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Exporting fine flavour cocoa beans to Europe

Takes 18 minutes to read

The demand for fine flavour cocoa in Europe is growing rapidly. Fine flavour cocoa is a niche market, in which small quantities of more expensive quality cocoa are traded. Fine flavour cocoa is often combined with single origin and bean-to-bar concepts. Direct trade is a growing channel for fine flavour cocoa beans, resulting in more interactions between cocoa growers and final manufacturers. Prices for fine flavour cocoa can be up to two or three times higher than those for bulk cocoa.


1 . Product description

The cocoa tree (Theobroma cocoa) grows in tropical areas between 15 and 20 degrees latitude north and south of the equator: Africa, Asia, and Latin America. After extraction from the pod, cocoa seeds are fermented and sun-dried. A cocoa producing tree can deliver on average 0.5 to 2 kg of dried seeds per year.

There are three varieties of cocoa beans: Criollo, Trinitario and Forastero. In general, the International Cocoa Organization (ICCO) defines fine flavour cocoa as beans produced from the Criollo varieties, while bulk cocoa is produced from Forastero varieties. The main exception is the “Nacional” variety from Ecuador, which is a kind of Forastero, but produces fine flavour cocoa with the right post-harvesting techniques. Fine flavours include fruit (fresh and browned, mature fruits), floral, herbal, and wood notes, nut and caramel notes, as well as rich and balanced chocolate bases.

Harmonised System (HS) codes are used to classify products and to calculate international trade statistics, such as imports and exports. The focus is on cocoa beans, of Harmonised System code 1801. Other cocoa products are covered in our study on semi-finished cocoa products in Europe.

2 . What makes Europe an interesting market for fine flavour cocoa?

European imports of fine flavour cocoa beans are growing

Fine flavour cocoa accounts for around 5% of the world’s cocoa production (200,000 tonnes per year). The European market for fine flavour cocoa can be further divided into ultra and high-end beans for gourmet chocolate (5–10%) and regular and low fine beans for the regular premium market. Even though this is a small percentage, the high-end market is the fastest growing segment in the chocolate market due to the expansion of speciality or premium chocolate products.

In Europe, growing demand for speciality chocolate can be found in traditional consuming countries such as Belgium, France, Germany, Italy, Switzerland and the United Kingdom. Especially in the United Kingdom, the consumption of premium chocolate products has increased in the last years. There are no specific European import data available for fine flavour cocoa beans.

Tips:

Single origin and bean-to-bar concepts are becoming more trendy

Chocolate products with a story are becoming more and more popular on the European market. Single-origin and bean-to-bar concepts are most relevant to fine flavour cocoa, combining storytelling and quality elements:

  • Bean-to-bar entails distinctive methods of production, packaging and direct shipping or sales to high-end outlets, thereby enabling a small number of producers to add significant amounts of value to cocoa production through quality branding and packaging, and by offering micro-lots with superior qualities and exclusive characteristics.
  • Single origin is becoming more popular because of the attention given to the production areas, as well as to the story of producers and their communities. Currently, the industry is creating mechanisms such the International Cocoa Awards (ICA) of the Cocoa of Excellence (CoEx). This rewards flavour, quality and diversity of different origins.

There are many examples of European companies making bean-to-bar and single origin chocolate products (with fine flavour cocoa beans), you can find a list of companies worldwide on the website of Bean&Bar.

Tips:

  • Identify buyers which match your mission and business ethics. Within fine flavour cocoa, trust is key to sustainable relationships and market consolidation. Long-term relationships can lead to optimisation of quality, transfer of know-how and better price prospects.
  • Discuss with your buyer the possibility to develop limited and special editions for top-quality cocoa which is produced in small quantities or micro-lots. Be clear about their requirements and what kind of samples they require (quantities, packaging, labelling, accompanying documentation).
  • Develop and articulate your unique selling points as a supplier of cocoa beans. Think about factors which set you apart from your competitors and create your marketing story around these factors. For example, they can be related to the origin of your cocoa beans, the agro-climatic characteristics of the producing region, the culture of the producing communities, the unique quality of your product, or the combination of these aspects.
  • Investigate whether you qualify for industry awards such as the International Cocoa Awards (Cocoa of Excellence). This can be an interesting way to profile yourself on the European market for fine flavour cocoa.
  • Check the possibilities of local value addition in your country. Learn more about cocoa production and value addition at the website of the European Cocoa Association.

Increased demand for dark chocolates due to interest in healthy living

Demand for higher-quality fine flavour cocoa is also stimulated by a growing interest in healthy living. European consumers are increasingly concerned about the impact of their food intake on their health and wellness. Cocoa contains flavonoids (antioxidants). These are associated with health benefits such as lower blood pressure, improved blood vessel health and improvement in cholesterol levels.

Health benefits are highest for dark chocolate due to its higher percentage of cocoa. This makes high-quality cocoa, such as the fine flavour variety Trinitario, more and more popular.

Europe currently accounts for around 45% of the dark chocolate market worldwide, which is expected to grow at an annual rate of over 8% by 2019 at the global level.

Tips:

Sustainability and certification on the European fine flavour market

Demand for certification of cocoa and chocolate is growing on the European and global markets. Certification is an important proof of commitment to sustainability, and usually provides a premium to producers and exporters. However, certification is not always necessary in the fine-flavour or high-quality cocoa value chain. The exception for this is organic certification, for which there is a niche market within the speciality segment.

Many importers and chocolate makers working with fine flavour cocoa consider certifications counterproductive, as they impose unnecessary costs on farmers. The fine flavour niche market already has aspects that are characteristic to a sustainable cocoa value chain, such as a close contact between farmers and buyers, traceability systems and the payment of price premiums (based on the quality of the cocoa beans).

However, certification can still be required by some buyers and retailers, and can integrate the product range of companies operating on the specialty market.

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3 . With which requirements must fine flavour cocoa comply to be allowed on the market in Europe?

You can only export cocoa to Europe if you comply with strict European Union requirements. In our study on buyer requirements for cocoa you can find a detailed analysis of these requirements. The highlights are given below, specified for the fine flavour cocoa market when relevant.

Legal requirements

You must follow the European Union legal requirements for cocoa, mainly dealing with food safety. Traceability and hygiene are the most important themes. Special attention should be given to specific sources of contamination. Pesticides, mycotoxins (ochratoxin A is of special relevance for cocoa), polycyclic-aromatic hydrocarbons (PAHs) and microbiological contamination such as Salmonella (although cocoa is considered low-risk) are the most common for cocoa beans.

It is also important to consider the contamination from heavy metals during production and handling, particularly cadmium. The presence of cadmium is a particular problem for cocoa from some Latin American countries due to factors such as volcanic activity and forest fires.

Quality criteria

If you want to access the European market for fine flavour cocoa beans, you will have to meet the high international quality standards.

Cocoa of Excellence mentions the following factors defining the quality of cocoa:

  • Good trees (genetics)
  • Well cared for and grown in a suitable environment
  • Pods correctly harvested
  • Good practices to keep the trees healthy and free of pests and diseases
  • Optimum fermentation and drying protocols specific to the type of beans
  • Know-how for processing cocoa beans and for chocolate making.

High-grade (fine flavour) cocoa beans are generally of higher quality than common grade cocoa beans, as their distinctive flavour is popular among manufacturers of high-quality chocolate. Fine flavour beans are usually produced from trees that contain the genetics of Criollo and/or Trinitario cocoa-tree varieties. Common grade (bulk) cocoa beans for mass production are genetically derived from Forastero trees.

Harvesting and processing techniques are also important in harnessing the “fine” qualities of fine flavour cocoa beans. During harvesting you should make sure you only take the ripe fruits. During processing you should make sure all cocoa beans are fermented and dried homogenously. Cocoa beans should be shipped shortly after harvest because extended storage (> 6 months) may result in losses due to the relatively high humidity in tropical environments.

To moderate the initially bitter cocoa flavour and to develop the typical cocoa flavour, the beans are fermented. Cocoa grading differs across producing and consuming countries. Standard practices have been set by the international cocoa trade associations. The grading of cocoa depends on the fermentation process:

  • Well fermented cocoa beans: less than 5% mould, less than 5% slate and less than 1.5% foreign matter.
  • Fairly fermented cocoa beans: less than 10% mould, less than 10% slate and less than 1.5% foreign matter.

There are currently no standardised procedures or language around assessing cocoa bean quality and its direct relation to high-quality chocolate for buyers and for consumers to understand, as is the case in the Q Coffee System.

To address this issue, an informal Working Group was set up in September 2015 during the World Cocoa Foundation (WCF) Annual Seminar on Cocoa in the Americas. This Working Group (established and coordinated by the Cocoa of Excellence Programme) aims to explore the development of international standards for assessing cocoa quality.

The members of the Working Group represent the range of stakeholders from cocoa producers’ associations, to traders, to chocolate manufacturers and to research organisations. The first consultations took place in September 2017, in Managua (Nicaragua), followed by one in Paris during the Salon du Chocolat (October 2017).

Tips:

Labelling and packaging requirements

The labelling and packaging requirements for fine flavour cocoa beans are similar as described in our study on buyer requirements for cocoa.

Note that in the fine flavour / speciality cocoa segment, jute bags are still commonly used. For very high-quality micro-lots vacuum-sealed GrainPro packaging can be used.

Additional requirements and requirements for niche markets

These requirements are similar as described in our study on buyer requirements for cocoa.

4 . What competition will you be facing on the European fine flavour cocoa market?

Latin America remains the strongest competitor for fine flavour cocoa

Latin America is currently responsible for about 80% of all fine flavour cocoa production in the world. Ecuador is the main producer, but other Latin countries, such as Peru, also play an important role. However, the competitiveness of this region is threatened by the increasing regulation on the cadmium content of cocoa. Cocoa from Latin America often shows higher cadmium levels than cocoa from other growing areas. The European Union has strict regulations for the cadmium levels in food, and also specifically for chocolate products.

Ecuador, Peru and the Dominican Republic are the main suppliers of fine flavour cocoa beans to Europe. Figure 1 illustrates the growth of the suppliers from these countries of origin.

The data covers all cocoa beans supplied by these countries, not only the fine flavour cocoa beans. However, according to the International Cocoa Organization (ICCO), a large part of the exports from these countries are fine flavour cocoa:

  • Ecuador: 75% of total exports classify as fine flavour cocoa beans
  • Peru: 75%
  • Dominican Republic: 40%
  • Madagascar: 100%
  • Colombia: 95%
  • Papua New Guinea: 90%.

Supplies from these countries to Europe increased significantly:

  • Ecuador: an annual average growth of 7.3% between 2012 and 2016
  • Peru: 27%
  • Dominican Republic: 13%
  • Madagascar: 18%
  • Colombia: 54%.

Supplies from Papua New Guinea decreased slightly at an annual average rate of 4.8% between 2012 and 2016.

Other upcoming fine flavour cocoa suppliers are:

  • Dominica: an annual average growth of 49% between 2012 and 2016 (at 895 tonnes in 2016)
  • Mexico: +28% (at 570 tonnes in 2016).

Tips:

  • Check the website of the European Commission to learn more about the maximum cadmium levels in food and the specific requirements for chocolate products.
  • Check the status of your country as an ICCO-recognised fine flavour country. Upcoming fine flavour producing countries include Congo, Tanzania and Cameroon. Cameroon for example, produces cocoa beans from Trinitario-type trees, producing cocoa powder with a distinct and sought-after red colour, but still classified as bulk cocoa. Ghana, Malaysia and Vietnam are experimenting with fine flavour cocoa production as well.

The fine flavour market remains highly competitive and hard to enter

It is very difficult to enter the market as a new fine flavour producer, due to its high quality requirements and the fact that there is no single criterion that determines whether or not cocoa will be classified as fine flavour. In addition, only governments can apply for fine flavour status, which gives a political component to this market as well. Countries with an organised cocoa sector, with governmental support and strong lobbying power, have higher chances of success.

Examples are the governments of Peru, Ecuador and Venezuela who all strongly support the development of the fine flavour cocoa market in their country.

Several new countries have been pursuing the fine flavour status. Since 2015, the newest countries on the list are Belize, Guatemala, Honduras, Nicaragua, Panama and Vietnam. Vietnam has been the latest addition to the list.

Other countries are still pursuing the fine flavour status. Recently, cocoa beans from the Philippines were selected as one of the best in the world. The Philippines is now also applying for a membership at the International Cocoa Organization.

Tips:

  • Investigate your opportunities within the speciality cocoa sector regardless of the ICCO listing of your country. High-quality Criollo/Trinitario cocoa beans with good traceability, interesting stories as well as micro-lots of a superior and authentic quality may access the market successfully. Adequate fermentation and drying, as well as the implementation of proper traceability systems, will contribute to the quality and perceived quality of your cocoa beans.
  • Check the government support available in your country regarding fine flavour cocoa development. For example, is your government currently trying to get the ICCO status or are there any governments subsidies you can apply for to develop your fine flavour cocoa company?

5 . Which channels can you use to put fine flavour cocoa on the European market?

See our study on channels and segments on the European cocoa market for more information. However, there are some differences when trading fine flavour cocoa.

The market for fine flavour cocoa is relatively small and highly specialised, with its own characteristics of supply and demand. The fine-flavour value chain is short and transparent, unlike the longer value chain for bulk chocolate. Farmers often sell their cocoa either directly to specialist agents of specific chocolate companies.

Some of the fine flavour cocoa is traded and processed by larger European companies, such as Valrhona, Daarnhouwer and Ecom Dutch Cocoa. The Dutch speciality trader Tradin also has its own speciality cocoa processing facility in the Netherlands: Crown of Holland. Some mainstream chocolate manufacturers also process fine flavour cocoa, such as Barry Callebaut.

Buyers have a wide range of products, especially the large ones. Some are more exclusive, especially the smaller ones with a clear mission, impact and quality commitment. Examples of these smaller European companies sourcing fine flavour cocoa beans from the country of origin are listed on the Bean&Bar website: Blanxart (Spain),

Original Beans (Netherlands), Idilio Origins (Switzerland), Alain Ducasse (France) and Solkiki (United Kingdom).

Tips:

  • Consider investing in partnerships with other cocoa providers in your region to make sure the fine flavour cocoa supply remains stable. For example, you could develop a region-wide strategy and a marketing platform for bringing together both growers and manufacturers in your country or region. Other interesting opportunities involve taking advantage of the exoticism of the product, as well as its origin and exploring ways to co-brand and market the product through the hotel, tourism and other sectors.
  • Attend relevant fine flavour or other cocoa/chocolate industry events in Europe, in order to meet potential direct (or indirect) buyers. Interesting trade events include Chocoa, Salon du Chocolat and the Origin Chocolate Event.
  • Explore the possibility of adding value to your product by designating the origins of different types of cocoa that are specific to your area. This will make your product more attractive for specialised buyers. In addition, explore the possibility of obtaining legally protected geographical indications for these varieties. This can be an important element in your storytelling.
  • See our studies on how to find buyers and how to do business for more information on how to access the European market successfully.

6 . What are the end-market prices for fine flavour cocoa in Europe?

Fine flavour cocoa commands a significant premium over bulk cocoa, in some cases, two to three times the price of bulk cocoa. The trade-off is that purchasers of fine flavour cocoa are much more demanding, focusing on higher quality and strict food safety regulations.

The quality (and thus the price) of fine flavour cocoa is related to the uniqueness and scarcity of the origins of specific varieties.

Prices for chocolate can be segmented in lower end, middle range and upper end. In general, the lower end chocolate products are often of standard quality and are the cheapest on the market. The upper end products are chocolate products of high quality, made with fine flavour beans and possibly with a single origin:

Table 1: Indication of consumer prices of fine flavour chocolate in various European markets
fine_flavour_cocoa_in_europe_-_table_1_-_indication_of_consumer_prices_of_fine_flavour_chocolate_in_various_european_markets.jpg

Source: Several speciality chocolate web shops, such as chocolate-de-luxe.de, chocoladerverkopers.nl and cocoarunners.com.

The price breakdown for chocolate is illustrated in Figure 2.

Export prices of fine flavour cocoa beans, 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. However, the largest shares are kept by chocolate companies and retailers.

Figure 2: Price breakdown for chocolate
fine_flavour_cocoa_-_figure_2_-_price_breakdown_for_chocolate_-_cocoa_barometer_2015_-_kopie.jpg

Source: Cocoa Barometer, 2015

Tips:

See our study on trends in the European cocoa market for more information.

Please review our market information disclaimer.

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