Exporting certified cocoa to Europe
Europe is the main market for certified cocoa beans and other cocoa products in the world. The growth of this market is driven by increasing consumer awareness of sustainability in the cocoa production, as well as by sustainable-sourcing commitments by major cocoa processors and manufacturers. Production and sales of certified cocoa have yet to reach maturity, since not all cocoa certified at origin is sold as certified, therefore failing to achieve the desired premium quality. As an exporter, you should certify according to market demand and buyer requirement factors, making sure that certification is economically viable to you and that it safeguards long-term commitments.
Contents of this page
- Product description
- What makes Europe an interesting market for certified cocoa?
- What trends offer opportunities in the European market for certified cocoa?
- What are the requirements for certified cocoa to be allowed on tne European market?
- Through what channels can you get certified cocoa beans on the European market?
- What are the premium prices for certified cocoa?
The cocoa tree (Theobroma cacao) grows in tropical environments within 15–20 degrees latitude north and south of the equator. The main cocoa-growing regions are Africa, Asia and Latin America. After extraction from the pod, cocoa seeds are fermented and then sundried. A producing cocoa tree can deliver on average 0.5–2 kg of dried seeds per year.
Harmonised System (HS) codes are used to classify products and calculate international trade statistics of imports and exports. This factsheet focuses on cocoa beans under HS code 1801. Other cocoa products are discussed in our study on semi-finished cocoa products in Europe.
Certified cocoa refers to cocoa that has met the standards of and has been certified by a certification body. Certification schemes attest whether the various stakeholders in a supply chain meet the environmental, social and economic standards required. 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 marketing claims.
Sustainability certification schemes
The leading international certification schemes are:
- Rainforest Alliance
UTZ and Rain Forest Alliance are the most commonly used mainstream certification schemes for cocoa. In 2017, these two organisations announced a merger into a single organisation and certification named Rainforest Alliance. This organisation will utilise the respective strengths of the current Sustainable Agriculture Network (SAN) and UTZ standards while creating a single auditing process for certificate holders. The new standard, to be launched in 2019, aims at achieving a greater social, environmental and economic impact, giving farmers and producers an enhanced framework to improve their livelihoods while protecting the landscapes where they live and work.
Fairtrade is a certification for small‐scale producers. It requires adherence to a set of environmental and social standards. The Fairtrade Labelling Organisations International (FLO) is the leading standard-setting and certification organisation for Fairtrade. Products which carry the Fairtrade label indicate that producers are paid a Fairtrade Minimum Price.
Organic certification aims to sustain the health of people, soils and ecosystems, while reducing poverty. 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 get certified for smaller and more specific standards meant for smaller niche markets which include Demeter and Símbolo de Pequeños Productores (SPP).
In addition to sustainability certification, some companies also develop their own cocoa-sustainability projects. These companies also sell their cocoa as sustainable, even though it has not been certified by one of the major standard bodies. The level of sustainability in these ‘corporate projects’ can be either higher or lower than, those of the major standard bodies. Examples of corporate sustainability projects include the Nestlé Cocoa Plan and Cocoa Life.
Europe is the leading market for certified cocoa and chocolate in the world
Europe is the leading consumer of cocoa and chocolate products in the world; around half of the global retail sales of chocolate occurs in Europe. In 2017, the European cocoa-processing industry increased by 2.6% to 1.3 million tonnes. Europe exported around US$ 20.6 billion (around €18 billion) of chocolate products in 2017, which accounts for 74% of overall international chocolate sales.
Europe is also the most important market for certified cocoa in the world. Certifications schemes play a very important role, mirroring the growing consumer awareness and changing industry profile towards sustainability.
The importance of each certification scheme in Europe varies significantly from country to country:
- UTZ-certified cocoa has its largest market in Europe, which accounts for 82% of its licensed supply chain actors. UTZ-certified cocoa and cocoa products are most widely available in the Netherlands and Germany, followed by Belgium, Italy and Switzerland. Most UTZ-certified operators located in these countries are chocolate and other confectionery manufacturers such as Barry Callebaut, Ritter Sport, Friesland Campina and traders such as August Toepfer & Co., Daarnhouwer, Naturkost Übelhör, Dutch Cocoa and others. The number of new end-consumer products placed on the market with the UTZ label reached 13,158 in 2017.
- The market for Rainforest Alliance certified cocoa products is largest in the United Kingdom, Belgium and France.
- Fairtrade cocoa is most important in the United Kingdom. Other important countries for Fairtrade cocoa are the Netherlands, Ireland and Switzerland. The market for Fairtrade cocoa continues to increase; one of the most important developments is the commitment of the retailers Aldi and Lidl, which have entered into global agreements with Fairtrade to increase the use of Fairtrade cocoa in their confectionery category across the UK and Europe.
- Organic: 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.
Multiple certification is also common in the cocoa and chocolate industry. For example, a significant 27% of UTZ-certified cocoa producer groups and estates were also certified by one or more other scheme in 2017. Double certification by UTZ and Rainforest Alliance is the predominant combination. Rainforest Alliance and UTZ have merged in January 2018 to develop a new joint certification programme under the name of Rainforest Alliance in 2019. This means that the markets for the two schemes will also transition into a single market.
- Read the International Trade Centre’s report The State of Sustainable Markets for more information on specific sustainable schemes for cocoa.
- Refer to the CBI’s market information on exporting cocoa to Europe to learn more about sustainability initiatives in individual European countries.
Sustainability is a consumer trend in Europe
Consumer awareness of issues related to certified cocoa production has grown over the last decade, resulting in increased demand for certified cocoa, especially in Northern and Western Europe. Both the media and public awareness campaigns such as those focused on child labour and trafficking have been a major driving force behind this trend.
Furthermore, many European retailers actively promote certified cocoa and increasingly source certified cocoa for their own private-label brands. Most of these are major players such as Ahold Delhaize and Hema (Netherlands), REWE and Lidl (Germany), Sainsbury’s (United Kingdom), Carrefour (France) and Coop (Switzerland).
Chocolate-producing industry sets sustainability goals
The five largest chocolate manufacturers in the world, Mondelez, Nestlé, Mars, Hershey’s and Ferrero, have all set sustainability targets to source certified cocoa, each following its own strategy in defining sustainability. Some use the certification schemes of the leading standard bodies, some work through their own projects, while others combine both approaches. Another evidence of growth in the market for certified cocoa is the increase in processing of sustainable cocoa products such as in the Netherlands. The Dutch industry reported a share of 30% of certified sustainable cocoa processed in the country in 2016, compared to 21% in 2014.
Some countries have also set sustainability targets at the chocolate and confectionery industry level. Companies from these countries might adopt practices to contribute to these targets, such as the endorsement of specific certification schemes or codes of conduct. The Netherlands, Germany and Switzerland, for example, work on their own national platforms to achieve their sustainability targets, namely:
- Swiss Platform for Sustainable Cocoa
- German Initiative on Sustainable Cocoa
- Dutch Government’s commitment to sustainable cocoa
In addition, governments’ procurement policies in Western Europe 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. All Dutch public agencies have started to implement them, including imposing conditions in their public tenders. Refer to the website of the European Commission to learn more about Green and Sustainable Public Procurement in the EU.
Certified cocoa bean production rises worldwide
An average of 30% of the global cocoa production met one or more certification standards in 2016, but not all of it was purchased as verified or certified. Verification ensures that certain agreed criteria and practices are met, but does not use a certificate to market the claim to the final consumer, which is the particular case for UTZ-certified cocoa. The World Cocoa Foundation estimates that around 22% of the cocoa traded globally is certified.
- Before engaging in any certification schemes, verify with your potential buyers whether a certification is required and whether it provides you with a competitive advantage over other suppliers to the European market.
- Stay up to date on sustainability initiatives in the cocoa industry through organisations such as the World Cocoa Foundation.
- Refer to the CBI’s trends in the European cocoa market report for more information.
What competition do you face on the certified cocoa market in Europe?
Ivory Coast and Ghana are the largest suppliers of certified cocoa beans to Europe. These two countries combined accounted for nearly 66% of all European certified cocoa bean imports in volume. They are also the leading countries in UTZ and Rainforest Alliance certifications in the world. Sales of UTZ-certified cocoa beans from Ivory Coast increased at a rate of 94% in 2017 compared to 2016. Ghana’s sales increased at an even higher rate: 123%. Cameroon and Nigeria are the third and fourth largest sellers of certified cocoa beans to Europe, having increased UTZ certification mostly by large-scale investment of large groups such as Olam.
Ivory Coast and Ghana accounted for approximately 77% of all Rainforest Alliance-certified cocoa production in the world (in tonnes), followed by Ecuador (7.6%) and Indonesia (5.6%) in 2017. The Dominican Republic (4.9%), Nigeria (2.2%) and Tanzania (1.2%) accounted for smaller shares.
Ivory Coast and Ghana also account for the largest areas of Fairtrade-certified cocoa in the world, at a share of 77% of total Fairtrade-certified production. They are followed by Latin American suppliers Dominican Republic, Peru and Ecuador. These five countries combined for 93% of the total Fairtrade International cocoa area in 2016. They are also among the largest suppliers of cocoa beans to the European market.
When it comes to organic cocoa production, however, Ivory Coast and Ghana play a much less important role. The largest organic cocoa production area can be found in the Dominican Republic, where nearly half of the total organic area in the world is located. The country is followed by the Democratic Republic of Congo, Peru, Sierra Leone and Tanzania.
- Use your portfolio of certifications as your competitive advantage. Learn from your potential competitors how to promote your certification trajectory and sustainability practices. See for example: COAGRICSAL (Honduras), CABRUCA (Brazil), Grupo CONACADO (Dominican Republic), Fedecovera (Guatemala) and Cooperativa Agroindustrial Cacao Alto Huallaga (Peru).
Cocoa beans are generally purchased from exporting countries by international trade houses, dealers and traders. The largest cocoa-processing and chocolate makers in Europe also maintain their own in-house buying companies in producing countries, which deal directly with suppliers at origin. Besides these companies, chocolate and confectionery companies tend to buy their cocoa beans from specialised import agents who represent specific exporters in producing countries. These characteristics are true for both conventional and certified cocoa beans.
The market channels for certified cocoa beans are characterised by chain of custody protocols. Chain of custody certification is applicable to all companies in the supply chain that own and handle the product and make sustainable certified claims about the product. These protocols provide evidence that the product originates from well-managed, certified sources, and verifies that it has not been mixed with products from uncertified sources at any point in the supply chain, except under strict management controls.
Transparency strategies by European importers and their clients often results in certification. A positive result of increasing transparency is that a transparent supply chain makes it easier to link up with small-scale traders and manufacturers of certified and specialty products. Larger cocoa bean processors and chocolate companies with sustainability commitments aim to have a direct link to the farmer, based on trust between the chocolate marker, the certifier and the importer.
- For more information on the European market channels for cocoa, refer to the CBI report on channels and segments for cocoa.
- Different characteristics regarding sustainability can attract smaller chocolate makers, particularly those who are looking to buy from the original source. Refer to the CBI documents Top 10 Tips for Doing Business with European Cocoa Buyers and Tips for Finding Buyers for Cocoa for more information on market entry strategies.
- Check the website of Organic-bio for a list of European companies buying organic and often Fairtrade-certified cocoa beans.
The end-market prices for chocolate vary depending on which segment of the market is targeted. Our study on channels and segments in the European cocoa market provides an overview of the upper end, middle range and lower end in the chocolate retail market and their main characteristics.
Sustainability certification doesn’t always affect the retail prices of chocolate, but most of them offer a premium to producers and exporters. Premiums may differ per country, producer and buyer because of several aspects such as quality, proportion of in-kind premium and negotiation powers.
- UTZ: Mandatory premium agreed upon between the certified group or producer and the first buyer. In 2017, an average of 83 euros/tonne was paid in cash premium to UTZ producers’ groups and estates. An average 45% of UTZ premium is used to further professionalise at coop level, while 55% is paid in cash to group members.
- Rainforest Alliance: No mandatory premium for farmers. After the merger with UTZ, premiums will be paid.
- Fairtrade: Mandatory minimum price for different cocoa products (beans, liquor, butter and powder), conventional or organic cocoa, plus a Fairtrade premium.
- Organic: Usually a markup of 15–30% over the baseline prices paid for organic-certified cocoa beans.
- Price premiums for certified cocoa beans may range widely, depending on quality and certification scheme. If you move towards certified cocoa, make a thorough cost calculation of fees, learning costs, workload and possibly lower yields, make sure you provide the required quality and comply with the standards correctly.
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