Entering the German market for cocoa

The German cocoa processing industry relies heavily on cocoa supplies from West Africa. However, the market attracts further interest in cocoa beans from other regions around the world; this is particularly so given the growing markets for organic and Fairtrade-certified cocoa beans in Germany. Producers and exporters of organic cocoa beans are likely to find the widest opportunities in Germany, where the market is large and diverse.

1. What requirements must cocoa comply with to be allwed on the German market?

You can only export cocoa to Germany 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 the following.

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.

The highlights for these requirements are given below, specified for the German market when relevant.

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

Legal requirements

You must follow the European Union legal requirements for cocoa, mainly dealing with food safety and hygiene. Related to this are the legal limits for food contaminants, 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 German 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 Germany 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 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)’s cocoa sampling protocol and cocoa 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.
• The methodology developed by the Cocoa of Excellence Programme to assess the quality of cocoa in different stages.

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 working group, 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 Germany should comply with the general food labelling guidelines of the European Union. The label should be in English and 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 and/or fair trade certified, the label should contain the name/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 and 65 kilograms. 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 3). 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 food safety requirements

You can expect buyers in Germany to request extra food safety guarantees from you. Regarding 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 GAP 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.

Additional sustainability requirements

As corporate responsibility and sustainability are growing in importance in the German cocoa sector, it has become essential to adopt codes of conduct or sustainability policies related to environmental and social impacts. Leading companies on the German chocolate market (such as Ritter Sport and Stollwerck) have sustainability policies emphasising the contact with producers, transparency in their operations, as well their social and environmental impact.

Certification standards like Rainforest Alliance (merged with UTZ in 2018) have become key on the mainstream chocolate market. Over 230 traders, cocoa processors and chocolate manufacturers operating in Germany are Rainforest Alliance/UTZ-certified.

3. Niche requirements

Germany represents the most important market for organic-certified cocoa products in Europe. 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.

EU Organic is the minimum legislative requirement for marketing organic cocoa in the European Union. On top of that other organic certification schemes in Germany are Biosiegel, Bioland and Naturland. Each scheme has its own requirements, and may be required by specific buyers. For instance, check the differences between Naturland and the EU organic regulation, and note that Naturland sets higher standards.

The market for Fairtrade cocoa is also growing in Germany, offering interesting opportunities in this niche market. The most common fair-trade standards on the German market are Fairtrade and GEPA. The Naturland Fair logo is for products that are organically produced and also fairly traded.

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.

2. Through what channels can you put cocoa on the German market?

1. How is the end market segmented?

Cocoa beans 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 used up to about 43% of total global cocoa consumption. It mainly processes cocoa liquor and butter into chocolate products, such as bars, candy bars and bonbons.

The confectionery industry can be segmented according to the quality of the end products. For cocoa beans, the end products mainly consist of chocolate bars.

Figure 3: Segmentation of the chocolate market based on quality

Low end: The low-end segment offers cheap cholate products, with lower cocoa content. The products are often produced by large chocolate manufacturers, for which they predominantly use bulk cocoa from West Africa (Forastero variety). Bulk cocoa is characterised by high volumes, low value and standard quality. Rainforest Alliance/UTZ-certified cocoa has become mainstream, and is increasingly being 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 mainstream and most popular brands for chocolate bars and candy bars found on the low end of the German confectionery market are:

• Milka and Toblerone (manufactured by Mondelez)
• Merci (August Storck)
• Kinderschokolade and Yogurette (Ferrero)
• Alpia and Sarotti (Stollwerck)
• Trumpf and Schogetten (Ludwig Schokolade)
• Nestlé Die Weisse (Nestlé)
• Ritter Sport (Alfred Ritter & Co.).  

These products are predominantly sold in supermarkets. The largest retailer groups in Germany are:

• Edeka Group (which includes supermarkets Edeka and Netto), with a market share of 21.5% in 2018;
• REWE Group (REWE and Penny), 14.7% market share;
• Schwarz Gruppe (Lidl and Kaufland), 14.7% market share;
• Aldi (with Aldi Süd and Aldi Nord), which together hold a market share of 11.1%.

An indication of consumer chocolate prices (based on REWE’s retail prices in 2019) in German supermarkets for lower end products is as follows:

	Product	Price (€/kg)
Lower end	REWE (Fairtrade dark chocolate 72%)	7.90
	Schogetten (dark chocolate 50%)	9.90
	Milka (Alpenmilch)	10.90
	Ritter Sport (dark chocolate, Peru, 74%)	13.90

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.

Examples of middle-range products available in Germany include the popular Swiss brand Lindt. Lindt is mainly known for their wide range of premium chocolate bars made from Trinitario and/or Forastero cocoa. Another example is the German brand GEPA, which offers fair-trade and organic-certified chocolate products.

These middle-range products are mainly sold through supermarkets, and are usually the high-quality category of retailers. Supermarkets also increasingly offer private label premium chocolate products. The table below gives an indication of consumer chocolate prices for middle-range products:

	Product	Price (€/kg)
Middle range	Hachez (dark chocolate, São Tomé, 73%)	19.90
	Lindt (dark chocolate 70%)	19.90
	GEPA (organic dark chocolate 60%)	22.90

High end: Smaller, more specialised chocolate makers produce high-end chocolate products, for which often fine flavour cocoa is used (usually a mix of Criollo, Trinitario and/or to a lesser extent Forastero). These products are characterised by a high cocoa content. Single-origin cocoa beans are important, both for the taste as the traceability of the cocoa. Bean-to-bar chocolate is a good example of a high-end product.

Belyzium, Edelmond and Georgia Ramon are examples of German bean-to-bar brands and specialty chocolate makers that produce high-end products. These products are mainly sold through specialty shops. Examples of specialty web shops in Germany include Chocolats de Luxe, Feine Schokolade and Schoko und Rum.

Chocolate consumer prices for high-end chocolate products are:

	Product	Price (€/kg)
High end	Edelmond (organic vegan dark chocolate, 66%)	59.30
	Georgia Ramon (organic dark chocolate, Belize, 70%)	104.00
	Belyzium (dark chocolate, Belize single estate, 68%)	124.00

For exporters it is important to realise that trade prices and retail prices behave independently, thus are not directly linked. As the below figure shows, only 6.6% of added value 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.

2. 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 German 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 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 Germany.

Figure 5: The main channels for export of cocoa to Germany

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, cosmetic and pharmaceutical industries throughout Europe. Some grinders also manufacture end products to supply directly to the retail or food service sector. Examples of cocoa bean processors/grinders in Germany are Cargill, Olam and Barry Callebaut.

For whom is this an interesting channel? If you are an exporter of high volumes of bulk 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 beans directly.

Importers

Importers of bulk cocoa handle large quantities and have contacts 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 Germany or re-export them to other European buyers.

Examples of large importers of cocoa beans and/or cocoa derivatives active in Germany are Albrecht & Dill Trading, Schlüter & Maack and Traub Trading. The previously mentioned Cargill, Olam and Barry Callebaut also import cocoa beans directly.

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 Germany are Naturkost Übelhör and Rapunzel (focused on organic produce), Bohnkaf Kolonial (focused on fine flavour) and GEPA (which sources fair-trade certified cocoa beans).

Specialised importers could 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, or even in finished products like chocolate. El Puente is a German company that imports chocolate fully produced at origin.

For whom is this an interesting channel? For exporters working with high volumes of bulk beans from producers/cooperatives, large importing companies can serve as a gateway into the German market. If you deal with bulk cocoa, discuss certification requirements and possible industrial applications with your importer. Note that many specialised importers prefer to work directly with producers and/or cooperatives and not through exporters.

A producer association selling specialty or certified cocoa can best sell its cocoa beans directly to specialised cocoa importers. 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.

If you, as an individual farmer, have the financial means and technical know-how to organise export activities, then you can also sell your beans directly to specialised importers or chocolate makers.

Large (private label) chocolate manufacturers

The largest industrial chocolate manufacturer worldwide is Barry Callebaut, which also has production and grinding facilities in Germany. Other large chocolate manufacturers active on the German market are Mars, Mondelez, Nestlé, Ferrero, Lindt & Sprüngli and Alfred Ritter & Co. These companies all 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. These companies are growing in importance as it becomes more common for large brands to outsource their production to specialised private label manufacturers. Examples of private label manufacturers in Germany are Delitzscher, Farüchoc and Weinrich. Weinrich produces large shares of both organic and fair-trade products, such as the popular organic Vivani brand. Ludwig Schokolade and Storck (apart from producing their own chocolate brands) also produce private label brand products for retailers.

For whom is this an interesting channel? Selling to these players is interesting if you have cocoa of a standard quality in high volumes. This may also be an interesting channel for local grinders with cocoa mass and cocoa butter which meet high quality standards (which means they do not need to be processed again). Then you can trade directly with European confectionery and food companies. If you have lower quality semi-processed cocoa products, your direct trading partner will usually be a European importer or grinder.

Small chocolate makers

Especially in the specialty and fine flavour segment, cocoa beans are increasingly being traded directly from farmer (association) to chocolate maker. 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, since responsibilities that are usually outsourced to traders (such as logistics, documentation and pre-financing) now need to be handled by the chocolate maker.

In this sense, direct trade can also happen with an importer as intermediary, who acts as a service provider and contact point in the transactions between the source and the end market. Such importers can also guarantee traceability and communicate the story of the cocoa beans accurately along the chain.

Examples of specialised chocolate (bean-to-bar) makers in Germany that source specialty cocoa directly from producing countries are Belyzium, Coppeneur, Georgia Ramon, Kilian & Close and Rausch.

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 your having 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 more in depth.

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

The intensity of rivalry 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. Rivalry is less intense in the specialty cocoa market. In this segment there is more focus on quality, taste and sustainability.

German cocoa processors rely on supplies from West Africa

The largest share of cocoa bean imports by Germany are bulk beans of West African origin. Ivory Coast, Nigeria and Ghana supply the German cocoa processing industry (78% of total cocoa bean supplies). These supplying countries rely on well-established cocoa supply chains. There is a large presence of multinational processing companies (examples: OLAM and Cargill), to which small cocoa producers and cooperatives are strongly linked, especially in Ivory Coast.

Cocoa produced in West Africa mostly comes from the Forastero tree, and is mainly used in the mainstream high-volume market. Between 2014 and 2018, German cocoa bean imports (both direct and indirect) from Ivory Coast increased at an average annual rate of 4.3%, while Ghanaian supplies decreased slightly (−1.2%) and Nigerian supplies increased strongly between 2014 and 2018 (+45%).

A large share of cocoa produced in Ivory Coast and Ghana is Rainforest Alliance/UTZ-certified, which is a market entry requirement to large manufacturers and retailers operating in mainstream markets.

Latin American supplies to Germany

Latin American countries are known for their high shares of fine flavour cocoa in total production, as well as for the production of organic cocoa. About 70% of organic cocoa is produced in Latin America. The largest Latin American suppliers of cocoa beans to Germany are Ecuador (3.1% market share in 2018) and Peru (1.9%). Between 2014 and 2018, Ecuador’s supplies decreased at an average annual rate of 7.9%, while Peruvian supplies increased by 8.7% in the same period.

Both countries export fine flavour cocoa. As much as 75% of Ecuador’s cocoa exports are fine flavour beans. Ecuador is strongly promoting the origin of its cocoa beans. This 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.

About 75% of Peru’s cocoa exports are registered as fine flavour cocoa. Fine flavour cocoa beans mainly consist of Trinitario and Criollo beans. Peru is also a major producer of organic cocoa beans (the world’s third largest).

The world’s largest organic cocoa producer is the Dominican Republic. A major share of organically produced cocoa from the Dominican Republic is also Fairtrade certified. Imports by Germany from the Dominican Republic decreased at an average annual rate of 21% between 2014 and 2018. This decrease in exports is explained by unfavourable weather in the Dominican Republic (prolonged rains, followed by drought), which is negatively affecting production volumes.

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

Please review our market information disclaimer.