Market concentration
and the consequences for sustainability
2015 Chocoa Conference - March 6, Amsterdam
Lucas Simons (CEO, NewForesight)
Key questions of this presentation
• How come despite decades of support, cocoa is still considered the ‘poor
mans crop’?
• Are there perhaps systemic reasons that determine the faith of the sector?
• How to get to a more healthy, vital sector?
– The need to move towards more profesional farmers
– The effect of consolidation in the sector
– Large companies co-operating
– And the importance of rewarding quality
2
Agriculture: one of the most unsustainable sectors.
But why?
3
The challenges in origin and the potential for resilience and
sustainability strongly depend on the ‘archetype’ of the sector
Absorption capacity for better
practices
The sector shapes model
Flat pyramid
Hybrids
Pentagon
Inversed pyramid
Farm scale
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The sector archetype is determined by a set of 4 macro forces
4 forces shape the sector ‘arche’ type
What is the enabling
environment?
What are barriers to enter
and -success?
What do markets reward?
Sector Shape
What are alternatives?
5
Recent acquisitions and consolidation in the cocoa sector
• Cargill buys ADM’s industrial chocolate business s for $440m
• The potential take-over of ADM’s global cocoa business by Olam ($1.3b) in
June is under review by the European Commission
• Barry Callebaut acquired the cocoa ingredients branch of Petra Foods for
$860m making it the largest player with a fully integrated supply chain
• In May 2014, Ecom Trading acquired Armajaro’s commodity trading division
(cocoa, coffee & sugar)
In general, consolidated markets in failing contexts and with little alternatives for
farmers leads to:
• Increased standardisation of demand
• Increased dependency’s
• Preserves economies of poverty (flat pyramids)
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CocoaAction: 11 companies united in a
common strategy
A rejuvenated
and economically viable
cocoa sector providing increased
opportunities to cocoa farmers
and their communities
IMPACT
LONGER-TERM
OUTCOMES
Results of CocoaAction,
plus farm communities,
industry, and
governments
over time.
SHORTER-TERM
OUTCOMES
Increased cocoa productivity and income
for cocoa farmers and their families
Improved quality of life in
cocoa farming communities
NEXT GENERATION
FARMERS
PRODUCTIVITY
Productivity Package Adoption
Good
Agricultural
Practices
Improved
Planting
Material
Fertilizer and
Soil Fertility
THRIVING
COMMUNITIES
Community Package Adoption
Primary
Education
Child
Labor
Prevention
Women’s
Empowerment
Alignment with Governments
OUTPUTS
Immediate, measurable
results and effects of the
collective actions of
CocoaAction companies.
ACTIONS
CocoaAction
Companies’
Actions
Inputs
Training
Programs
Good Agricultural
Practices
Planting
Material
Fertilizer
Education
Child Labor
Women’s
Empowerment
Aligned Activities of CocoaAction Companies
CocoaAction company programs and actions are aligned to achieve
coordinated delivery of Productivity and Community Packages..
CocoaAction Partners
Productivity Package
Activities
CocoaAction Partners
Community Package
Activities
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Thank you!
www.newforesight.com
www.scopeinsight.com
@Lucas_Simons
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