Dominican Republic is also Fairtrade certified.

Peru supplied nearly 16 thousand tonnes of organic cocoa in 2018, accounting for 21% of total organic cocoa imports by the EU. Peru ranked as the world’s fourth-largest organic cocoa producer, after the Dominican Republic, Sierra Leone and DR Congo. About 75% of Peru’s total cocoa exports are registered as fine flavour cocoa, which are mainly cocoa beans from the Trinitario and Criollo varieties. The high share of organic in combination with high-quality cocoa gives Peru a very strong competitive advantage.

In addition, Peru has managed to strongly promote the quality and unique origin of its cocoa beans. Peru’s cocoa association APPCACAO is a driving force in developing the cocoa sector through a countrywide coordinated effort between cocoa associations/cooperatives, companies, support organisations and the government. Promoting your origin is important, as chocolate products with cocoa origin claims attract a 51% higher retail price and higher consumer appreciation in the growing online retail space.

The tightening of the European Union cadmium regulations, however, was a problem for European cocoa imports from Peru, as cadmium contamination is high in some cocoa-growing regions in the country. This has led buyers to source from alternative origins.

Sierra Leone and Congo: established organic cocoa suppliers to Europe

In 2018, DR Congo supplied an estimated 13% of total EU organic cocoa imports, amounting to 9.9 thousand tonnes. This makes DR Congo the third-largest supplier of organic cocoa to the EU. DR Congo is the third-largest organic cocoa producer with an estimated 52 thousand hectares for organic cocoa production in 2018.

DR Congo has grown from an emerging to an established organic cocoa supplier to the European cocoa market, after heavy investments in the country’s cocoa sector by donors and companies. Several associations have been formed, such as the Association of Cocoa and Coffee Exporters DR Congo (ASSECCAF), which defends the interests of exporters in the coffee and cocoa export sector. In addition, there have been initiatives to profile DR Congo as a destination for fine flavour cocoa. The combination of high-quality and organic cocoa has led several European bean-to-bar makers to source from DR Congo. Examples include Blanxart (Spain) and Original Beans (the Netherlands).

Sierra Leone is another important organic cocoa supplier to Europe, ranking as the fourth-largest supplier with 7.7 thousand tonnes in 2018. Sierra Leone is the second-largest organic cocoa producer in the world, with a dedicated organic cocoa production area of nearly 62 thousand hectares in 2018.

The organic cocoa sector in Sierra Leone has in part been boosted by Dutch trader Tradin Organic since 2015. Since 2017, Tradin has had its own cocoa sourcing company in the country, which received an investment of US$3 million from impact investor AgDevCo to continue to strengthen and expand organic cocoa production and export capacity from Sierra Leone.

Both DR Congo and Sierra Leone attract greater interest from buyers as alternative sources of certified (organic) cocoa beans, with low incidence of cadmium contamination when compared to Latin America.

Identifying your potential competitors

To be successful as an exporter, it is important to learn from your potential competitors. Focus on their marketing strategies, the product characteristics they highlight and their value addition approaches. Successful companies with high shares of certified cocoa that export to the European market and from which you can learn include the El Ceibo cooperative (Bolivia), Grupo Conacado (Dominican Republic), Cooperativa Agroindustrial Cacao Alto Huallaga (Peru), Fedecovera (Guatemala) and Ingemann (Nicaragua).

Learn how to promote your portfolio of certifications and sustainability practices from these companies. Give detailed information about your cocoa growing region (origin) and the varieties, qualities, processing techniques and certification of the cocoa you offer. You can also share information about the history of your organisation, your cocoa growing farm(s) and  the passion and dedication of the people working there. These are all elements that make your company unique.

3. Through what channels can you put certified cocoa on the European market?

Cocoa and cocoa products are used for processing in four different industries: confectionery, food, cosmetics and pharmaceutical. This document focuses only on the confectionery industry, as this is the main segment for cocoa beans. In 2017, the confectionery industry alone represented up to 43% of total global cocoa consumption. This industry mainly processes cocoa liquor and butter into chocolate products, such as bars, candy bars and bonbons.

How is the end market segmented?

The confectionery industry can be segmented according to the quality of the end products. Certified cocoa is used in both the mainstream and the specialty cocoa market. Certified cocoa beans used in the specialty market are mainly used for the production of high-end chocolate products. The figure below shows the general segmentation of the chocolate end market.

Figure 1: Segmentation of the chocolate market based on quality

Low end: the low-end segment offers cheap chocolate products with lower cocoa content. The products are often produced by large chocolate manufacturers, using mainly bulk cocoa from West Africa (Forastero variety). Bulk cocoa is characterised by high volumes, low value and standard quality. Rainforest Alliance-certified cocoa is most often used in the lower-end segment.

Low-end chocolate products are usually mass-market products of big brands and lower-quality private label products from supermarkets. Examples of big brand products include Milka and Toblerone (manufactured by Mondelez), M&Ms and Twix (manufactured by Mars) and Kit-Kat (Nestlé). These products are predominantly sold in supermarkets.

Examples of brands and an indication of consumer chocolate prices (based on retail prices in 2020) in European supermarkets for lower-end certified products are:

Middle range: the middle-range segment includes chocolate products of good quality, which are commonly sustainably certified. Certification, storytelling and the origin of the cocoa beans are important in this segment, mainly for marketing purposes.

Examples of middle-range products available in Europe include the popular Swiss brand Lindt. Lindt is mainly known for its wide range of premium chocolate bars made from Trinitario and/or Forastero cocoa, sourced through Lindt’s own sustainable sourcing programme. Another commonly available middle-range chocolate product in several European countries is Côte d’Or, which is certified by Mondelez’s own Coco Life sustainability programme (which works in partnership with Fairtrade).

These middle-range products are also mainly sold through supermarkets, usually the high-quality category of retailers. Supermarkets also increasingly offer private label premium chocolate products with Fairtrade and/or organic certification. These products offer the same quality and characteristics as branded products but are usually offered at more competitive prices.

The table below gives some examples of middle-range chocolate brands as well as an indication of consumer chocolate prices for these products (based on Dutch and French retail prices in 2020):

High end: smaller, more specialised chocolate makers produce high-end chocolate products, mainly using fine flavour cocoa (usually Criollo and Trinitario varieties, and/or Forastero, to a lesser extent). These products are characterised by a high cocoa content. Single-origin cocoa beans are important, both for the taste and for the traceability of the cocoa. Bean-to-bar is one of the categories of the high-end chocolate market. Organic certification is especially relevant in this niche segment.

Examples of bean-to-bar brands working with organic cocoa in Europe are Original Beans (the Netherlands), Michel Cluizel (France), Fjåk Chocolate (Norway) and Friis Holm (Denmark).

These products are mainly sold through specialty shops, online or otherwise. Examples of specialty web shops in Europe are Chocolats de Luxe (Germany), Chocoladeverkopers (the Netherlands), Sourced Market and Cocoa Runners (the United Kingdom). High-end chocolate products are also sold at trade fairs, such as Salon du Chocolat (with events in France, Belgium, Italy and the United Kingdom), Chocoa (the Netherlands) and the organic fair Biofach (Germany).

Chocolate consumer prices for high-end chocolate products are given in the table below (based on Dutch prices in 2020):

Premium prices for certified cocoa: for exporters of cocoa, it is important to realise that trade prices and retail prices behave independently and are not directly linked. As the figure below shows, only 6.6% of added value goes to farmers. In general, export prices of cocoa beans and the share kept by cocoa producers will depend on the cocoa bean quality, the size of the lot and the supplier’s relationship with the buyer. The largest shares are kept by chocolate companies and retailers.

In addition, although sustainability certification does not always affect the retail prices of chocolate, most of them offer a premium to producers and exporters. Premiums may differ per country, producer and buyer due to various aspects, such as quality, proportion of in-kind premium and negotiation powers.

• Rainforest Alliance: a mandatory ‘sustainability differential’ will be included in the cocoa certification programmes from October 2020 onwards. This will consist of a cash amount per metric tonne paid to individual farmers, as well as cash and/or in-kind investments at farmer group level, which need to be complemented by mandatory reporting on investments by first buyers. Note that, in Ivory Coast and Ghana, this sustainability differential is required in addition to the Living Income Differential;
• Fairtrade: mandatory minimum price for different cocoa products (beans, liquor, butter and powder), conventional cocoa or organic cocoa, plus a Fairtrade premium. Fairtrade premiums for cocoa were raised in 2019;
• Organic: usually a margin of 15-30% over the baseline prices paid for organic-certified cocoa beans;
• Combined Fairtrade and organic: for both organic and Fairtrade-certified cocoa, a buyer pays the Fairtrade Minimum Price (or the market price, whichever is higher), and on top of that a premium and a fixed organic differential.

Through what channels does certified cocoa end up on the end market?

As an exporter, you can use different channels to bring your certified cocoa to the European market. Entering the market will vary according to the quality of your cocoa beans and your supply capacities. It is important to realise that the European market is moving towards shorter supply chains. This means retailers and cocoa-processing companies are increasingly sourcing their cocoa beans directly.

The market channels for certified cocoa beans are characterised by chain of custody protocols. Chain of custody certification is applicable to all companies in the supply chain that own and handle the product and make sustainable certified claims about the product. These protocols provide evidence that the product originates from well-managed, certified sources, and verifies that it has not been mixed with products from uncertified sources at any point in the supply chain, except under strict management controls. The figure below shows you the most important channels for cocoa beans in Europe:

Figure 3: The main channels for export of cocoa to Europe

Cocoa bean processors/grinders

Large processors/grinders source their cocoa beans directly from producing countries, mostly under the principles of their own sustainability programmes. However, they will also source from otherwise certified cooperatives. Examples of cocoa bean processors/grinders in Europe, including their corporate sustainability programmes are Cargill (Cargill Cocoa Promise), Olam (Cocoa Sustainability) and Barry Callebaut (Forever Chocolate).

These multinationals process raw material into cocoa mass, cocoa butter and/or cocoa powder, which they distribute to the confectionery, food, cosmetic and pharmaceutical industries throughout Europe. Some cocoa processors also manufacture end products to supply directly to the retail or food service sector.

For whom is this an interesting channel? If you are an exporter of high volumes of (certified) bulk cocoa beans, your direct trading partner will usually be a cocoa grinder/processor. These companies tend to buy high volumes of standard qualities and often require Rainforest Alliance or their own sustainability certification as a minimum standard. They usually have cocoa buying stations in producing countries to which you can sell your cocoa beans directly.

Importers

Most importers handle cocoa beans that comply with a wide range of certified standards. Examples of large cocoa trading companies importing certified cocoa are Albrecht & Dill Trading (Germany), Sucden (France) and Theobroma (the Netherlands). They distribute cocoa in their own country or elsewhere in Europe. These importers normally handle large quantities and have direct contact with exporters in producing countries. In most cases, importers have long-standing relationships with their suppliers.

Importers active in the specialty segment usually deal with smaller quantities and often work directly with producers and producer cooperatives. Examples of specialty trading companies in Europe are Silva (Belgium), Uncommon Cacao (United States, with storage facilities in the Netherlands), Cocoanect (the Netherlands) and Naturkost Übelhör (Germany). Naturkost Übelhör is focused on organic produce and holds a wide range of organic certification standards, including BioSuisse Organic, Bioland, EU Organic, Fairtrade, Naturland and Sedex.

For whom is this an interesting channel? Large importing companies usually serve as a gateway if you export high volumes of certified bulk beans. Importers are likely to purchase cocoa beans that comply with various certification standards, to cater for their different customers in different industry segments.

For a producer association selling specialty or organic/fair trade-certified cocoa, the best option is to sell cocoa beans directly to specialised cocoa importers. When working with specialised importers, bear in mind that many prefer to work directly with producers and/or cooperatives and not through exporters.

If you produce or have very high-quality cocoa beans and are working through an importer, it is best to also discuss the possibilities to directly link up with high-end chocolate makers. This is an interesting opportunity for farmers or farmers’ cooperatives that have the financial means and know-how to access the market directly.

Chocolate manufacturers

Examples of large and medium-sized (private label) chocolate manufacturers in Europe include Valrhona (France), Pronatec and Chocolat Bernrain (Switzerland). These companies have their own importing departments and source their cocoa beans directly from producing countries. These chocolate companies with sustainability commitments aim to have a direct link to the farmer, based on trust between the chocolate maker, the certifier and the importer. They also operate across different certification standards, including the Rainforest Alliance, as well as organic and fair trade.

For whom is this an interesting channel? If you have high volumes of standard-quality cocoa , it may be interesting to sell to large chocolate manufacturers. This may also be an interesting channel for local grinders with cocoa mass and cocoa butter meeting high quality standards (which means they do not need to be processed again). This would allow you to trade directly with European confectionery and food companies. If you have lower-quality semi-processed cocoa products, your direct trading partner is usually a European importer or grinder. Large-scale chocolate makers tend to operate across the entire range of certification, from Rainforest Alliance to organic and fair trade.

Small chocolate makers

Especially in the specialty and fine flavour segment, cocoa beans are increasingly traded directly from farmers (or farmers’ associations and cooperatives) to chocolate makers. Although direct trade is growing, it still represents a very small part of the cocoa market. Not all chocolate makers are able to sustain direct trade and all the responsibilities usually outsourced to traders, such as logistics, documentation and pre-financing.

Direct trade can also happen with an importer as intermediary, acting as a service provider and contact point in the transactions between the producer and the chocolate maker. Importers can also safeguard traceability and communicate the story of the cocoa beans accurately along the chain.

Examples of bean-to-bar makers in Europe that source part of their organic or Fairtrade cocoa directly from producing countries are Åkesson’s (United Kingdom), Blanxart (Spain) and Ritual Chocolate (United Kingdom).

For whom is this an interesting channel? If you produce or have very high-quality cocoa beans and you are working through an importer, it is a good idea to discuss the possibilities to directly link up with high-end chocolate makers. Direct trade is always the preferred option. However, targeting specialty chocolate makers directly means you must have the financial means and technical know-how to organise export activities. Specialty chocolate makers may not have specific certification requirements or could even reject certification altogether. This is because their operations already address sustainability elements and often go beyond what any certification scheme can offer. However, organic certification especially is growing among this group of buyers.

This study was carried out on behalf of CBI by ProFound – Advisers In Development.

Please review our market information disclaimer.