The European market potential for certified cocoa

Sustainability is becoming increasingly important on the European cocoa market, both for consumers and for industry players. Large chocolate companies often participate in the sustainable cocoa market with their own sustainability programmes. Governments’ procurement policies in Europe have also added to the demand for certified cocoa. This growing demand makes Europe the most important market for certified cocoa in the world. The largest markets for certified cocoa and chocolate are found in Western Europe.

1. Product description

The focus of this document is on cocoa beans (whole or broken, raw or roasted), which corresponds with HS code 1801. Cocoa bean derivatives (cocoa paste, cocoa butter and cocoa powder) are covered in our study on semi-finished cocoa products in Europe.

Certified cocoa

Certified cocoa refers to cocoa that has met the standards of a certification scheme, related to environmental, social and/or economic aspects, and has been certified by a certification body. Certification shows whether the various stakeholders in a supply chain meet the environmental, social and economic standards required. Certification schemes are not directed to the quality of cocoa.

You can find certified cocoa both on the bulk and specialty market. Certification on the bulk market is increasingly used as an entry requirement, due to stricter sustainability protocols of manufacturers and retailers in Europe. This makes it increasingly difficult for non-certified suppliers to access the European market. Specialty cocoa is associated with niche certification segments, such as fair-trade and organic cocoa.

Companies have a variety of reasons for deciding to obtain certification for their supply chains, including end-consumer demand, ensuring transparency and traceability, improving brand reputation and adding credibility to their sustainability claims.

Sustainability certification schemes

The leading international certification schemes for cocoa are the following.

• Rainforest Alliance: This is the most commonly used mainstream certification scheme for cocoa. In 2018, Rainforest Alliance merged with UTZ. In 2019 a new single standard was launched, aimed at achieving a greater social, environmental and economic impact. Rainforest Alliance/UTZ works with both small and large farms, and is focused on conserving biodiversity and supporting sustainable livelihoods by transforming land-use and business practices.
• Fairtrade: Fairtrade is a certification, which requires adherence to a set of environmental and social standards. Fairtrade mostly focuses on cooperatives made up of smallholder farmers. Fairtrade International (FLO) is the leading standard-setting and certification organisation for Fairtrade. Products that carry the Fairtrade label indicate that producers are paid a Fairtrade Minimum Price. The current minimum prices and premiums for cocoa, whether organic certified or conventional, can be found in the Fairtrade Minimum Price and Fairtrade Premium Table.
• Organic: Organic certification aims to sustain the health of people, soils and ecosystems. Certification requires cocoa to have been grown without the use of synthetic nutrients, in addition to requiring the use of methods and practices for plant protection and soil conservation. In the European Union, organic certification is laid down in the legislation regarding products from organic production.

Besides the larger certification schemes, cocoa producers and exporters can also be certified for more specific standards meant for smaller niche markets. These include:

• Demeter: Demeter is a private organic certification organisation, focused on biodynamic agriculture.
• Small Producers’ Symbol (SPP): SPP is a fair-trade certification for organised small fair-trade producers/cooperatives.

Company sustainability programmes

In addition to sustainability certification, most major cocoa processing and manufacturing companies have developed their own cocoa sustainability commitments over the years. Each company follows its own strategy in defining sustainability. Some use the previously mentioned certification schemes, some work through their own projects, while others combine both approaches. Examples of corporate sustainability projects include the following:

• Nestlé: The Nestlé Cocoa Plan
• Mars: Cocoa for Generations
• Mondelez: Cocoa Life
• Lindt & Sprüngli: Farming Program
• Barry Callebaut: Forever Chocolate
• Cargill: Cocoa Promise

2. What makes Europe an interesting market for certified cocoa?

Europe is the world’s leading market for certified cocoa

In Europe, certification schemes play a very important role, as they mirror the growing consumer awareness and changing industry attitude towards sustainability. Although there are no Europe-wide data available on certified cocoa imports, the World Cocoa Foundation estimated that around 22% of globally traded cocoa is certified. Europe is the world’s largest cocoa bean importer. In 2019, total imports of cocoa beans by Europe amounted to over 2.4 million tonnes. Between 2015 and 2019, import volumes increased by an average of 6.4% per year.

Nation-wide sustainability initiatives further drive up demand for certified cocoa in Europe

Several European countries have set up national cocoa platforms with sector-wide targets to move towards a sustainable cocoa sector. Examples of European countries working on nation-wide sustainability targets include the following.

• Switzerland: Swiss Platform for Sustainable Cocoa
• Germany: the German Initiative on Sustainable Cocoa
• The Netherlands: The Cocoa Origins Program
• Belgium: Beyond Chocolate

These initiatives include targets for sustainable sourcing. Partly because of this, the import of certified cocoa in these countries has increased. For instance, in Germany, up to 72% of all chocolate confectionery sold in 2019 was produced with sustainably produced cocoa, marking an increase of 33% since 2015. This includes cocoa certified by Fairtrade and Rainforest Alliance/UTZ, as well as by the private standards of cocoa/chocolate companies. The Dutch cocoa sector also increased its use of sustainable cocoa, from 21% to 30% between 2014 and 2016.

Government procurement policies in Western Europe have also added to the demand for certified cocoa. Their policies consistently focus on sustainability criteria for the purchase of products, such as cocoa and chocolate. The Dutch government, for instance, has elaborated specific sustainable procurement guidelines which include cocoa. Depending on the buyer and their enforcement actions, producers will need to comply (or commit to comply) with the required standards.

Apart from these nation-wide initiatives, there are initiatives to develop legally binding measures for the use of sustainable cocoa on a European level. A first reaction at European Union (EU) level was the launch of a plan to protect and restore global forests in July 2019. A new regulatory proposal regarding this plan will be presented by the EU in 2021. This proposal will include measures to minimise the impact of EU consumption of cocoa, which is seen as a risk commodity for deforestation. The largest cocoa companies, such as Barry Callebaut, Mars and Mondelez, support the call on the EU for due diligence regulations. The EU due diligence laws in the cocoa sector are expected to become operational in 2022.

In general, sustainability issues are pressing to both producers and buyers, and will remain high on the international agenda. As the commitments and programmes mentioned in this section show, companies and governments recognise the need to create a more sustainable cocoa sector. The focus on and importance of sustainability for companies active in the cocoa sector will only increase and intensify, broadening the focus to issues such as biodiversity.

3. Which European countries offer the most opportunities for certified cocoa?

The largest markets for certified cocoa and chocolate are found in western Europe. Countries with strong national sector-wide sustainable cocoa initiatives are interesting for your certified cocoa, as they drive industry demand for sustainable cocoa. Countries with high consumer demand for sustainable chocolate offer interesting opportunities as well. As such, especially Germany, the Netherlands, Belgium, the United Kingdom, France and Switzerland are interesting markets for certified cocoa.

The importance of each certification scheme in Europe varies significantly from country to country, as set out below. Note that there is currently more certified cocoa being produced than sold, so always ensure that certification is economically viable for you and that it guarantees long-term relationships with buyers.

The market for Rainforest Alliance-certified cocoa

Rainforest Alliance has its largest cocoa market in Europe. Europe accounts for over 80% of its licensed supply chain actors. Most Rainforest Alliance-certified cocoa actors are found in Germany, followed by the Netherlands, Italy, Belgium and the United Kingdom. The latter three countries showed the highest growth in numbers of newly certified supply chain actors in 2018. France is also a relatively large market for Rainforest Alliance.

In general, most certified operators are (chocolate) confectionery manufacturers, such as Barry Callebaut and Nestlé, and traders like August Töpfer & Co., Daarnhouwer and Dutch Cocoa.

The market for Fairtrade-certified cocoa

The largest Fairtrade market can be found in the United Kingdom. The United Kingdom registered general Fairtrade retail sales of over €1.8 billion in 2018. Sales, however, saw a decline between 2017 and 2018, as retailers are increasingly starting to favour their own sustainability schemes, at the cost of the official Fairtrade standard. Nevertheless, the Fairtrade market will remain large. This is, for instance, driven by the commitment made by the British supermarket chain Waitrose to only source Fairtrade cocoa for its private label products by the end of 2019.

Germany follows as the second-largest Fairtrade market in Europe. About 17% of total German cocoa imports were Fairtrade certified in 2019. The market for Fairtrade cocoa in Germany is expected to keep growing in the coming years, partly driven by the agreement in 2018 of REWE to only use Fairtrade-certified cocoa beans for its private label chocolate products.

Switzerland is also a relatively large market for fair trade products, with retail sales reaching €817 million in 2018. Overall, fair trade sales in Switzerland grew by 13% between 2017 and 2018. The Fairtrade share of cocoa and chocolate products in Switzerland reached an estimated 7% of the total market, amounting to the use of 4.5 thousand tonnes of Fairtrade-certified cocoa in 2018. Switzerland also registered Europe’s highest per capita consumption of fair trade products, with over €95 per person spent in 2018.

Sales of Fairtrade cocoa in Europe are growing in general, as discounters Lidl and Aldi (which are present in most European countries) agreed to increase the use of Fairtrade cocoa in their private label chocolate products.

The market for organic-certified cocoa

Europe is the world’s second-largest region when it comes to organic retail sales, only after North America. Overall retail sales in Europe reached about €41 billion in 2018. The popularity of organic certification for cocoa in specific countries follows the general market for organic products in Europe. The largest national markets for organic foods are Germany (27% of the European market in 2018), France (22%) and Italy (8.6%). 

The organic chocolate market in Western Europe was valued at €30 million in 2017, and is expected to grow by 3.0% on a yearly basis for the next coming years. France plays an important role in the European organic chocolate market. France’s organic chocolate market grew to such extent that it is shifting from niche to mainstream. An estimated 53% of chocolate products contained an organic-certified label in 2019.

The organic market in Germany had already made the shift from niche to mainstream several years ago. The overall organic market in Germany is expected to keep growing, at an average annual rate of 1.9% between 2017 and 2022. Confectionery (chocolate) products are expected to be the fastest-growing categories in organic food sales. In addition, industry sources indicate that organic certification is growing among high-quality and specialised chocolate makers.

Belgium also ranks among one the most important organic chocolate markets in Europe. Of all chocolate products on sale, an estimated 54% contained an organic-label in 2019. Examples of Belgian organic chocolate producers are Belvas (the first organic chocolate maker of Europe), Nao and Magic Chocolates.

The European Union imported an estimated 74 thousand tonnes of organic cocoa beans in 2018. The main suppliers were the Dominican Republic with almost 37% of total EU supplies, followed by Peru (21% of supplies), DR Congo (13%) and Sierra Leone (10%).

Important players on the European organic chocolate market include Green & Black’s (United Kingdom), Alter Eco (France) and Chocolat Stella (Switzerland).

4. Which trends offer opportunities on the European certified cocoa market?

Sustainability in the cocoa sector remains critical worldwide, and has been impacting policy-makers in recent years. Consumer awareness about sustainable cocoa production has also grown over the last decade. Certifications schemes have become to play a very important role in the cocoa sector as they mirror the growing consumer awareness and changing industry profile towards sustainability.

Sustainability is a consumer trend in Europe

Consumer awareness of issues related to sustainable cocoa production has grown over the last decade in Europe. This has resulted in a growing demand for sustainable and traceable cocoa and chocolate, especially in northern and western Europe. Both the media and public awareness campaigns such as those focused on child labour and human trafficking have been a major driving force behind this trend.

Furthermore, many European retailer groups actively promote certified chocolate products to their customers, and are increasingly sourcing certified cocoa for their own private label brands. Most of these are major players such as Ahold Delhaize (the Netherlands), REWE and Lidl (Germany), Sainsbury’s (United Kingdom), Carrefour (France) and Coop (Switzerland).

The use of certification in branded and private label chocolates comes from the sustainability programmes of these retailers. They make these decisions top down. Examples of specific sustainability programmes of retailers include:

• Marks & Spencer’s Plan A sustainability programme, which includes their sustainable cocoa commitment;
• Coop’s programme Actions, not words, which includes their ‘Fair cocoa for fine chocolate’ commitment;
• Lidl’s sustainability programme ‘A better tomorrow’, including their commitment on sustainable cocoa sourcing.

In general, retailers are showing growing engagement in improving the sustainability of the cocoa value chain. In 2019, leading European retailers formed the Retailer Cocoa Collaboration (RCC) to jointly support the Cocoa & Forests Initiative. Participating retailers in the RCC are Ahold Delhaize, Carrefour, Lidl, Aldi, Metro Germany, M&S, Sainsbury’s, Tesco and Waitrose. As part of the joint commitment, these retailers will, among other things, encourage cocoa traders and suppliers to commit to sustainable cocoa production and trade.

Global attitudes towards certification in the cocoa sector

Certification, used as a tool to realise a sustainable cocoa sector, remains under scrutiny. The VOICE Network, a global network of organisations in the cocoa sector, rejected certification as a long-term solution to poverty and sustainability in 2019. In general, third-party certification schemes have received a great deal of criticism over the years.

In response, certification schemes are constantly finding ways to stay relevant. New recent developments include the release of the new ISO standard for sustainable and traceable cocoa in May 2019. In addition, Fairtrade raised its Minimum Price and Premium for cocoa, while Rainforest Alliance and UTZ merged in 2018 to form a stronger, more effective organisation together.

These developments bring opportunities for cocoa growers and exporters. However, it also shows how important it is to certify your cocoa according to market demand and buyer requirements, and to keep up to date with sustainability initiatives.

Growing demand for organic cocoa due to increased interest in healthy living

In Europe there is a growing interest in healthy living, which has driven up the demand for organic cocoa and chocolate. The common perception is that organically produced products reduce the consumer’s exposure to artificial chemicals and pesticides.

Although organic cocoa is highly valued on the European market, you should realise that there are also costs involved to certify your company as organic. Direct costs for farmers and/or exporters include both the costs necessary to comply with the organic standard, as well as the fee that has to be paid to the certifying body to obtain the certificate for your farm or company. Also bear in mind that changing to an organic farming system (and thus stop using synthetic fertilisers) may cause initial decreases in cocoa yield. However, there are a range of organisations and initiatives that offer technical support to help you with conversion to organic farming. For instance, trading company Tradin Organic offers support to establish organic farming systems, which boost your cocoa yields under organic production. For a concrete example, refer to their project in Sierra Leone.

An example of an exporting company specialised in organic cocoa is, for instance, Grupo Conacado from the Dominican Republic.

Demand for high-quality cocoa beans that are both Fairtrade and organic certified is growing

Industry sources indicate that the demand is growing for specialty cocoa that is both Fairtrade and organic certified. There has already been a steep increase of cocoa beans sales that are both organic and Fairtrade certified. Between 2014 and 2018, production of cocoa beans that were certified by both standards increased by 39% globally, amounting to almost 34 thousand tonnes in 2018.

Consumers across Europe are showing a growing interest in higher quality chocolates that comply with good ethical standards. Examples of consumer products that are certified by both Fairtrade and organic are: Traidcraft (United Kingdom), Chocolates from Heaven (Belgium) and Otto Chocolates (Italy).

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

Please review our market information disclaimer.