Entering the Italian market for cocoa

Italy sources a high share of its imports directly from cocoa-producing countries. Together, West African countries account for more than 70% of Italy’s cocoa bean imports, but cocoa bean supplies from East Africa have grown in recent years. Italy is home to large-scale chocolate companies but also has several small-scale and high-quality chocolate makers. Depending on your available volumes, cocoa bean quality and certification possibilities, different market segments and different buyers will be relevant for you as an exporter.

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

You can only export cocoa to Italy 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.

Buyer requirements can be divided into:

1. Musts: legal and non-legal requirements you must meet to enter the market;
2. Additional requirements: those you need to comply with to keep up with the market;
3. Niche requirements: these apply to specific niche markets.

The highlights for these requirements are given below, specified for the Italian market where relevant.

Legal and non-legal requirements you must comply with

Legal requirements

You must follow the European Union’s legal requirements for cocoa. These mainly deal with food safety and hygiene. The legal limits for food contaminants are related to this, of which the most common are:

• Pesticides (consult the EU pesticide database for an overview of the maximum residue levels (MRLs) for each pesticide);
• Mycotoxins (ochratoxin A is of special relevance for cocoa);
• Polycyclic-aromatic hydrocarbons (PAHs);
• Microbiological contamination such as Salmonella (although cocoa is considered low-risk);
• Heavy metals such as cadmium (which is a particular problem for cocoa from some Latin American countries due to factors like volcanic activity and forest fires).

Quality requirements

If you want to access the Italian market for cocoa beans, you will have to meet your buyer’s quality standards. They are particularly high within the specialty segment for fine flavour cocoa beans.

Buyers in Italy and elsewhere currently assess the quality and flavour of cocoa beans in different ways and often use a combination of two or more methodologies. The Cocoa Beans: Chocolate & Cocoa Industry Quality Requirements guide provides recommendations on cocoa growing, post-harvest practices and quality evaluation methods that contribute to cocoa quality.

Other common cocoa quality assessment methodologies and international cocoa standards used among chocolate makers and cocoa traders are, for instance:

• ISO’s Standards on classification and sampling for cocoa beans;
• The cocoa sampling protocol and cocoa grading form of the Fine Cacao and Chocolate Institute (FCCI);
• Heirloom Cacao Preservation’s genetic evaluation of cocoa to identify and value cocoa and its flavour;
• Equal Exchange/TCHO’s quality assessment and tasting guide to assess the quality of cocoa along the value chain.

There are no harmonised international procedures, nor is there a specific terminology for assessing cocoa bean quality and flavour and its direct relation to high-quality chocolate for buyers and consumers. However, a workgroup, coordinated by the Cocoa of Excellence Programme, is currently developing international standards for assessing cocoa quality.

Labelling requirements

The labelling of cocoa beans exported to Italy should comply with the general food labelling requirements of the European Union. The labelling should be written in English and should include the following to ensure traceability of individual batches:

• Product name
• Grade
• Lot or batch code
• Country of origin
• Net weight in kilogrammes.

If your cocoa is organic and/or fair trade-certified, the label should contain the name/code of the inspection body and the certification number.

Figure 1: An example of labelling of cocoa beans

Source: Chocolate Cortés

Packaging requirements

Cocoa beans are traditionally shipped in jute bags, which can weigh between 60 and 65 kilogrammes. On the mainstream market, bulk shipment of cocoa beans has become more popular. This means cocoa beans are loaded directly into the ship’s cargo hold or in shipping containers containing a flexi-bag (see Figure 4). This mega bulk method is often adopted by larger cocoa processors, which handle cocoa beans of standard qualities.

In the specialty cocoa segment, jute bags are still commonly used. For very high-quality micro lots, vacuum-sealed GrainPro packaging can be used.

Figure 2: Examples packaging for cocoa: jute bag, container-sized flexi bag and GrainPro
Sources: Osu.edu, Bls.bulk.com and GrainPro

Additional requirements to keep up with the market

Additional food safety requirements

You can expect buyers in Italy to request extra food safety guarantees from you. When it comes to production and handling processes, you should consider the following:

• Implementation of good agricultural practices (GAPs): the main standard for good agricultural practices is provided by GLOBALG.A.P. This is a voluntary standard for the certification of agricultural production processes that provide safe and traceable products. Certification organisations (such as Rainforest Alliance/UTZ) often incorporate GAPs in their standards;
• Implementation of a Quality Management System (QMS): a system based on Hazard Analysis and Critical Control Points (HACCP) is often a minimum standard required at the level of storage and handling of cocoa beans. If you export semi-finished cocoa products, some buyers will also expect you to have certification, such as International Featured Standards: Food (IFS) or British Retail Consortium Global Standards (BRC) certificates, for your manufacturing facilities.

It is good to take into account that your Italian importer might re-export large quantities of cocoa beans to other destinations in Europe. These other buyers forward their requirements, which might increase the need for other specific certifications or standards. This will depend on the final market and the market channel.

Additional sustainability requirements

Corporate responsibility and sustainability are growing in importance in the cocoa sector. This means that adopting codes of conduct or sustainability policies related to environmental and social impacts is becoming increasingly important when trying to enter the Italian market. Leading companies on the Italian chocolate market such as Ferrero and ICAM have sustainability policies highlighting their relationship with farmers, transparency in their operations and their social and environmental impact at origin.

Certification standards like Rainforest Alliance/UTZ are important on the mainstream chocolate market. Several traders and manufacturers operating in Italy are Rainforest Alliance/UTZ-certified; examples are Besana, Crea and Irca.

Niche requirements

In order to market your cocoa as organic in the Italian and European market, it must comply with the regulations of the European Union for organic production and labelling. EU Organic is the minimum legislative requirement for marketing organic cocoa in the European Union. There is no mandatory national organic label in Italy.

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 for exporters. 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 European Union 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).

The most common fair trade standards on the Italian market are Fairtrade and company-specific standards like Altromercato. Before you can market your cocoa beans as Fairtrade and/or organic, an accredited certifier must audit your growing and processing facilities. Examples of accredited certifiers are Control Union, Ecocert, FLOCERT, ProCert and SGS. Audits for Altromercato are managed and conducted by an independent body within Altromercato itself, known as the Project Committee.

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

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

Figure 3: Main suppliers of cocoa beans to Italy (excluding intra-European trade), in %, 2019

Source: Eurostat, 2020

West Africa accounts for over 70% of Italy’s cocoa bean imports

Ivory Coast supplied more than half of Italy’s direct cocoa bean imports in 2019, reaching nearly 47 thousand tonnes. Ghana was the second-largest supplier of cocoa beans to Italy in 2019, registering a 21% share of Italy’s total direct imports that year (almost 18 thousand tonnes). Another significant West African supplier to Italy is Nigeria, having supplied 4 thousand tonnes of cocoa beans in 2019. While imports from Ivory Coast and Ghana remained relatively stable between 2015 and 2019, imports from Nigeria grew at an average annual rate of 16% in the same period. This increase could be explained by the impulse for cocoa production and export by the Cocoa Association of Nigeria.

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

The presence of these multinationals is also a driving force behind the growing cocoa-grinding industry in Ghana and Ivory Coast. Ivory Coast was the world’s second-largest cocoa grinder in 2018/19, with 585 thousand tonnes or 12% of global grindings. Ghana’s grinding industry consumed an estimated 300 thousand tonnes in 2018/19, amounting to 6.3% of global grindings.

Between 2015/16 and 2018/19, Ivory Coast and Ghana both registered growth in their grinding volumes, of 5.9% and 14% respectively. By grinding more beans at origin, cocoa-producing countries aim to increase the value of their exports and protect their economies from the volatility of the global cocoa market. Nevertheless, most grinders at origin are owned by multinationals such as Cargill, Olam and Barry Callebaut.

A large share of cocoa produced in Ivory Coast and Ghana is Rainforest Alliance/UTZ-certified, which is a common market entry requirement for large manufacturers and retailers operating in mainstream markets. About 46% of the total 4.1 million hectares of cocoa production in Ivory Coast were Rainforest Alliance/UTZ-certified in 2017. For comparison, about 18% of Ivory Coast’s cocoa production area was Fairtrade-certified in 2017.

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, which contributes to climate change. As a response, industry players, donors and the governments of Ghana and Ivory Coast 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 2020/21 crop.

Fast-growing suppliers to Italy come from East Africa

Developments in Italian cocoa bean imports show an interesting dynamic for smaller suppliers in African countries. Registering an average annual growth of around 29% in volume, Congo is the sixth-largest exporter of cocoa beans to the Italian market, having supplied 1.8 thousand tonnes of cocoa beans in 2019. Cocoa farming and exporting is one of the main activities promoted by the Congolese government to diversify its economy and reduce its dependence on oil.

Uganda’s exports of cocoa beans to Italy also grew in volume between 2015 and 2019, at an average annual rate of 5%. In 2019, Uganda supplied around 1.7 thousand tonnes of cocoa beans to Italy. In 2018, Uganda ranked as the world’s fifth-largest country for organic cocoa production. With about a quarter of the land for growing cocoa certified as organic, there is still ample room for organic growth. However, in spite of its potential, Uganda still faces challenges related to the quality of the cocoa beans, safeguarding traceability and dealing with certification costs.

Supplies from Latin America important for Italian specialty market

The largest Latin American suppliers to Italy are Ecuador and Peru, each accounting for about 4.5 thousand tonnes of cocoa beans. Both saw a slight decrease in their exports to Italy, with an average annual decrease of 1.2 and 3.8% respectively, possibly due to the tightening of the European Union cadmium regulations. Cadmium contamination is high in some cocoa-growing regions in Peru and Ecuador, which has led buyers to source from alternative origins.

In 2018, Ecuador was the world’s seventh-largest cocoa producer, with a production volume reaching over 235 thousand tonnes. As much as 75% of Ecuador’s cocoa exports are fine flavour beans, which makes it the world’s largest fine flavour cocoa producer. Ecuador’s cocoa production is growing in general, mainly thanks to the development and introduction of the high-yielding, disease resistant CCN-51 cocoa variety.

Peru ranked as the world’s eighth-largest cocoa producer in 2018, with production volumes amounting to almost 135 thousand tonnes. About 75% of Peru’s cocoa exports are registered as fine flavour cocoa. Fine flavour cocoa beans are mainly Trinitario and Criollo beans. Peru is also a large producer of organic cocoa beans; in 2018, it ranked as the world’s fourth-largest producer.

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.

3. Through what channels can you get cocoa on the Italian 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 about 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. For cocoa beans, the end products mainly consist of candy bars and chocolate bars (filled or otherwise).

Figure 4: 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/UTZ-certified cocoa is often used to certify low-end products.

Lower-end chocolate products are usually mass-market products of big brands and lower-quality private label products from supermarkets. The market share of private labels in Italian supermarkets has been relatively steady for years with a market share of approximately 20%. The largest retailer groups in terms of turnover in Italy are:

• Coop Italia
• Conad
• Selex
• Esselunga
• Gruppo VéGé.

Examples of brands and an indication of consumer chocolate prices (based on Cicalia's retail prices in 2020) in Italian supermarkets for lower-end products are given below:

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

Middle-range products are mainly sold through supermarkets, among other products in the high-quality category. Supermarkets also increasingly offer their own premium private label chocolate products. Examples in Italy include the premium private label chocolate line of Despar Italia. 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 prices for these products:

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, with Italian brands such as Karuna, Donna Elvira and Slitti.

High-end products are mainly sold at chocolate events and in specialty shops. Examples of specialty shops in Italy include Chocolate7 and Tutto Cacao. Examples of high-end chocolate makers/brands and an indication of consumer prices for these high-end products are given below:

For exporters, 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.

Figure 5: Value distribution per actor in %, per tonne of sold cocoa

Source: Cocoabarometer

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

As an exporter, you can use different channels to bring your cocoa to the Italian market, depending on the quality of your cocoa beans and your supply capacities.

It is important to realise that the European market is moving towards shortened supply chains. This means retailers and cocoa-processing companies are increasingly sourcing their cocoa beans directly. The figure below shows you the most important channels for cocoa beans in Italy:

Figure 6: The main channels for export of cocoa to Italy

Cocoa bean processors/grinders

Large processors/grinders source their cocoa beans directly from producing countries. They process the raw material into cocoa mass, cocoa butter and/or cocoa powder, which they distribute to the confectionery, food, cosmetics and pharmaceutical industries throughout Europe. Some cocoa processors also manufacture end products to supply directly to the retail or food service sector.

Examples of companies that process/grind cocoa beans in Italy include chocolate manufacturers Barry Callebaut, Nestlé, Elah Dufour, Majani, Jacopey Cioccolato Peyrano, Agostoni and Ferrero.

For whom is this an interesting channel?

If you are an exporter of high volumes of bulk cocoa beans, then your direct trading partner is usually a cocoa grinder/processor. These companies tend to buy high volumes of standard qualities. They usually have cocoa-buying stations in producing countries to which you can sell your cocoa beans directly. If you deal in bulk cocoa, discuss certification requirements with your buyer.

Importers

Importers of bulk cocoa beans 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 either sell the cocoa beans to companies in Italy or re-export them to other European buyers. However, re-exports of cocoa beans from Italy are not substantial.

Very few Italian companies specialise solely in trading, and these companies tend to be smaller. Examples include Cacao Dominicano, which has an exporting branch in the Dominican Republic, and Aurea Tradings, which is based between Italy and El Salvador. Both companies are mainly active in the specialty segment and handle smaller quantities. Their branches in producing countries enable them to supply small and medium-sized Italian companies directly.

For whom is this an interesting channel?

Large importing companies usually serve as a gateway if you export high volumes of bulk beans. However, the Italian market mainly consists of smaller-sized importers specialised in certified and/or specialty cocoa beans. This is an interesting opportunity for farmers or farmers’ cooperatives that have the financial means and know-how to access the market directly.

Large (private label) chocolate manufacturers

Several large chocolate manufacturers are active on the Italian market, including the previously-mentioned multinationals Barry Callebaut, Nestlé and Ferrero. Other examples include ICAM and Caffarel. These companies have their own importing departments and source their cocoa beans directly from producing countries.

Private label manufacturers may also be an interesting entry point for your cocoa beans. Private labels are growing across Europe. The market share of private labels in Italy is about 20% of the entire market. Industry sources predict market growth for private labels as popularity grows among retailers. Examples of private label manufacturers in Italy are Walcor and Laica.

For whom is this an interesting channel?

Selling to these players is interesting if you have large volumes of cocoa beans of a standard quality.

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 that are 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 specialised chocolate (bean-to-bar) makers in Italy are plentiful and include Amedei, Aruntam, Bodrato Cioccolato, Domori, Guido Castagna, Guido Gobino and Majani, among several others. Examples of Italian chocolate makers focused on fair trade cocoa are Quetzal and Libero Mondo.

For whom is this an interesting channel?

Targeting specialty chocolate makers directly is recommended for producers and exporters dealing with specialty cocoa beans. This requires you to have the financial means and technical know-how to organise export activities. You could also consider setting up local processing facilities to add more value to your cocoa beans. Our study on the European market for semi-finished cocoa products discusses this subject in greater depth.

Intermediaries/agents

Agents act as intermediaries between you, cocoa importers and chocolate makers. Some agents are independent, but others are hired to procure cocoa beans on behalf of a company. An agent acts as an intermediary and has the knowledge to evaluate and select interesting buyers for you. An example of an agent in Italy is COM.EX.IM.

For whom is this an interesting channel? 

If you have limited experience exporting to European countries, agents can play a very important role. Agents are also interesting if you have limited quantities of non-specialty cocoa or if you lack the financial and logistical resources to carry out trade activities. Working with an agent is also useful if you need a trusted and reputable partner within the cocoa sector. Be prepared to pay a commission for their work.

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

Please review our market information disclaimer.