Entering the Spanish market for cocoa

West African countries supply most of Spain’s cocoa beans imports, primarily in bulk. Latin American suppliers are also highly important to Spain, and growing in relevance as the market for high-quality chocolate grows. This growing market offers opportunities such as direct relationships between Spanish bean-to-bar makers and suppliers in producing countries. Certification is also growing in Spain, but it still is not as consolidated as in north-western European markets.

1. What requirements and certification must cocoa comply with to be allowed on the Spanish market?

Exports of cocoa to Spain must comply with strict European Union requirements. Our study on buyer requirements for cocoa provides a more complete overview of these standards. Consult the specific requirements for cocoa on the European Commission’s Access2Markets website.

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: applying to specific niche markets

Highlights for these requirements can be found below, specified for the Spanish market where relevant.

1. Legal and non-legal requirements you must comply with

Legal requirements

You must comply with the European Union legal requirements for cocoa, which refer mostly to food safety and hygiene. In this regard, the most common applicable legal limits for food contaminants 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 from 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 Spanish market for cocoa beans, you will have to meet your buyer’s quality standards, which are particularly high within the specialty segment for fine flavour cocoa beans.

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

Other cocoa quality assessment methodologies and international cocoa standards commonly used by chocolate makers and cocoa traders include the following:

• ISO’s Standards on classification and sampling for cocoa beans
• The Fine Cacao and Chocolate Institute (FCCI): check their website and contact FCCI for their sampling protocol and grading form
• 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

In addition, a workgroup coordinated by the Cocoa of Excellence Programme has launched the International Standards for the Assessment of Cocoa Quality and Flavour website, where you can download the first protocols on quality standards.

These protocols describe step by step how to: 1) sample cocoa beans for evaluation; 2) assess their physical quality; 3) process them into coarse powder, liquor and chocolate, and 4) establish a sensory evaluation of the flavours expressed in these three products.

Labelling requirements

The labelling of cocoa beans exported to Spain should comply with the general food labelling guidelines of the European Union. The information provided on labels must be easy to understand, easily visible, clearly readable, and should be written in a language easily understood by the purchaser. In most cases, this means labels should be written in English.

The label should include the following topics to ensure traceability of individual batches:

• product name
• grade
• lot or batch code
• country of origin
• net weight in kilograms

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

Figure 1: An example of cocoa bean labelling

Source: Chocolate Cortés

Packaging requirements

Cocoa beans are traditionally shipped in jute bags, which can weigh between 60 kg and 65 kg. In 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 2). 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 of packaging for cocoa: jute bag, container-sized flexi-bag and GrainPro

Sources: Osu.edu, Bls.bulk.com and GrainPro

2. Additional requirements to keep up with the market

Additional food safety requirements

Expect buyers in Spain to request extra food safety guarantees from you. Some of the production and handling processes you should consider implementing include:

• 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 for safety and traceability of products. Note that certification organisations such as Rainforest Alliance/UTZ often incorporate GAP in their standards.
• 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 certifications for your manufacturing facilities, such as International Featured Standards: Food (IFS), Food Safety System Certification (FSSC 22000) and British Retail Consortium Global Standards (BRC).

Additional sustainability requirements

Corporate responsibility and sustainability have become very important in the entire European cocoa sector, including in Spain. Leading companies in the chocolate market, such as Trapa, Ibercacao and Natra, have their own sustainability policies highlighting their relationship with farmers, transparency in their operations, as well their social and environmental impact at origin.

As an exporter, adopting codes of conduct or sustainability policies related to your company’s environmental and social impacts may give you a competitive advantage. In general, it is likely that buyers require you to comply with their code of conduct and fill out supplier questionnaires about your sustainability practices.

Certification standards are usually part of the sustainability strategy of traders, cocoa processors, chocolate manufacturers and retailers. As such, a standard like Rainforest Alliance/UTZ has become increasingly important in the mainstream cocoa market. More than 80 cocoa supply chain actors operating in Spain are Rainforest Alliance/UTZ certified.

Keep in mind that Spanish importers might reexport cocoa or processed cocoa products to other destinations in Europe. Although Spanish buyers may not be as strict as buyers from northern European countries when it comes to certification or sustainability, the latter push their requirements forward, which may increase the need for you to adopt specific certifications or standards. This will depend on the final market and market channel used.

Initiatives to develop legally binding measures for the use of sustainable cocoa at the EU level are ongoing. The European Commission is working on due diligence laws to protect and restore global forests. These regulations are expected to become operational in 2022. These laws will include measures to minimise the impact of EU consumption on the cocoa sector, which is seen as a risk commodity for deforestation. The largest cocoa companies, such as Barry Callebaut, Mars and Mondelez, support the call for the EU to adopt due diligence regulations. Once operational, buyers might download some of the regulation requirements to cocoa suppliers and exporters. The European Union also has plans to boost sustainable cocoa production in Ivory Coast, Ghana and Cameroon, providing training opportunities as well as specific requirements for exporters from these countries.

3. Niche requirements

EU Organic

In case you want to market your cocoa as organic in the Spanish market, it must comply with the regulations of the European Union for organic production and labelling. Obtaining the EU Organic label is the minimum legislative requirement for marketing organic cocoa in the EU.

Note that the new EU organic regulation came into force on 1 January 2021. This means that producers in third countries will have to comply with the same set of rules as those producing in the EU. Also, inspections of organic production and organic products has become stricter to prevent fraud.

Before you can market your cocoa beans 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. To become organic certified, you can expect a yearly inspection and audit which aims to ensure that you comply with the rules on organic production.

Note that all organic products imported into the EU must have an appropriate electronic Certificate of Inspection (COI). These 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).

Fairtrade

The market for fair-trade cocoa is very small in Spain, although it is growing. The most common fairtrade standard in the Spanish market is Fairtrade. The accredited certifier for Fairtrade is FLOCERT. SPP (Small Producers’ Symbol) is another less common standard in the Spanish market.

2. Through what channels can you get cocoa on the Spanish 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. The confectionery 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. In Spain, chocolate bars accounted for nearly 36% of total sales volume in 2018. The chocolate confectionery industry in Spain reached a value of €1.6 billion in 2019, with volumes reaching 212 thousand tonnes.

Figure 3: Chocolate market segmentation by quality

Source: ProFound

Supermarkets are the leading sales channel for chocolates in Spain. The market share of overall private labels in Spanish supermarkets reached nearly 50% in 2019. Hence, private label chocolate brands are widely available and common in Spanish supermarkets. The largest retailers in Spain are:

• Mercadona
• El Corte Inglés
• Carrefour
• Eroski
• DIA
• Alcampo
• Lidl

Low end: The low-end segment offers cheap chocolate products with low 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.

Low-end chocolate products are mainly found in supermarkets. These are usually mass-market products of big brands and retailers’ low-quality private label products. The table below provides examples of low-end product brands and indications of prices based on  Alcampo and Mercadona retail prices in 2021:

	Product	Pictures*	Price (€/kg)
Lower end	Hacendado (Private label brand, dark chocolate, 150 g)		5.00
Nestlé, Dolca (Dark chocolate, 100 g)		6.00
Milka (Milk chocolate, 125 g)		6.96

Source of pictures: https://www.alcampo.es/compra-online/search/?sort=price-asc&q=chocolate%3Arelevance and https://tienda.mercadona.es/categories/92

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

Middle-range products are also mainly sold through supermarkets, usually the high-quality retailer category. Supermarkets increasingly offer their own premium private label chocolate products. These products offer similar 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 based on Alcampo and Mercadona retail prices in 2021:

	Product	Pictures*	Price (€/kg)
Middle range	Hacendado (Private label brand, dark chocolate, 85%, sugar-free, 100 g)		14.00
Tierra Madre (Dark chocolate, 70%, Fairtrade, organic, 100 g)		19.00
Suchard (Dark chocolate, 70%, Dominican Republic, organic, 90 g)		22.40

Source of pictures: https://www.alcampo.es/compra-online/search/?sort=price-asc&q=chocolate%3Arelevance and https://tienda.mercadona.es/categories/92

High end: Small, specialised chocolate makers produce high-end chocolate products, mainly using fine-flavour cocoa (usually Criollo and Trinitario varieties, and/or to a lesser extent Forastero). These products are characterised by high cocoa content. Single origin cocoa beans are important, both for taste and traceability of the cocoa. Bean-to-bar is one of the categories in the high-end chocolate market, featuring brands such as Utopick and Blanxart.

High-end products are mainly sold at chocolate events and in specialty shops. Examples of specialty shops in Spain include Club del Chocolate and Primos de Origen. The number of Spanish high-end chocolate makers is growing. The website of the Fine Cacao and Chocolate Institute and this article on the bean-to-bar scene in Spain provide you with a good list of chocolate makers working with high-quality cocoa in Spain. The table below provides some examples and an indication of consumer prices for high-end chocolate products based on Club del Chocolates’ 2021 retail prices:

	Product	Pictures*	Price (€/kg)
High end	Moro (Dark chocolate, 75%, Papua New Guinea, 80 g)		60.00
Kaitxo (Dark chocolate, 75%, Nicaragua, El Castillero, Rio San Juan, organic, 70 g)		88.57
Utopick (Dark chocolate, 70%, Colombia, Tumaco, 70 g)		95.00

Source of pictures: https://www.clubdelchocolate.com/

Exporters must note that trade prices and retail prices are not directly linked. As the below figure shows, only 6.6% of added value generally goes to farmers. In general, cocoa bean export prices 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.

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 Spanish market. Entering the market will vary according to the quality of your cocoa beans and your supply capacities.

The European market is moving towards shortened supply chains, which means that retailers and cocoa processing companies are increasingly sourcing their cocoa beans directly at origin. The figure below shows the most important channels for cocoa beans in Spain.

Figure 5: Main cocoa export channels to Spain

Source: ProFound

Cocoa bean processors/grinders

Large processors and grinders source cocoa beans directly from producing countries. They process the raw material into cocoa mass, cocoa butter 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 sectors.

Nederland SA and Moner Cacao (both part of the Nederland Group), Natra, Indcresa, and large multinationals Olam and Barry Callebaut are some of the cocoa bean processors and grinders in Spain. CHOCOVIC has been part of Barry Callebaut since 2009, mainly producing couverture. Some confectionery manufacturers also have their own grinding facilities in Spain, such as Nestlé.

For whom is this an interesting channel? If you are a high-volume bulk cocoa bean exporter, then your direct trading partner is usually a cocoa grinder or processor. These companies tend to buy high volumes of standard quality beans. They usually have buying stations in producing countries where you can sell your cocoa beans directly.

Importers

Bulk cocoa bean importers normally handle large quantities and have direct contacts with exporters in producing countries. In most cases, importers have long-standing relationships with their suppliers. Importers either sell cocoa beans to companies in Spain or reexport them to other European buyers. However, cocoa bean reexports from Spain are not substantial.

Barry Callebaut, Olam, Indcresa, Nederland SA, Natra and Nestlé also import cocoa beans directly from origin in addition to grinding and manufacturing.

Few Spanish importers are active in the specialty segment. One example of a Spanish specialty trading company focused on high-quality cocoas from Venezuela exclusively is Cacao Venezuela Delta. Rockwinds is another example, based in France but with offices in Spain, Switzerland and Ghana.

Most high-quality chocolate makers in Spain buy their cocoa beans from other European specialty cocoa importers, such as Daarnhouwer (Netherlands), Silva Cacao (Belgium) and Twenty Degrees Cacao (United Kingdom, part of the Olam Cacao Group). These specialised importers usually handle small quantities, often working directly with producers and producer cooperatives. They often work on projects with cocoa-producing cooperatives in origin countries.

Specialised importers may also be interested in value-added cocoa products processed at the country of origin, as described in our study on the European market for semi-finished cocoa products.

For whom is this an interesting channel? For exporters working with high volumes of bulk beans from producers or cooperatives, large companies that engage in cocoa processing activities and importing can serve as a gateway into the Spanish market. If you deal with bulk cocoa, discuss certification possibilities with your buyer.

Farmers and farmers’ cooperatives with specialty or certified cocoa can best sell cocoa beans directly to specialised cocoa importers, since many specialised importers prefer to work directly with producers and cooperatives and not through exporters.

In addition, if you produce or have very high-quality cocoa beans and are working through an importer, it might be interesting to discuss the possibilities to directly link up with high-end chocolate makers. This is mainly an opportunity for those that have the financial means and technical know-how to access the market directly.

Large (private label) chocolate manufacturers

The world’s largest industrial chocolate producer is Barry Callebaut, which has production and grinding facilities in Spain. Other large multinational chocolate manufacturers active in the Spanish market are Mars, Mondelez, Nestlé, Ferrero and Lindt & Sprüngli. These companies all have their own importing departments and source their cocoa beans directly from producing countries.

Examples of Spanish chocolate manufacturers include Chocolates Eureka, Chocolates Torres, Chocolates Valor, Lacasa and Tirma.

Private label manufacturers may also be an interesting entry point for your cocoa beans. Private label is growing across Europe, but in Spain it has a 50% share of the entire market. Examples of chocolate manufacturers that produce for the private label market in Spain are Natra, Ibercacao and Antiu Xixona.

For whom is this an interesting channel? Selling to these players is interesting if you have standard quality cocoa beans available in large volumes.

Small chocolate makers

Especially in the specialty and fine flavour segment, cocoa beans are increasingly traded directly from farmers or farmer associations and cooperatives to chocolate makers. Direct trade is growing, but it still represents a very small part of the cocoa market. Not all chocolate makers are able to sustain direct trade and meet 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 transactions between producers and chocolate makers. Importers can also safeguard traceability and communicate the story behind the cocoa beans accurately along the chain.

Examples of specialised chocolate makers in Spain are plentiful, such as Kaitxo, Kankel Cacao, Vallflorida Xocolaters, Casa Cacao, Utopick and Maychoco.

For whom is this an interesting channel? Targeting specialty chocolate makers directly is recommended for producers and exporters dealing with specialty cocoa beans. However, it requires 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 more in depth.

Intermediaries and 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 buyer. An agent acts as an intermediary and has the knowledge to evaluate and select interesting buyers for you. Examples of brokers or agents in other European countries include H.C.C.O Hanseatic Cocoa & Commodity Office (Germany) and Amius (United Kingdom).

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 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.

3. What competition do you face on the Spanish cocoa market?

Competition in the market for bulk cocoa with low added value is generally intense. This segment is 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 in this segment. In the specialty cocoa market, there is more focus on quality, taste and sustainability, reducing competition.

Ivory Coast, Ghana and Cameroon: largest suppliers of cocoa beans to Spain

More than 72% of Spain’s total cocoa bean imports originated in West Africa in 2020. Ivory Coast was the largest cocoa supplier in 2020 with 40 thousand tonnes, equivalent to 41% of the total direct imports. Ivorian cocoa bean exports to Spain grew at an average annual growth rate of nearly 12% between 2016 and 2020.

Ghana accounted for 16% of Spain’s total imports of cocoa beans in 2020, while Cameroon supplied 7% of Spanish cocoa bean imports. Ghana registered an average annual increase of 7.5% between 2016 and 2020, whereas Cameroon’s exports had an average annual decrease of -14% in the same period.

Both Ivory Coast and Ghana mainly produce Forastero cocoa beans and focus on the production of large volumes and low quality. Ivory Coast and Ghana together roughly produce up to two-thirds of the global cocoa supply. As such large cocoa producing countries, Ghana and Ivory Coast have well-established cocoa supply chains with a large presence of multinational processing companies, such as OLAM and Cargill, linked to small cocoa producers and cooperatives.

These multinationals are also a driving force behind the growing cocoa-grinding industry in both countries. Ivory Coast was the world’s second-largest cocoa grinder in 2019/20, with 610 thousand tonnes or 13% of global grindings. Ivory Coast aims to grind 1 million tonnes of cocoa beans by 2022, almost doubling its current output. Ghana’s grinding industry consumed an estimated 300 thousand tonnes in 2019/20, accounting for 6.5% of global grindings. Note that most grinding facilities at origin are owned by multinationals, such as Cargill, Olam and Barry Callebaut.

A large share of cocoa produced in Ivory Coast is Rainforest Alliance/UTZ certified, which is a common market entry requirement of large manufacturers and retailers operating in mainstream markets. About 46% of the total 4.6 million hectares of cocoa production in Ivory Coast was Rainforest Alliance/UTZ certified in 2018. In comparison, approximately 16% of Ivory Coast’s cocoa production area was Fairtrade-certified in 2018. This article compares the Rainforest Alliance and Fairtrade standards.

Despite certification efforts, there are widespread sustainability concerns regarding the cocoa sector in 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 Ivory Coast and Ghana launched the Cocoa and Forests Initiative. In addition, child labour is a recurring concern in both countries, where an estimated 2.1 million children still work in cocoa fields.

In a bid to tackle farmer poverty, the governments of Ghana and Ivory Coast have raised the minimum export prices for cocoa to US$ 2,600 per tonne, with the addition of a fixed ‘living income differential’ on all their cocoa sales at US$ 400 per tonne), applicable from the 2020/21 crop.

In Cameroon, the government and cocoa producer associations have launched programmes to improve nationwide post-harvest techniques and enhance cocoa quality. Although Cameroon mainly cultivates Trinitario, the Cameroonian type is classified as bulk cocoa. Approximately one-third of cocoa exported by Cameroon is certified as Rainforest Alliance/UTZ.

Latin America is an important cocoa bean supplier to Spain

Latin America plays a significant role in Spanish imports of cocoa beans, though in different volumes when compared to West and Central Africa. Approximately 13.4% of Spain’s total cocoa imports were sourced directly from Latin America in 2020.

Among Latin American countries, the Dominican Republic is the largest supplier of cocoa beans to Spain with an estimated 5.8 thousand tonnes in 2020, however showing a modest average annual growth 1.3% between 2016 and 2020. According to FAOSTAT data, the Dominican Republic was the world’s tenth-largest cocoa producer in 2019. As much as 60% of the country’s cocoa exports are recognised as fine flavour, which are mainly cocoa beans from the Trinitario and Criollo varieties.

The Dominican Republic is also an important supplier of organic cocoa. In fact, having approximately 73 thousand hectares of cocoa harvest area certified as organic in 2018, the Dominican Republic is the world’s largest organic cocoa producer. A large share of organically produced cocoa from the Dominican Republic is also Fairtrade certified.

After the Dominican Republic, Ecuador and Peru were the largest Latin American suppliers to Spain in 2020, with 3.7 thousand tonnes and 2.5 thousand tonnes respectively, growing respectively 10% and 6.5% on average per year between 2016 and 2020.

FAOSTAT ranked Ecuador as the world’s fifth-largest cocoa producer in 2019. As much as 75% of Ecuador’s cocoa exports are fine flavour, making it the world’s largest fine-flavour cocoa producer. Ecuador strongly promotes its cocoa beans’ origin, an important promotional element that may help raise retail prices by 51% and improve consumer appreciation in the growing European online retail space.

According to FAOSTAT statistics, Peru was the world’s eighth-largest cocoa producer in 2019. Peruvian cocoa stands out because approximately 75% of the country’s total cocoa exports are registered as fine flavour cocoa and Peru is also known as a main supplier of organic cocoa. Peru was the world’s fourth-largest organic cocoa producer in 2019, after Dominican Republic, Sierra Leone and Democratic Republic of the Congo. The high share of organic cocoa in combination with high-quality cocoa gives Peru a strong competitive advantage.

Peru has also 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.

Despite their growing export volumes to Spain, both Peru and Ecuador have been affected heavily by the European Union regulation limiting the maximum amounts of cadmium in cocoa products. Cadmium contamination is high in some cocoa-growing regions in Peru, Ecuador and Colombia, which has led buyers to source from alternative origins.

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

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