Changing the World: One Bar at a Time
By Mary Ellen Kuhn
An emerging group of mission-driven companies is expanding the niche for products that benefit people and planet.
A decade ago,
awaiting the birth of his first child, Canadian chocolate maker Karlo
Flores had an epiphany.
“When my son was going to be born,”
recalls Flores, a fifth-generation chocolatier, “I felt a
responsibility to do something good for his world, his future. I started
reading about organic, and it made sense.”
So much sense, in fact, that he decided to introduce a
line of chocolate bars produced with ingredients grown organically without
pesticides or herbicides. Not long after the arrival of his son, Flores
launched his Terra Nostra (Latin for “our earth”) brand.
But organic chocolate was just a starting point for
Flores and his campaign to make the world a better place. Today
Flores’ company, Vancouver, British Columbia-based Terra Nostra
Organic, helps provide agricultural training for Nicaraguan cocoa growers,
produces chocolate in energy-efficient plants and buys wind power credits
to offset its carbon emissions. The self-described “small but
intent” chocolate maker uses only ingredients that are Fair Trade
Certified, which means their producers are guaranteed a living wage.
Most recently, Flores has begun working with Santa
Monica, Calif.-based distributor Essential Living Foods to establish a new
approach to Fair Trade certification. Still under development, the venture
will operate under the banner Equitable Trade.
“Eventually, what our Equitable Trade initiative
will do will be to give a platform for others who want to do something
socially responsible,” says Flores.
Ethical chocolate
Terra Nostra isn’t the only chocolate company
with a conscience. Companies large and small are introducing brands that
wear a mantle of social and/or environmental responsibility — i.e.,
are Fair Trade Certified, sustainably grown or supportive of initiatives to
help growers of the cocoa beans used in chocolate making. Certainly the
industry could benefit from some halo polishing.
Chocolate’s image was seriously tarnished in
2001 when a series of media stories pointed to the existence of child
slavery on cocoa farms in West Africa, the largest source of cocoa beans.
Since then the chocolate and cocoa industries have taken steps to bring an
end to such labor practices, but “ethical” and/or
“green” products still make particular sense for the category.
Now retailers are finding a place for them in the store, and research
suggests that shoppers will be increasingly receptive to them.
U.S. consumers’ attitudes toward green issues
shifted dramatically within the past year, according to the 2007 ImagePower
Green Brands Survey conducted by global brand experts Landor Associates and
two partner companies.
“A year ago, 58 percent of those polled in
the online study said they were not interested [in green issues],”
says Russ Meyer, Landor’s chief strategy officer. This year, however,
virtually 100 percent of those polled reported at least some green
attitudes and behaviors, says Meyer, who is based in the company’s
San Francisco office.
Consumers come in “different flavors of
green,” Meyer points out, noting that the way in which the concept is
defined varies from one person to the next. “‘Green’
means more than one thing,” he says. It may signify “good for
the environment, good for the body, good for the world at large. Each of
those is part of the green message.”
For chocolate, a “good for the world”
positioning often means Fair Trade Certified. Cocoa growers certified as
Fair Trade producers are paid a guaranteed minimum price for their crops,
work in safe conditions and receive a “social premium” that
goes toward community and business development projects, explains Anthony
Marek, public relations manager for TransFair USA, Oakland, Calif., an
independent certifying agency.
Fair Trade Certified imports into the United States
have increased at an average annual rate of 76 percent for the past five
years, Marek reports.
Understanding Fair Trade
Still, the majority of U.S. consumers are not clear on
the concept of Fair Trade. In 2006, just 39 percent of U.S. adults reported
recognizing the Fair Trade Label, and only 13 percent claimed to fully
understand it, according to research conducted by The Natural Marketing
Institute, Harleysville, Pa.
The Fair Trade movement hasn’t been embraced by
the mainstream, but it is picking up steam, contends Steven Hoffman,
president of Compass Natural Marketing, Boulder, Colo., and a specialist in
socially responsible marketing/communications campaigns.
“Fair Trade is probably where organic was 20
years ago in the consumer’s mind, and look where organic is
now,” notes Hoffman.
Where organic is, for the record, is growing nicely.
U.S. sales of organic chocolate totaled $70.8 million in 2006 — up 33
percent over the prior year, according to market research firm Euromonitor.
Here’s a look at three premium/gourmet chocolate
companies, all built on the conviction that there’s an opportunity in
the marketplace for businesses that embrace core values of social and
environmental responsibility — without neglecting sound business
practices.
Theo Chocolate: ‘People, planet,
profit’
Joe Whinney, founder and president of Seattle-based
Theo Chocolate, began importing organic cocoa beans into the United States
in 1994 and dreamed for years of establishing his own chocolate-making
venture. In 2004, he moved to Seattle from Cambridge, Mass., and started
the process. Theo chocolate bars made with organically grown, Fair Trade
Certified ingredients began rolling off the production line in March 2006,
and swiftly met with a warm reception from critics, retailers and
consumers.
This summer the fledgling organization clinched the
product award for Outstanding Chocolate at the Fancy Food Show in New York
City. Last year Theo was recognized with three medals in the International
Academy of Chocolate Awards program in London.
Theo products already are sold by hundreds of
specialty retailers as well as major grocery chains including Whole Foods,
Wild Oats, Hannaford and Shaw’s.
Business has been going even better than expected,
reports Debra Music, vice president of sales and marketing. “We
expect to quadruple our sales in 2007 over 2006, and the future continues
to look bright as the story of our mission and our products becomes better
known,” she says.
Whinney received an in-the-fields introduction to
cocoa growing 15 years ago when he worked as a volunteer for a small
conservation foundation in Central America. “One of the things I saw
was that both social and environmental degradation are really economic
issues,” Whinney reflects. “Just putting a fence around the
rain forest isn’t necessarily going to save the planet,” he
continues. “It really comes down to finding business solutions that
address environmental problems.”
Thus, producing a top-notch, gourmet product and
maintaining a profitable bottom line have always been key components in the
Theo business plan. Social and environmental responsibility are critically
important, Whinney emphasizes. At the same time, he stresses, “We
need to know that our business is solid.” The company’s
shorthand for its triple-focus is “people, planet, profit.”
Divine Chocolate: Heavenly chocolate with a heart
The Washington, D.C.-based arm of a company founded in
the United Kingdom in 1997, Divine U.S. made its debut on Valentine’s
Day 2007. Divine sells an assortment of 1.5-ounce and 3-ounce chocolate
bars, and it also recently introduced a chocolate-filled Advent calendar
that Whole Foods will be selling this holiday season.
The company has a unique business model. It is
partially owned by the Ghana-based Kuapa Kokoo cocoa farmers’
cooperative, with additional investment from several nonprofit and
development organizations. All of the cocoa used in Divine Chocolate
products is purchased from Kuapa Kokoo growers on Fair Trade terms, and the
growers hold two seats on Divine’s board of directors.
“We have a goal of getting farmers farther up
the value chain,” explains Erin Gorman, chief executive officer of
Divine U.S.
The company’s relationship with Kuapa Kokoo
farmers is making a difference in their lives, Gorman emphasizes. To date,
the co-op members have voted to invest their social premium funds in
community projects that have included building schools, supporting health
clinics and digging wells for clean drinking water.
Natural foods stores in the Washington, D.C., area
were among the first to take on Divine chocolate bars, but the company
aspires to — and has been achieving — broader-based
distribution, Gorman reports. In the United Kingdom, mainstream retailers
including Tesco, Asda and Sainsbury’s stock Divine products.
Divine also targets its bars to organizers of school
fundraisers and religious groups like Catholic Relief Services, which has
teamed with Divine for a Fair Trade Chocolate sales effort.
Endangered Species Chocolate: Passion + purpose
While its name may suggest a more exotic base of
operations, Endangered Species Chocolate is headquartered in Indianapolis,
home to owners Randy Deer and Wayne Zink. The company was established in
1993 with a focus on animal preservation, but the corporate mission has
since been expanded, explains Zink, who is chief operating officer.
Artwork depicting various at-risk species is featured
prominently on the product labels, and information about the animals’
plight is included inside — which not only educates consumers, but
helps set Endangered Species apart from other chocolate brands.
“The idea of helping the environment is actually
built into the branding of the chocolate,” says Zink. “Our goal
is to help people understand that habitat, humanity and species are all
interconnected,” he continues, noting that Endangered Species’
core value of reverence for life is based on the ethic of humanitarian
Albert Schweitzer.
The company donates 10 percent of net profits to a
rotating group of three charitable causes, each selected via a rigorous
screening process. Current beneficiaries include a Nigerian community of
cocoa growers, an ocean conservancy project and a haven for chimpanzees in
Louisiana.
Zink says Endangered Species products are all
“ethically traded.” In 2006, the company elected to work
directly with the growers that source its cocoa rather than participating
in TransFair’s certification program, which charges a fee of 10 cents
per pound of cocoa purchased.
Retail gains
It’s no surprise, perhaps, that many socially
responsible brands have found a home in natural foods stores. But Zink says
he is particularly pleased about Endangered Species’ expansion into
more mainstream channels.
“Our growth as a company — which is over
200 percent in the past year — is in conventional retailers —
Kroger, Albertsons, Ralphs, Bashas’ and Target,” he says. This
spring, for example, Target stores featured Endangered Species bars not
only in the center-store candy set, but in the much sought after retail
real estate at the front end as well.
Zink says he has found that some mainstream retailers
are willing to moderate their expectations for trade spending and vendor
deals. “They’re making real financial allowances for our
mission,” he says. “A year ago, we’d sit in these
meetings [with retail buyers] and feel we couldn’t afford it.”
This year, some buyers are showing more flexibility, Zink observes.
“Retailers are starting to realize that they
have to participate because the consumer base is growing,” contends
Theo Chocolate’s Whinney.
“I think social responsibility [in positioning
food products] is an evolving movement that more and more people are
becoming aware of,” says Jennifer Rudolf, public relations manager at
TransFair USA. “It is in part driven by consumers. ... I think
retailers are responding to that demand.”
That may be true, agrees Jay Jacobowitz, president of
Retail Insights, a Brattleboro, Vt.-based consultancy to the natural
products industry. But he points out that it all boils down to the
appropriateness of the product for a retailer’s target audience.
“I don’t think sustainability trumps
slotting fees,” says Jacobowitz. “The marketing positioning of
a sustainable, premium, organic chocolate product is dead-center target for
a Whole Foods positioning and thus equals low or no resistance. If you go
to the other end of the spectrum, which is a price-positioned, regional,
conventional supermarket serving a blue-collar market with a price point
image, that probably equals maximum resistance.”
In other words, he says, socially responsible
chocolate will be most at home in a natural foods chain or other upscale
retail environment. In fact, Divine Chocolate’s Gorman reports that
the high-end department store chain Nordstrom has approved Divine Chocolate
bars for sale in its cafés.
“There are so many specialty chocolate offerings
out there,” Gorman acknowledges. “They’ve chosen to go
with a product that is Fair Trade ... which I think is really interesting
and says a lot about them positioning themselves as a retailer that is
trying to be socially responsible.”
As for a mass market retailer like Target devoting
substantial space to Endangered Species SKUs, that makes sense too,
Jacobowitz continues. “They want to be trend-forward, so that would
lower the barrier [to entry] for a product like this.”
Stocking a socially responsible chocolate brand is a
good way for a retailer to enhance its cachet, agree Jacobowitz and Landor
branding expert Meyer. Meyer notes that retailers — Whole Foods, Wild
Oats and Trader Joe’s — led the list of top U.S. “green
brands” identified by consumers in the study cited earlier.
“Clearly grocery stores is a category that is
green or should be green,” says Meyer. Thus, “having green
products in their stores would have a beneficial effect on the image of a
retailer,” he says.
From mission to message
Of course, building social responsibility into a
product doesn’t always come cheaply, thanks to higher costs for
ingredients and fees for Fair Trade Certification, for example.
That’s another reason these products tend to fit best in upscale
retail environments, where a shopper might be more willing to fork over
$5.99 for a 3-ounce bar of Theo Chocolate, for example.
“It’s our responsibility to educate
consumers so they understand why the price point is higher,” says
Music. “It’s a combination of the fact that the product is high
quality and we’re passing [some of the profits] back to the growers,
who are growing organically and sustainably.”
“There’s definitely a large educational
exercise that has to go into marketing a Fair Trade or socially responsible
product,” adds Whinney, “but it’s getting easier and
easier because it’s not just something that other small companies are
doing.”
Major chocolate makers are moving into the socially
responsible arena with a variety of initiatives as well as via the
acquisition of organic brands. (See sidebar on page 80.)
Simultaneously, the increased availability of
single-origin chocolate, which touts the fact that it is made from cocoa
beans harvested in a specific location, helps bridge the gap between
ingredient producer and chocolate bar purchaser.
“In evoking a specific country or region,
single-origin chocolates really help the consumer understand that the
chocolate comes from a place-based agricultural product,” says
Melissa Schweisguth, marketing manager of Dagoba Organic Chocolate,
Ashland, Ore. “Single-origins naturally lend themselves to sharing
the story of the faces and places behind the label.”
“We’re calling out the origin,” says
Whinney. “For us, that becomes a launching pad to go deeper into
telling the story of the producers of the cocoa.
“The first and easiest thing to do is to start
with the name of the country,” he continues. “The next layer is
to start telling regional stories and specific farmer stories.”
In the end, it’s the authenticity of the message
that will matter most to the purchaser of socially responsible products,
contends Divine Chocolate’s Gorman.
“I think conscientious consumers want that story
to be robust and to give them a picture of the world and — above all
things — for it to be true,” she says.
Next Issue: An in-depth look at Fair Trade
Certification of chocolate products.
Ethical Chocolate Glossary
Fair Traded Certified - Guarantees
growers receive fair wages and have safe working conditions; no official
government guidelines for certification
Organic - Refers to
crops raised without using most conventional pesticides or fertilizers;
certification administered by the U.S. Department of Agriculture
Sustainable - Describes
agricultural production that preserves the environment
TransFair USA - Agency
that audits and certifies transactions between U.S. companies that offer
Fair Trade Certified products and their international suppliers
Sources: TransFair USA, U.S. Department of Agriculture,
World Commission on Environment and Development
Major Players Embrace Social Responsibility
Ethical chocolate initiatives aren’t limited to
idealistic niche players. Leading companies are pouring millions of dollars
into projects to promote sustainable crop production and to improve
conditions for cocoa growers.
They’re also adding organic and Fair Trade
Certified brands. The Hershey Co. bought organic chocolate pioneer Dagoba
in 2006, and Cadbury Schweppes Plc acquired the highly regarded Green &
Black’s brand of organic chocolate the prior year.
Barry Callebaut, the world’s largest producer of
cocoa and chocolate products, supports several industry initiatives,
including the World Cocoa Foundation’s (WCF) Sustainable Tree Crops
Program, which teaches African growers environmentally friendly farming
techniques that improve crop yield and quality. The Zurich-based company
also has opted to introduce its own programs.
“Our goal is to drive change in how cocoa is
farmed by working on the ground in cocoa-farming communities,” says
Massimo Garavaglia, Barry Callebaut’s president of food manufacturers
and gourmet/specialties in North America. “We focus our
energies at the start of the cocoa supply chain — on the farm,”
says Garavaglia, referring to the company’s Quality Partners program
in West Africa, which provides education, training and health care for
farmers.
“Specifically,” Garavaglia continues,
“the program trains cocoa farmers on various farming methods,
enabling them to produce more and better quality cocoa beans and increase
their income.”
M&M’s maker Mars Inc., already a supporter
of WCF projects and other industry initiatives, announced this spring that
it would invest an additional $4.5 million in development programs for
cocoa growers over the next three years.
Meanwhile at the Hershey Company, the issue of
corporate social responsibility is moving into the spotlight. The company
created a new position, vice president of corporate social responsibility,
this spring and named longtime communications executive John Long, who
serves as chairman of the WCF, to fill it.
Hershey also has extended its focus on sustainability
as part of a venture with Starbucks in which the two companies plan to
develop new premium, coffee-flavored confections. Making the announcement
this summer, Hershey addressed the social responsibility angle, pledging in
a corporate press release to purchase only cocoa that is “socially
responsible, economically viable and ecologically sustainable.”