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The European market potential for certified cocoa

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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.

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 European-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 2018, total imports of cocoa beans by Europe amounted to nearly 2.5 million tonnes. Between 2014 and 2018, import volumes increased by an average of 9.2% 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.

These initiatives include targets for sustainable sourcing. Partly because of this, the imports of certified cocoa in these countries has increased. For instance, in Germany, up to 62% of all chocolate confectionery sold in 2018 was produced with sustainably produced cocoa, marking an increase of 35% since 2014. 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 current calls for legally binding measures for the use of sustainable cocoa on a European level. A first reaction at EU level was the launch of a plan to protect and restore global forests in July 2019, which includes an assessment of introducing new regulation to minimise the impact of EU consumption on deforestation and forest degradation.

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.

Tips:

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 produced than sold. Therefore 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 (merged with UTZ) has its largest cocoa market in Europe. Europe accounts for over 80% of its licensed supply chain actors. Most Rainforest/UTZ-certified cocoa actors are found in Germany, followed by the Netherlands, Belgium, Italy 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 markets can be found in the United Kingdom. The United Kingdom registered general Fairtrade retail sales of over €2.0 billion in 2017, with sales growing by 7% compared to the year before. Growth is expected to continue; this is, for instance, driven by the commitment made by the British supermarket chain Waitrose to only source Fairtrade cocoa by the end of 2019 for its private label products.

Germany follows as the largest Fairtrade market in Europe. About 12% of total German cocoa imports were Fairtrade-certified in 2018. The market for Fairtrade cocoa in Germany is expected to keep growing in coming years, partly driven by the agreement in 2018 of to only use Fairtrade-certified cocoa beans for its private label chocolate products.

Switzerland is also a relatively large market for Fairtrade products, with Fairtrade retail sales reaching €631 million in 2017. Overall Fairtrade sales in Switzerland grew by 12% between 2016 and 2017. The Fairtrade share of cocoa and chocolate products in Switzerland reached an estimated 7% of the total market. Switzerland also registered Europe’s highest per capita consumption of fair trade products, with an estimated €91 per person spent in 2017.

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. Industry sources also indicate that the demand for Fairtrade-certified cocoa in combination with organic certification is growing. There has already been a steep increase of cocoa beans sales that are both organic and Fairtrade certified. Between 2013 and 2017, cocoa beans that were certified by both standards increased by 39% globally, amounting to 32 thousand tonnes in 2017.

The market for organic-certified cocoa

Europe accounts for 36% of the global organic products consumption. 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 (28% of the European market), France (20%) and Italy (8%). 

For organic chocolate specifically, France plays an important role in the European market. The French organic chocolate market grew by 21% between 2015 and 2016, shifting from a niche to mainstream market. 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.

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

Tips:

  • Before engaging in any certification schemes, verify with your potential buyers whether certification is required and whether it provides you with a competitive advantage over other suppliers to the European market.
  • Find importers that specialise in organic products on the website of Organicbio.
  • If you produce cocoa according to a Fairtrade scheme, find specialised European buyers who are familiar with sustainable and/or fairtrade products, for instance by using the FLOCERT customer database.
  • Find potential business partners in Europe by checking the lists of UTZ certified cocoa supply chain actors.
  • Refer to our study on trends in the European cocoa market for more information.

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 increasingly source 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:

Global attitudes towards certification in the cocoa sector

Certification, used as a tool to reach a sustainable cocoa sector, remains under scrutiny. The VOICE Network, a global network of organisations in the cocoa sector, recently rejected certification as a long-term solution to poverty and sustainability. 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 late 2018, 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.

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This study has been carried out on behalf of CBI by ProFound – Advisers in Development.

Please review our market information disclaimer.

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