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10 tips for doing business with European cocoa buyers

Takes about 14 minutes to read

European buyers are constantly looking for ways to secure supplies of good-quality cocoa. Here are some tips for doing business with European cocoa buyers. After reading these, you will have a better chance of convincing importers to buy your product. If you are already doing business in Europe, these tips can help improve your relationship with buyers. If you are new to doing business in Europe, these tips will prepare you for your first contact with buyers.


1 . Be ready to provide information on your product offer

Buyers in Europe will expect you to be able to provide up-to-date and reliable data on your farm(s) and/or the farmers that are producing your cocoa beans. You should have these data available for the past three to five years and work out a prediction for the coming two to three years.

The data need to include detailed information about the following:

  • cocoa varieties and their genetic profile;
  • characteristics and figures of the producing region, including its agro-climatic context;
  • characteristics and organisational chart of the producing cooperative(s), if relevant;
  • the number of farmers and their family members;
  • the size of the farm(s);
  • how many kilogrammes or tonnes of cocoa per farmer are produced annually;
  • how many kilogrammes or tonnes of cocoa can be supplied annually, per quality grade;
  • characteristics of the post-harvest protocols;
  • a laboratory analysis of cadmium levels in your cocoa beans. If you do not have this ready, you should at least be prepared to provide your buyer with this. In general, European importers consider <0.5 ppm of cadmium in cocoa beans an acceptable level. Up to 0.8 ppm may still be accepted, but acceptance above 0.8 ppm will depend on the content of cocoa in the finished chocolate. If the level rises above 1 ppm, chocolate makers will either reject the product altogether or have to blend the cocoa with other cocoa with lower cadmium content.

Tips:

  • Always be transparent and honest. The cocoa market is small, so negative experiences with suppliers travel fast. Be clear and open about your own track record, your supply capacities and your cocoa varieties.
  • Visit the website of the International Cocoa Organisation for recommendations on how to reduce cadmium levels in cocoa beans. Provisions for methods of sampling and analysis for the official control of cadmium and other heavy metals will also help you to ensure compliance.

2 . Maintain high quality and steady volumes

European buyers are looking for suppliers who can provide a continuous supply of high-quality cocoa in steady volumes. This means you need to ensure that you can meet the quality requirements your buyer is asking for. Remember to only make promises you can fulfil.

Regularly inform your buyers concerning the status of their orders, as well as your expected future production volumes. If you have any problems meeting certain quality requirements or volumes, you need to discuss this with your buyers in advance. Do not wait until the last minute to share bad news. Give yourself and your buyer enough time to work out a suitable solution.

The quality of your cocoa beans is linked to your pre-harvest, harvesting, post-harvest, processing and storage methods. In summary, producing high-quality cocoa beans requires good trees (genetics), good agricultural practices, harvesting the right beans at the right time, dedicated fermenting and drying, good storage and adequate transportation.

When it comes to post-harvest handling, European chocolate makers are looking for suppliers that can guarantee good-quality fermentation and drying protocols. Some European chocolate makers are experimenting with these techniques themselves, and may be willing to involve you in this part of product development. If you communicate that you are open to change and willing to invest time in additional processing to meet their specific requirements, this can give you a competitive advantage.

Tips:

3 . Prepare cocoa samples in the right way

Offer to send interested buyers a sample of your product. This sample should represent the overall quality of your cocoa. Your potential buyers will assess both the physical and sensory quality of your cocoa.

In general, make sure you understand the buyer’s requirements, and agree on what kind of samples to send, including with regard to quantities, packaging, labelling and accompanying documentation. As a general rule, you should offer samples of about 1 kilogramme. With this amount, interested buyers will have enough beans to conduct tests. Also, keep a 1-kilogramme sample for yourself and document well which sample you send to which company.

Tips:

  • See the sampling protocol of the Fine Cacao and Chocolate Institute (FCCI) for guidelines on how to prepare a sample. They describe two options, one for in a laboratory and the other for in the field.
  • If you have lot sizes exceeding 1 tonne of cocoa, read the guidelines for sampling of bagged and bulk cocoa beans from the International Standards for the Assessment of Cocoa Quality and Flavour (ISCQF). Note that, before you can download any files, you should first register on the website.

4 . Invest in personal partnerships

Direct trade in cocoa is very important, and can provide interesting opportunities to create closer relationships with buyers. Your buyers will appreciate dealing with you personally rather than through agents. Buyers value personal business relationships, as the European cocoa sector, particularly the speciality segment, is very much a people’s market.

The following list suggests several ways of making your buyers feel valued, with which you can emphasise the importance of your relationship:

  • Invite potential buyers for a personal visit to your producing region.
  • Offer them samples of micro lots they can test themselves.
  • Demonstrate knowledge and control of your value chain to your potential buyer, as traceability is increasingly important in the European cocoa market.
  • Offer each potential buyer a slightly different product, adapted to their requirements and particularities.
  • If you are part of a cooperative, designate buyers to their “own” farmers. This will improve consistency in product quality and help nurture a positive business relationship between all parties.
  • Communicate clearly, quickly, personally and regularly.
  • Be ambitious and show commitment by responding quickly to questions after the visit and delivering on your promises.
  • Be aware of the cultural differences in Europe, and communicate with your buyer accordingly.

Tips:

  • Find out which is the best language to communicate in. If you have not mastered the English language well enough to communicate with your potential buyers, communicate in your native language –especially if they do speak your language (such as French or Spanish). Alternatively, consider hiring an interpreter or translator. This will help avoid miscommunications.
  • Read more about the business cultures in Europe and adopt a few of these tips when communicating with a buyer or potential buyer.
  • Read our finding buyers study to find out more about how and where you can find European buyers for your cocoa beans.

5 . Distinguish yourself from your competition

The best way to attract a buyer’s attention is by setting yourself apart from your competition. To do so, you need to define your differentiating factor, your Unique Selling Point (USP). When you have found your USP, you should actively promote it. Storytelling is very important, as both buyers and consumers love to see the story behind a product.

One aspect that plays a big role in the cocoa sector is origin. It is therefore a good idea to invest in online marketing to share the story of the origin of your cocoa beans. For example, build a website where you tell your buyers all about the uniqueness of your cocoa varieties, the history of your farm and the terroir (soil) where your farm is situated. Furthermore, give your story a face by providing good-quality photos of the farmers, their families (ask for authorisation) and the plantations.

Ingemann (Nicaragua) is a good example of a cocoa company that has already achieved success in this regard. Their website includes information about all aspects of production, cocoa varieties and producing communities. The websites of Xoco Gourmet (Honduras) and Balmed (Sierra Leone) are other good examples.

Cocoa traders and chocolate makers will also use your stories in their own communications. For instance, chocolate makers in particular will use your story to help market their products to consumers. It is increasingly important for them to sell their chocolates to consumers as an experience. By telling the story, they connect consumers to their (your) products.

Giving regular updates about your cocoa farm and/or cocoa products on social media would serve to strengthen your position. For example, you could use Twitter, Facebook, LinkedIn, YouTube and Instagram, including by connecting these social media pages to your website. Buyers use these online social media platforms regularly, as do consumers.

Tips:

  • Know and maintain the genetic profile of your cocoa trees, which distinguishes the unique flavour of your cocoa beans. Link up with existing research projects in your region related to cocoa germplasm mapping and biodiversity conservation, such as The International Center for Tropical Agriculture (CIAT) in Colombia.
  • Investigate whether you qualify for industry awards like the International Cocoa Awards (Cocoa of Excellence). This can be an interesting way to profile yourself on the European market for specialty cocoa.
  • Websites can be simple, but need to be accurate, relevant and up to date. Always include company information, product data and contact details.

6 . Meet buyer requirements and implement traceability

The European Union’s requirements for food safety are strict and apply as much to the cocoa sector as to any other sector. Cocoa buyers will look for suppliers that can comply with the prescribed legislation and regulations, since European authorities can hold them liable.

Buyers also value certification for social responsibility and sustainability. Be sure to check your potential buyer’s website to find out what their expectations are, and talk to them directly about this – especially if you have questions on how to comply with requirements. Many larger European companies publish their own sustainability claims and policies on their websites. This is a good indicator of what you can expect.

Traceability is a strong trend in cocoa products in Europe, and an increasing number of chocolate makers mention the origin of their cocoa on the product wrapping. Besides periodic visits to origin countries, European chocolate makers have no direct control or have little control over the quality of the production, process and exports of cocoa beans. In many cases, these buyers just accept or select the offer of cocoa beans through importers, traders, agents or dealers.

As such, if you manage a farm or belong to an association or cooperative of smallholdings, it is very important to show the degree of control that you have over the production. If you manage to implement full traceability in your supply chain, this will give you a competitive advantage.

Tips:

7 . Be aware of the differences in business culture

Contact exporters from your own country, and perhaps from other producing countries, and exchange experiences about doing business with European buyers. Learn from them and get some tips on dos and don’ts when exporting to Europe.

Cultural awareness is key for success as an exporter. Some points to consider:

  • The international business language is English.
  • Managers are generally open and friendly.
  • Northern European buyers are often straightforward and will tell you what they think, whereas Southern European buyers tend to be less direct.
  • Always keep your promises, be punctual and recognise the value of a contract.
  • Be honest at all times in your conversations with buyers. This is important and greatly appreciated.

8 . Be well informed on prices and flexible on financing

Prices and financing are two important areas to research when doing business in Europe. The price of cocoa usually depends on the prices determined in the futures market of New York or London. You can check the daily prices for bulk cocoa on the website of the International Cocoa Organisation. Remember that exchange rates fluctuate, which may have an effect on the price you get. Cover this risk by including a clause on currency risk in your contracts.

Specialty cocoa usually fetches higher prices than bulk cocoa, as chocolate makers are willing to pay a premium for good quality and a unique product. For specialty cocoa, the premiums paid can go as high as €500 to €5,000 per tonne (above the London or New York stock market). Generally, prices are determined in relation to the uniqueness, scarcity and origin of the particular cocoa.

In order to establish a selling price, it is important to know your production costs. Calculating your production costs and thinking about the margin you want to make helps you make informed business decisions, such as when to sell how much and for what price.

In terms of financing, it is a good idea to look into the different options for export financing. Look at the options offered by local and international banks, for example. Some buyers also offer pre-financing/advance payments, but you will need to agree these terms at the start of your negotiations.

Tips:

  • If you export large quantities, consider hedging against falling prices to protect yourself from risks due to market price fluctuations. Hedging is a trading operation that allows a trader to turn a less acceptable risk into a more acceptable one. Read more about how you can hedge against falling cocoa prices on The Options Guide.
  • Calculate your production costs. Knowing your production costs gives you a better idea of the minimum price for which you want to sell your cocoa beans. This online tool from the Cyprus Agricultural Research Institute is a good way to help you calculate your production costs.
  • See Impact Finance, Rabo Rural Fund, responsAbility and Root Capital for examples of export financing.
  • Read our study to learn more about how best to organise your cocoa bean export to Europe.
  • Do not default on a contract so you can deliver the goods to a different buyer offering a better price. This can have a significant impact on your reputation as an exporter in the market and will jeopardise future business opportunities. Always meet contractual and financial requirements as agreed upon with your buyer.

9 . Prepare well for a visit from buyers or potential buyers to your farm

Buyers of specialty cocoa increasingly prefer to visit farmer communities and cocoa plantations they work with. They are usually interested in investing in social relationships with farmer communities, discussing drying and fermentation techniques and/or finding new interesting sourcing destinations and unique cocoas. These visits will eventually strengthen your relationship with them, which lowers the business risks for both you and the buyer.

Before accepting a request from or inviting a buyer to visit, assess your production volumes and quality, and see when would be the best time for a visit. Buyers are most likely to be interested in visiting your farm during the harvesting season, as this gives them a direct opportunity to test your cocoa and possibly discuss post-harvest innovations. Be ready to answer questions about production volumes and to negotiate pricing if the interest in a trade deal is mutual.

Tips:

  • Once you have an incoming buyer visiting your producing region, make a clear agenda and programme for the visit, detailing specific locations and time blocks. Consult the buyer on what they would like to see and experience, and shape the programme accordingly. Include factors such as nursery/seedlings, production, farming communities, cooperative staff, post-harvest and warehousing infrastructure, and other interesting elements in which the buyer might be interested.
  • Have the main facts and figures of your cocoa production practices at hand. Buyers will ask you questions about this.

10 . Contact trade promotion agencies

There are several governmental and non-governmental organisations that promote imports from developing countries. They do so by offering support to small and medium-sized enterprises (SMEs) and/or business support organisations (BSOs) in selected partner countries. Examples include:

Check which organisations specifically target your country, and check which export programmes they offer. These programmes can help you understand the market and become export ready, and also offer matchmaking services and support for exhibiting at trade fairs, for example.

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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