The Belgian chocolate sector Role and importance of Belgium in the cocoa and chocolate chain 01 | Introduction 1 | Introduction 0 | Contents 1 andIntroduction Belgium is is known tation of Belgium as a chocolate country This study basedfor its chocolate Belgium is known for its chocolate and tation of Belgium as a chocolate country on research by seizes every done opportunity to underline this seizes every opportunity to underline this by being among the biggest consumers Research Consultancy to Belgium asset. Our&country has a lot to 2 offer to From bean worldwide. -the Paul Elshof. 2.1 global cocoa chain. Belgians have aThe Port of Antwerp: storage and throughput asset. Our country has a lot to offer to worldwide. industry sweet tooth and consume a lot2.2 of cho-The grinding Although Belgium undeniably is a choAcknowledgments: colate. Moreover, Belgium takes pride colate country, the engagement of the sweet tooth and consume a lot of cho- Although Belgium undeniably is a cho- colate. Moreover, Belgium takes pride colate country, the engagement of the in its fine quality of chocolate as it is the Belgian government remains vague when home country of a large number of small it comes to efforts for a more sustainable chocolate companies, renowned all over cocoa chain. The government invests in the world. Especially since the last two not even a handful of ad hoc projects and decades, an increasing amount of small is not actively engaged in the existing ‘chocolatiers’ started up its own business sustainability platforms. by being among the biggest consumers Jan Cappelle 3 it is the Industrial chocolate: Belgium rules the world in its fine quality of chocolate as Belgian government remains vague when Barbara Goffin 3.1 The suppliers ofto industrial chocolate worldwide home country of a large number of small it comes efforts for a more sustainable Corentin Dayez 3.2 Production ofchain. industrial in Belgium chocolate companies, renowned all over cocoa Thechocolate government invests in Nancy De Wispelaere the world. Especially since the last two not even a handful of ad hoc projects and Guy Gallet production in in Belgium: decades, an increasing amount4of smallThe chocolate is not actively engaged the existing Gijs Verbraak business ‘Belgian chocolate’platforms. ‘chocolatiers’ started up its own sustainability Frank Mechielsen The number of chocolate companies to make Poissonnier chocolates. A country 4.1 could Marieke the global cocoa chain. Belgians have a to make chocolates. A country could 4.2to its The turnover of chocolate companies not wish for a better contribution With this study, Oxfam-Wereldwinkels Eline Demey 4.3 uses Employment economy than a sector that proudly wants issues to investigate how important the not wish for a better contribution to its Nevertheless, the cocoa chain has a economy than a sector that proudly uses lot of challenges and problems to deal The diversity of the chocolate industry and the adjective ‘Belgian’ as a true4.4 asset chocolate sector is for Belgium Editor: the adjective ‘Belgian’ as a true asset with. Especially the cocoa farmers in the and export “Belgian chocolate” on wrappings and in shops for 4.5 its mainImport whether thisofoutweighs the sustainability Ben Schokkaert on wrappings and in shops for its main producing countries live and work in very product. product. difficult circumstances. Smallholders efforts of the government. In other words, 5 Chocolate consumption if chocolate production and consumption represent 95% of the cocoa produced 5.1 The consumer market But Belgium is more than a marketing is important for the Belgian economy, to But Belgium is more than a marketing worldwide. Most of them live below the 5.2Bel Per capita tool for boxes of chocolates. The whatconsumption extent does the government of this Lay-out tool for boxes of chocolates. The Bel- poverty line. By consequence, they have Grafische dienst farNew gian factory of Barry Callebaut 5.3 is by Oxfam-Wereldwinkels Efraïm the biggest production site in the world gian factory of Barry Callebaut is by far little bargaining power in the chain, let the biggest production site in the world alone the financial capacity to invest in of industrial chocolate sold to chocolate productivity, quality and good practices. chocolate industry companies and to artisanal enterprises in Farmers can hardly pay for hired labour a sustainable cocoa the chocolate sector. The Port of Antwerp and take their children along to the cocoa base economy supply plays an important role as supply base field. Sometimes, they have to carry out industries in for cocoa deliveries to the industries in dangerous and heavy work, like carrying surrounding countries. And do not forget heavy loads or climbing in trees to cut the that Belgian consumers add to the repu- cocoa pods with machetes. As a result, markets country invest back in the sustainability of the entire sector. 6 Sustainability of industrial chocolate sold to chocolate Druk op Cyclus Print (100% kring6.1 The companies and to artisanal enterprises in Belgian cocoa and looppapier) bij in de Weer - Gent The Port 6.2 Belgian efforts towards theDruk chocolate sector. of Antwerp plays an important role as Verantwoordelijke uitgever: xxxxxxxxxx, Ververijstraat 15for cocoa deliveries to the 17, 9000 Gent forget Conclusions surrounding countries. And do 7not Art. nr.: 000000 ed. nov 2010 - 267 thatoww: Belgian consumers 2 repuRecommendations add to8the 3 2 | From bean to Belgium The cocoa supply chain Smallholders Exporters - International traders Grinders Chocolate companies only half of the children in Ivory Coast at- The cocoa required by the chocolate The volumes of beans imported are big- tends school. The most vulnerable group industry, located in Belgium, is imported ger than what is needed for the Belgian are the children from the poorer neigh- in various ways and forms: as cocoa grinding industry. The net imports indicate bouring countries Mali and Burkina Faso. beans (about 58,000 tons), as cocoa the volumes that have been grinded in butter (about 65,000 - 70,000 tons), as Belgium in recent years. The remainder With this study, Oxfam-Wereldwinkels cocoa paste/liquor (about 30,000 tons) has been imported for further distribu- wants to investigate how important the and as cocoa powder/cake (about 14,000 tion into Europe, or for temporary ware- chocolate sector is for Belgium and tons). In terms of cocoa bean equivalents housing as cocoa stocks. whether this outweighs the sustainability the Belgian industry used 198 462 tons efforts of the government. In other words, of bean equivalents (2008-2009; ICCO if chocolate production and consumption Cocoa Statistics). is important for the Belgian economy, to what extent does the government of this The physical cocoa beans imported into country invest back in the sustainability of Belgium mainly come from Ivory Coast the entire sector. and Ghana. On average, about 75-80% of all imported beans originate from West Africa. Cocoa originating from other countries or regions such as Latin America and Asia is mostly of better quality; the cocoa is used for the premium chocolate pro- Retailers ducts and for single origin chocolates. Consumers 4 5 IMPORT COCOA BEANS INTO BELGIUM (156,773 TONS) EXPORT COCOA BEANS (98,486 TONS) GRINDING OF COCOA BEANS TO BUTTER/PASTE/POWDER IMPORT OF GRINDING PRODUCTS IN BELGIUM 32.034 tons IVORY COAST: 48.676 tons 12.580 tons 157.000 tons 61.991 tons 17.377 tons NIGERIA: 29.965 tons 20-25% REST OF THE WORLD 75-80% WEST-AFRICA FRANCE: 47.646 tons GHANA: 19.785 tons IN 693 tons EX GERMANY: 27.655 tons PAPUA NEW GUINEA: 8.028 tons 342.000 tons 6.526 tons 10.045 tons 2826 tons DOMINICAN REP.: 6.842 tons 30.173 tons ECUADOR: 5.161 tons THE NETHERLANDS: 19.021 tons 440.000 tons 21.361 tons 57.404 tons 5.870 tons USE OF BELGIUM CHOCOLATE INDUSTRY IN 58.000 tons COCOA BEANS IMPORT OF CHOCOLATE 2.964 tons 514 tons EXPORT OF CHOCOLATE INDUSTRIAL choc. / FINISHED prod. FRANCE 26.851 tons 869 tons THE NETHERLANDS 29.782 tons 85-95% EX INDUSTRIAL choc. / FINISHED prod. OTHER COUNTRYS 24-30% GERMANY 27.410 tons IN ITALY 14.475 tons FRANCE 92.642 EXPORT OF GRINDING PRODUCTS EX THE NETHERLANDS 76.570 UK: 8.594 tons UK 50.172 ITALY 22.273 6 GERMANY 87.406 7 2.1 | The Port of Antwerp: storage and throughput 2.2 | The grinding industry In Western Europe, cocoa is landed in a In the Port of Antwerp, several companies for cocoa (LIFFE). Some of them have The majority of the cocoa beans that number of ports. The most important is are located, responsible for the hand- subsidiaries in cocoa producing countries arrive in Belgium are exported to desti- Amsterdam. Antwerp takes the second ling and storing of the cocoa volumes. for the storage and handling of cocoa, nations in surrounding countries. Most of place, before Hamburg, Le Havre and Vollers (headquarter in Bremen) handles for example in Ivory Coast, Ghana and these exports go to Germany, France and Bremen. about 50% of all cocoa beans in the Port Vietnam. the Netherlands, where the major grinding of Antwerp and plays an important role companies are located. Cocoa beans are imported in Belgium in the supply of the beans to the relevant In Belgium, the only grinding companies for several purposes. Firstly, the Port of industries. are those of Barry Callebaut (Wieze/Leb- Antwerp has the infrastructure to stock, Due to the recent acquisitions of Uni- beke; as for the year 2008/2009, approxi- handle and export the beans to neigh- control and Unieveem, Katoennatie has mately 40,000 tons) and Kraft Foods He- bouring countries. Additionally, the port also become an important company in rentals (about 20,000 tons). Kraft Foods as a warehouse is also significant for the the handling of cocoa. Unieveem claims Herentals grinds beans to liquor for Kraft London International Futures & Finance to handle about 60-70% of the European Foods Halle, where industrial chocolate Exchange (LIFFE) for cocoa. Secondly, market for processed cocoa products is made mainly for the production of the the physical cocoa beans are needed like butter, liquor and powder. The bulk whole range of chocolate products under for the Belgium-based cocoa grinding of the operations of these companies the brand Cote d’Or. Due to a new supply industry. takes place in the Port of Amsterdam, but agreement with Barry Callebaut, parts of Unicontrol is increasing its presence in these activities are probably outsourced In absolute terms, the Port of Amsterdam Antwerp. to the Barry Callebaut plants. handles a substantially higher volume of Molenbergnatie, one of the oldest ‘naties’ beans (about 600,000 tons a year) as it is in the port of Antwerp, has grown into a All other companies located in Belgium the port via which supplies for the major global supply chain manager for coffee, do not work starting from the cocoa bean. grinding factories of Cargill Cocoa and cocoa, tea, nuts and spices. The Durme This is confirmed when comparing export ADM Cocoa located nearby are handled. Natie started in 2006; its main activity is and import data for half ingredients into The ports of Amsterdam and Antwerp are the storing of cocoa and coffee and all Belgium. more or less equally important in terms implied treatments. In 2008/2009 Belgium imported 32,034 of storing stocks. But in recent years, Antwerp took a bigger volume than Am- These companies are increasing their tons of cocoa butter from France (the sterdam, probably due to the competitive international presence and have direct Barry Callebaut subsidiaries in Meulan conditions it could offer. lines to the European futures market and Rouen) and 30,173 tons from The Ne- 8 9 Towards a more vertical integration: concentration in the cocoa and chocolate 5 grinders operate more 01 Introduction than |50% of total worldwide yearly grindings therlands (Cargill Cocoa, ADM Cocoa and In other words, an important activity of Dutch Cocoa/ECOM). Exports of cocoa the chocolate industry in Belgium is to butter vacillate between 2,500 and 5,500 work mostly from half ingredients im- tons a year. ported from neighbouring countries. The In 2008/2009 Belgium imported 21,361 import of all half ingredients into Belgium tons of cocoa paste/ liquor from The Ne- is undeniably more important than the therlands, 12,580 tons from France and export. This clearly shows that grinding is 6,526 tons from Germany. Yearly exports not the most important activity for com- from cocoa liquor are around 10,000 tons. panies located in Belgium. 50% 5% 13% 500.000 tons 190.000 tons 7% 12% 13% 250.000 tons 440.000 tons 500.000 tons 660.000 tons For cocoa powder and cake a similar pattern exists. Around 17,000 tons of import per year, mainly from the three countries mentioned before. 290.000 tons 200.000 tons 155.000 tons Worldwide tendency towards outsourcing activities 100.000 tons 80.000 tons 60.000 tons 60.000 tons 28.000 tons In the course of time, so-called vertically integrated companies did all the relevant steps in the production process from bean to bar. During the last decades a process of division of labour has been developed in which the various parts of the chain have been separated since 2009 part of ADM from each other. During the 1980s, the US companies ADM (grinding capacity of 500,000 tons in 2007) and Cargill (500,000 tons) acquired within a short period of time a number of companies specialising in the grinding and pressing of cocoa beans. Other cocoa grinding companies are Barry Callebaut (440,000 tons), Petra Foods (250,000 tons) and Blommer (190,000 tons). These companies operate more than 50% of the total worldwide yearly grindings (about 3.7 mln tons). A large part of the remainder is still done by the major chocolate companies. Further on in the supply chain, a small group of chocolate companies together command nearly 60% of the worldwide chocolate market: Kraft/Cadbury (15.1% world market share), 5 chocolate companies command nearly 60% of the world chocolate market. since 2009 part of B. Callebaut 60% 7% 15% 8% Mars (14.7%), Nestle (12.5 %), Hershey’s (8.3 %) and Ferrero (6.8 %). They still are, to a certain extent, vertically integrated companies, but there is a strong tendency towards outsourcing parts of the grinding and chocolate production process towards other companies. 15% 15% 11 3 | Industrial chocolate: Belgium rules the world 3.2 | Production of industrial chocolate in Belgium This part of the cocoa chain is growing In Belgium, since the 1970s, Callebaut of the production is, however, for export. in importance, especially in Belgium. developed into a major producer of in- In Belgium four companies specialise in The growth can mainly be explained as a dustrial chocolate, for its own chocolate the production of industrial chocolate. result of the volumes of industrial cho- products as well as for other chocolate Barry Callebaut is by far the most impor- colate production that are increasingly companies. Smaller chocolate compa- tant supplier for industrial chocolate to outsourced by the chocolate industry. In nies withdrew altogether from the original the major chocolate companies and the this specific part of the cocoa chain, the steps and concentrated more and more chocolate world with a yearly production industry located in Belgium plays a very only on the end phases: the production of of at least 270,000 tons in Wieze. Cargill important role. chocolate products and packaging. This has a capacity of 60,000 tons in Moes- process is now gaining momentum also kroen; the capacity in Antwerp is not among the major chocolate companies. known. Belcolade (a division of Puratos They decide to spend their money rather in Erembodegem) is estimated to have a on developing new products, entering capacity of about 60,000 tons. Schokinag in Manage is acquired by ADM in 2009. 3.1 | The suppliers of industrial chocolate worldwide At the beginning of 2007, Barry Callebaut as China, Russia and Brazil, and made new markets and marketing their final estimated the total open market in indus- important acquisitions such as Chocovic products. The most recent example is the trial chocolate (the part of the industrial in Spain. The aim was to reach a total long-term global supply agreement sig- All Belgian companies that produce cho- chocolate production which is outsourced production capacity of 1,350 million ton in ned by Barry Callebaut and Kraft Foods colate products buy their industrial cho- by chocolate companies to producers 2010. The yearly worldwide investments in September 2010. Barry Callebaut will colate from these four companies or from such as Barry Callebaut) at 1.74 million of 115 to150 million euro a year and even deliver the majority of Kraft Foods cocoa the few companies producing industrial tons. In 2007, the open market comprised 250 million euro in the year 2007/08 were products and industrial chocolate require- chocolate in surrounding countries like about 30 % of all chocolate. Of the open made based on the assumption that in the ments around the world. CEMOI in France. The only exception is market, considered to be highly frag- coming years the major chocolate com- Until now only 8 to15% of the industrial Kraft Foods Halle that receives the liquor mented with many local players, Barry panies will raise their levels of outsourcing chocolate production by the top five from Kraft Foods Herentals and produces Callebaut at that time had a 38% share. from an actual level of 5 to 20% of their consumer chocolate companies is out- its own industrial chocolate. Over the last years, it raised this share industrial chocolate needs to levels of 25 sourced, according to information from considerably in various ways. The com- to 30% in 2012/2013. Barry Callebaut Barry Callebaut. pany outsourced contracts with some of calls itself: ‘the heart and engine of the the major chocolate companies. It made chocolate industry’. The companies mentioned above play a crucial role in the global cocoa/chocolate The industrial chocolate, the starting point chain as the main suppliers of industrial huge investments in the construction for most Belgian chocolate companies, is chocolate to the producers of chocolate of new factories in new markets such mainly produced in Belgium. The majority products. 12 13 4 | The chocolate production in Belgium: ‘Belgian chocolate’ 4.1 | The number of chocolate companies Belgium is known for its chocolate and surrounding countries. And do not forget seizes every opportunity to underline this that Belgian consumers add to the repu- asset. Our country has a lot to offer to tation of Belgium as a chocolate country the global cocoa chain. Belgians have a by being among the biggest consumers sweet tooth and consume a lot of cho- worldwide. colate. Moreover, Belgium takes pride in its fine quality of chocolate as it is the Although Belgium undeniably is a cho- home country of a large number of small colate country, the engagement of the chocolate companies, renowned all over Belgian government remains vague when the world. Especially since the last two it comes to efforts for a more sustainable decades, an increasing amount of small cocoa chain. The government invests in ‘chocolatiers’ started up its own business not even a handful of ad hoc projects and to make chocolates. A country could is not actively engaged in the existing not wish for a better contribution to its sustainability platforms. chocolate, cocoa, sugar confectionery in Belgium (2008) FLANDERS TURNOVER IN MLN EURO WALLONIA EMPLOYMENT BRUSSELS IMPORT NUMBER OF COMPANIES EXPORT economy than a sector that proudly uses the adjective ‘Belgian’ as a true asset With this study, Oxfam-Wereldwinkels on wrappings and in shops for its main wants to investigate how important the product. chocolate sector is for Belgium and 10,6 9,5 5,2 5,9 9,5 whether this outweighs the sustainability But Belgium is more than a marketing efforts of the government. In other words, tool for boxes of chocolates. The Bel- if chocolate production and consumption gian factory of Barry Callebaut is by far is important for the Belgian economy, to the biggest production site in the world what extent does the government of this of industrial chocolate sold to chocolate country invest back in the sustainability of companies and to artisanal enterprises in the entire sector. % OF TOTAL FOOD SECTOR the chocolate sector. The Port of Antwerp plays an important role as supply base for cocoa deliveries to the industries in 14 15 4.2 | The turnover of chocolate companies 4.3 | Employment issues Sugar confectionery included, Choprabis- might have boosted this tendency, is the The majority of companies and employ- sive part of production, the packaging co reports a turnover of 4.3 billion euro for global trend in the cocoa chain to out- ment is found in Flanders. The figure for process, as it was, in Europe. A growing the year 2008, implying a turnover of 3.44 source certain phases in the production, Wallonia is seen in another light when number of companies is outsourcing the billion euro for the chocolate sector alone. such as grinding and making industrial considering the fact that only one fac- packaging process in an attempt to lower The turnover has been increasing steadily chocolate. The fact that Barry Callebaut tory, Ferrero in Arlon, employs about 900 the costs involved. over the years, coming from 3.45 bil- decided since the 1970s to develop into persons. Godiva management closed down its lion euro in 2005. Employment has been a major producer of industrial chocolate rising for a while, but is stabilizing now. might have contributed to this trend. This The general manager of Gudrun Choco- which implied the loss of about 90 jobs The chocolate and sugar confectionery gave way to chocolatiers to start from the late points out the ever growing demands in the factory at Koekelberg. In the case sector in Belgium in 2008 counted for industrial chocolate onwards. In this way, from customers, especially supermarket of Gudrun Chocolate, cost savings were 10 % of turnover in the total food sector they could focus on developing creative chains in the United States. According to achieved by concentrating all activities and almost 10 % in terms of employment final products and marketing strategies. management, the exchange rate of the in Lier, and by closing down the site of and exports. Over a longer period of time euro against the dollar makes it very dif- Herenthout. (1995-2007), the chocolate sector is the ficult to maintain the most labour inten- packaging department in April 2010, only sector together with the vegetable, fruit and potatoes sector in which the number of companies and of employees has increased. 4.4 | The diversity of the chocolate industry Many of the medium sized and small To show some of the diversity in size and Barry Callebaut Belgium’s turnover has chocolate companies were founded after employment table 6 provides a list of the increased considerably: in 2007 it com- 1950, quite a number of them even during 25 largest companies active in the cho- prised 1,885 million euro. In 2009 the the last two decades. The threshold to colate and confectionery sector, using turnover decreased slightly to 2,110 mil- enter the industry is thus not so high that the Trends Top database for figures of lion euro. In the total database of more it is impossible to start new companies. turnover and employment (for 2008). than Belgian 136,000 companies, it ranks Once the artisanal requirements are 28th. fulfilled, it seems to be mostly a matter of good and clever marketing and good business acumen to get a position amidst the Belgian ‘chocolatiers’. What 16 17 Company jacali Turnover 2008 in MLN Euro Employment 2008 2,128.2 896 404.8 1,023 371.5 899 322.7 501 85.3 120 126.9 197 64.1 23 62.2 381 86.9 346 48.8 114 46.2 305 34.1 96 32.7 96 30.6 100 The figures for Puratos are aggrega- A number of the companies are speci- ted figures that include data on other alised in the production of private label products and activities than chocolate. products. The most important ones in Puratos is specialized in bakery, pastry terms of sales and production volumes and chocolate. Belcolade is an integral are: Jacques (Barry Callebaut/Stollwerck), part of Puratos. It presents itself as the Baronie Chocolate (Veurne), Kim’s Cho- only Belgian owned company manufactu- colate, Italo Suisse, Gudrun Chocolade- ring industrial chocolate and the number werken, Belgian Chocolate Group and the two in the worldwide professional market two Natra Factories (Natrajacali and Natra of high quality chocolate. The turnover of all Crump). For these companies it is also Puratos has risen quite a lot over the last true that most production is meant for few years: in 2007 the turnover was 217.6 export. For example, Gudrun Chocolade- million euro, in 2009 the company turned werken (Lier) indicated recently that 70% over 336.3 million euro. of total sales are pralines under private label for big retail chains in the USA. For Kraft Foods, it is unclear whether data are aggregated and hence also include The Trends Top database does not pro- non-chocolate figures. The Cote d’Or vide figures for the Stollwerck subsidiary brand is the most important in Belgium Jacques in Eupen, although this is one of in the subsector of bars and tablets and the most important chocolate producers also in chocolate toffees. Kraft Foods/ after Cote d’Or in the Belgian market, Cote d’Or and Ferrero produce by far the claiming to have a market share of 12% of the Belgian chocolate market. 30.3 92 28.3 106 28.3 88 28.1 72 biggest volumes and turnovers. 27.1 60 Guylian, Godiva, Leonidas and Neuhaus 26.1 82 33.2 93 14.7 127 14.5 90 14.5 109 are important companies that give Belgian chocolate its fame worldwide. Around 80 to 90 % of their production is exported. Guylian is the biggest in sales. 19 11.6 17 ‘Belgian chocolate’ 4.5 | Import and export of ‘Belgian chocolate’ In 2000, the European Directive 2000/36 allowed for other vegetal fats to replace cocoa Belgium is known for its chocolate and tation of Belgium as a chocolate country butter for up to 5 % as the ingredient for chocolate. In Belgium, known for its fine qua- seizes every opportunity to underline this by being among the biggest consumers lity chocolate using only cocoa butter, the Directive was seen as a clear levelling of the asset. Our country has a lot to offer to worldwide. quality standards for chocolate products in general. It is noteworthy that most Belgian the global cocoa chain. Belgians have a companies communicate explicitly that their chocolate products always contain 100% sweet tooth and consume a lot of cho- Although Belgium undeniably is a cho- cocoa butter. colate. Moreover, Belgium takes pride colate country, the engagement of the in its fine quality of chocolate as it is the Belgian government remains vague when In this context, the notion ‘Belgian chocolate’ became particularly sensitive. One of the home country of a large number of small it comes to efforts for a more sustainable activities of Choprabisco is the generic promotion of the image of the Belgian confec- chocolate companies, renowned all over cocoa chain. The government invests in tionary industry, among others by “contesting the illegal use in foreign countries of the the world. Especially since the last two not even a handful of ad hoc projects and appellation ‘Belgian’ for products which are not produced in Belgium”. The Belgian decades, an increasing amount of small is not actively engaged in the existing Chocolate Code, approved by Choprabisco in 2007, refers to ‘Belgian chocolate’ as ‘chocolatiers’ started up its own business sustainability platforms. chocolate of which the complete process of mixing, refining and conching is done in to make chocolates. A country could Belgium. The Code only refers to geographical features and not to the quality of the not wish for a better contribution to its With this study, Oxfam-Wereldwinkels chocolate. economy than a sector that proudly uses wants to investigate how important the the adjective ‘Belgian’ as a true asset chocolate sector is for Belgium and on wrappings and in shops for its main whether this outweighs the sustainability product. efforts of the government. In other words, if chocolate production and consumption But Belgium is more than a marketing is important for the Belgian economy, to tool for boxes of chocolates. The Bel- what extent does the government of this gian factory of Barry Callebaut is by far country invest back in the sustainability of the biggest production site in the world the entire sector. of industrial chocolate sold to chocolate companies and to artisanal enterprises in the chocolate sector. The Port of Antwerp plays an important role as supply base for cocoa deliveries to the industries in surrounding countries. And do not forget that Belgian consumers add to the repu- 21 5 | Chocolate consumption Most chocolate products produced in This different pattern indicates that the This is reflected by investments in the in each important market, and also in new Belgium are meant for export. At the prices per unit have increased. chocolate production in the new markets markets like Japan Brazil or China. Other by the main companies. Barry Callebaut is cocoa and chocolate companies follow a spreading its production facilities worldwi- similar trend. same time, a lot of the chocolate products consumed in Belgium are imported. This is due to the fact that of the major chocolate companies only Kraft Foods/Cote d’Or has its production centre in Belgium. The other major ones, such as Mars and Nestle, are based in other countries and import their finished products. 5.1 | The consumer market 5.2 | Per capita consumption Belgians are not the largest consumers of chocolate in the world, but they are in the top ten of chocolate consumers worldwide. Based on data from Barry Callebaut and Euromonitor, Belgium occupies the seventh place worldwide. CAOBISCO statistics rank Belgians fourth after Switzerland, the United Kingdom and Germany Up-to-date figures for chocolate con- with a consumption of 8.9 kg per head in sumption in Belgium, released by the 2006. Studiecentrum Snacks en Zoetwaren Benelux in March 2010, covered the sales of industrially produced chocolate products sold to the retail chains, such as bars, tablets and countlines. The value of the consumer market has been increasing in the last four years: from 579 million euro in 2006 to 644 million euro in 2008. In 2009, a crisis year, the consumer market value remained at 641 million euro. Whereas the value of the consumer market is going up, the volumes sold during the last three years are going down: from 63,800 ton in 2006 to 60,800 ton in 2009. de, buying or building production centres 5.3 | New markets Chocolate consumption in 2008 Country United Kingdom Ireland Switzerland Germany Norway Austria Per capita consumption in Japan, Brazil Belgium and China clearly shows another recent USA trend in worldwide chocolate consumption. About 50% of all chocolate consumption still takes place in Europe and about Denmark Sweden 25% in North America. However, with a Russia fast growing economy and an emerging The Netherlands middle class of a few hundred million people, per capita consumption levels will undoubtedly increase in Latin America and Asia. Kilos Japan Brazil China 0 kilo pp 22 12 kilo pp 23 6 | sustainability 6.1 | The Belgian cocoa and chocolate sector During the last decade, sustainability is- - 2000) to set up sustainability projects. In products would continue to grow signifi- Foods has about one third of the Belgian sues have gained importance in various the Roundtable for a Sustainable Cocoa cantly in 2010. Recently, Barry Callebaut chocolate market. Kraft did not make any commodity chains. The influence of the Economy (RSCE - 2007) industry conve- set up a close cooperation with Rainforest statements on certification regarding the media, NGO campaigns and consumer nes with governments, NGOs, unions and Alliance and Utz Certified. It wants to Milka and Toblerone brands. demand for sustainable finished products producers to define a joint strategy on a have all the major certification standards For 2011, there is a new important launch cannot be neglected in this evolution. structural sustainable improvement of the to be able to supply the whole range to its in the Gourmet Division of Barry Calle- Also in the cocoa chain, sustainability in sector. And on the issue of child labour, customers. baut: the Belgian brand Callebaut will be all its aspects is high on the agenda. Se- the main initiatives are the Harkin-Engel Belcolade is predominantly operating launching four new Fairtrade products veral organisations have denounced the Protocol (2001) and the International Co- together with Rainforest Alliance and to that will be sold to restaurants, hotels and poverty of the cocoa producing commu- coa Initiative (ICI- 2002). a lesser extent also with Fairtrade and chocolatiers. This launch will enable small organic certifications. chocolate makers to use Fairtrade cho- nities and bad labour conditions in the cocoa production. Especially the persistent Trends towards certification issue of the worst forms of child labour One of the tools to obtain more sustaina- In October 2009, Kraft Foods announced and to communicate about their engage- in West African producing countries have bility is certification. to extend its commitment and to buy ment to Fairtrade in their shops. been at the centre of several NGO-cam- Seventeen years ago, Barry Callebaut 30,000 tons of Rainforest Alliance certified Other cocoa or chocolate companies in paigns. started with the first sourcing and sup- cocoa beans by 2012. A start is made at Belgium, like Ferrero, but also Guylian, ply of certified cocoa. For a long time, the end of 2009 with specific products in Godiva or Neuhaus did not make any Investing in the chain it mainly used the Fairtrade certification the Cote d’Or range: the Sensations line announcement on investments in certifi- Investing in cocoa farmers and their scheme, later on followed by organic. De- was launched on the Belgian and French cation. communities is crucial for a sustainable mand for organic chocolate has been de- market. In the beginning of 2010 these cocoa chain. Companies realise this and veloping steadily over the last ten years. products were also introduced in other Consumer markets have taken private initiatives, providing In January 2010, Barry Callebaut confir- European markets, the USA and Canada. In March 2010, a group of companies, assistance and training to cocoa farmers, med a marked increase in the demand for The intention is to have all Cote d’Or and NGOs, government and trade unions in mostly aimed at increasing productivity certified cocoa and chocolate products in Marabou products certified by Rainforest the Netherlands declared to contribute to and product quality of cocoa farms. They Europe; in 2009 the demand for Fairtrade Alliance by the end of 2012. With the achieving the goal that in 2025 all cho- are also engaged in sector-wide multista- chocolate jumped by 50%, the increase various Cote d’Or products, Kraft Foods colate consumed in the Netherlands will keholder initiatives or initiatives at ‘pre- in certified products overall jumped with is market leader in the chocolate market consist of sustainably produced cocoa. In competitive level’. Many companies in- 12%. The spokesperson of Barry Calle- in Belgium. With the Cote d’Or brands Belgium, the debate on certification is not vest in the World Cocoa Foundation (WCF baut expects that the demand for certified and the Milka brands together, Kraft as lively, but the demand for certified pro- 24 colate in their pastries, pralines, desserts 25 6.2 | Belgian efforts towards a sustainable cocoa economy ducts is also increasing. Fair trade is by jor chocolate industry in the UK has been Governments of cocoa consuming and the child in the cocoa sector as one of far the best known certification scheme in faster in its policy to opt for certified pro- producing countries can play a crucial the major axes of the policy objectives. Belgium. duction: Cadbury chose for the Fairtrade role to make the value chain more sustai- Furthermore, education, as a positive label for its Dairy Milk brand, Nestlé for its nable. Especially since there is a geograp- alternative for child victims of worst forms Of all schemes Fairtrade has the stron- four-finger Kit Kat. Additionally, the major hical adjective attributed to the product, of child labour, was presented as one of gest development focus and incorporates retail chains such as Tesco, Sainsbury such as ‘Belgian chocolate’, it is interes- the five concentration areas of the Belgian all sustainability aspects: next to strict and Coop offer various certified chocolate ting to see how the Belgian government Cooperation policy and child rights as a social and environmental criteria it also products under their private labels. contributes to the improvement of ethical transversal issue. The paper clarifies that practices in the sector by investments the Belgian government started a project stands for economic sustainability. There is a fixed minimum price (2000 USD for In Belgium, Oxfam Fairtrade, Delhaize and in projects, by taking up responsibility at on child labour in the West African cocoa one tonne cocoa) and a premium (200 Lidl are the top three licensees for choco- international platforms and in its appro- sector, in cooperation with the Organisati- USD per tonne). The Fairtrade system late, representing 70% of the chocolate ach towards other stakeholders such as on for Economic Cooperation and Deve- updates and reviews its control system category in sales value. The Oxfam- producers, industry and consumers. lopment (OECD), based on a partnership constantly, in order to make sure that all Worldshops are still the most important criteria are met. channel for the sale of Fairtrade chocolate Projects in the cocoa chain South, the private sector, regional organi- products in Belgium. The three retailers The Belgian department for Foreign Af- sations, NGOs and West African produ- The value and market share of the pro- Delhaize, Lidl and Carrefour have a strong fairs, Trade and Cooperation for Develop- cers organisations. One of the objectives ducts sold under Fairtrade or one of the private label strategy for Fairtrade and are ment follows up closely on its eighteen is to stimulate the dialogue between sta- other certification schemes is not exactly increasing their offer to chocolate paste partner countries that are predominantly keholders and work out regional solutions known. The share in Belgium is estimated or easter eggs. In Wallonia some French situated in sub-Sahara Africa. Cocoa for this issue. The outcome of the project to be very low, at less than 1%. The total organisations such as Ethiquable and producing countries like Ghana or Côte will be a regional guide of best practices volume of Fairtrade chocolate sold in Alter Eco also sell Fairtrade chocolate. In d’Ivoire are not selected as partner coun- in the combat against the worst forms Belgium was just below 400 tons in 2009, 2010, some new actors have joined the tries. However, Belgium intends to make of child labour, which will be a stepping counting for 3% of the global Fairtrade system, such as Exki, Pain Quotidien and an effort to invest in West Africa, a region stone to actually invest in good practices cocoa volume. The UK realized a volume Italo Suisse with Tonkey’s. that delivers seventy percent of the global on the ground. The guide was foreseen cocoa bean production. end 2009. In October 2010, no guide nor of 3,356 tons, the Netherlands 2,136 tons. between governments of North and The Netherlands is performing the best next steps have been defined to tackle with 280g Fairtrade chocolate per capita. The policy paper of the federal depart- The higher volume of Fairtrade chocolate ment of Development Cooperation of in the UK is due to two reasons. The ma- November 2008 mentions the rights of 26 the issue. 27 In June 2008, Belgium organized a multi- sumer, such as child labour, quality of the a sustainable sector, is the International Sustainable trade stakeholder forum in collaboration with product, rational resource management, Cocoa Organisation (ICCO). Back in the Belgium supports its own Trade for Deve- the US Department of State’s Bureau of wise-use of biodiversity or transparency. 1970s, a series of agreements setting up lopment Centre (TDC). This TDC aims to Democracy, Human Rights and Labor. In The members have concretised the main international commodities markets were improve the professionalization and mar- that period, the Belgian government star- challenges in ten key elements. concluded at the United Nations Confe- ket access for producers in the South. It ted to support a project called ‘Combat In the Declaration of Trinidad & Tobago rence on Trade and Development (UNC- wants to create a platform for sustainable against Child Trafficking and the Worst the resolve was expressed to set up TAD), the aim being to stabilize prices by trade and aid for trade. Additionally, TDC Forms of Child Labour in Ivory Coast’, set national round tables in order to create applying quota mechanisms to exports provides information on sustainable trade. up by the German Gesellschaft für Tech- an open dialogue among stakeholders and buffering stocks. But the liberalization nische Zusammenarbeit (gtz). Belgium on national level and to work together to- of the markets have pushed the internati- Public authorities are important buyers. started investing financially in this project wards a sustainable cocoa chain. National onal commodity bodies to look for a rene- Apart from their exemplary role, the public in 2009 and the finalization is foreseen in roundtables have been set up in the Ne- wed function. The mandate of the ICCO is sector has the power to contribute to March 2011. Reports on and results of therlands, Ghana, Indonesia and Ecuador. now to work towards a sustainable world sustainable development by purchasing this project since the Belgian investment Unlike neighbouring consuming countries cocoa economy. The concept of sustai- sustainable products for its own use and are not publicly available. like the Netherlands or Germany, Belgium nability encompasses social, economic consumption. In Belgium, the govern- does not invest financially in the global ef- and environmental dimensions in both ment spends 5.4% of the GDP on the International bodies fort to work towards a RSCE. Additionally, production and consumption. Remunera- procurement of goods and services. The The Roundtable for a Sustainable Co- official Belgian delegates were not repre- tive prices and higher incomes for cocoa Belgian federal government subscribes to coa Economy (RSCE) is an initiative for sented at the meetings and no follow-up farmers are essentials elements within the the goal of the European Council and the dialogue on sustainability amongst all from the Belgian government was given context of sustainability, according to the European Commission of 50% sustaina- stakeholders in the cocoa economy. The to the outcome of the RSCEs. ICCO. Since 2009, the ICCO was also as- ble procurement procedures for all federal RSCE was created in 2007 and convened Additionally, up to now, there has been no signed to take up a coordinating role for public procurement. Both the Belgian and in Ghana (2007), Côte d’Ivoire (prepara- national meeting with the different stake- the RSCE. the Flemish authorities are in the process tory meeting 2009) and Trinidad & Tobago holders within the Belgian cocoa sector, At the ICCO, during the negotiations of of developing guidelines for sustainable (2009). i.e. the relevant governmental depart- the new agreement, Belgium was most of procurement in which sustainable and fair At the meetings, cocoa producers con- ments, industry, NGOs and unions. the times represented by a delegate of the trade will be included. vene with and talk to companies or their European Commission. For a country with governments and NGOs to raise issues Another important forum for governments major interests in the cocoa economy, this that stretch from the producer to the con- to voice concerns and initiatives towards is rather unusual. 28 29 7 | Conclusions Important role in the sector also incorporate quality criteria and sus- it cannot be used as an excuse not to my. Belgium is rightly proud of the role it Belgium plays an important role in the tainability principles. critically question one’s suppliers and not can play. Its commitment to the sector at to invest in a more sustainable chain. If the World Expo in Shanghai in 2010 again cocoa and chocolate sector. What might be the most important phase of the cocoa Poor efforts on sustainability the Belgian cocoa and chocolate sector emphasized its engagement in the sector. chain for the Belgian cocoa sector is the Several companies located in Belgium wants to play a significant role, everyone However, the investments in a more industrial chocolate production. Barry undertake some effort to produce a small needs to join efforts. Barry Callebaut, cru- sustainable cocoa chain, relative to cocoa Callebaut has invested hugely in the pro- amount of sustainable chocolate. Fair cial for global chocolate production, has processed and finalized in Belgium are duction of industrial chocolate and Belco- trade and organic are front-runners when taken a modest step towards the leading far from satisfactory. The two projects lade also specialised in this phase of the it comes to engagement into an econo- role it could play, making the cocoa chain supported by the Belgian government chain, albeit on a smaller scale. Belgian mic, socially and ecologically sustainable more fair. are on the worst forms of child labour in companies have taken up a leading role cocoa chain. Over the last years, Belgian as it comes to the production of industrial cocoa and chocolate companies also Not only the industry, also consumers recommendable, as this issue has been chocolate, with a remarkable boost in the invested in other sustainability sche- in neighbouring countries seem to have amongst the biggest social and econo- last years. mes, such as Rainforest Alliance and Utz more appetite for sustainable chocolate. mic challenges in the sector for decades, Certified. All in all, companies located in The United Kingdom has, relatively spo- especially in West Africa. The multista- The investments by Belgian cocoa com- other countries are more encouraged to ken, much higher figures of consumption keholder approach is promising, but the panies might be stimulated by the Belgian produce more sustainable chocolate. The of sustainable chocolate. In the Nether- processes are not transparent and the Chocolate Code, developed by Cho- Dutch company Verkade committed to lands, the government showed initiative, results are unclear as well. prabisco in 2007. This code states that, 100% Fairtrade chocolate and the for- with joint efforts of NGOs, trade unions Furthermore, at the RSCE there is no in order to label chocolate as ‘Belgian’, mer British company Cadbury also made and companies. Together they agreed to participation or investment from the the complete process of mixing, refining strong commitments to Fairtrade. ensure that all chocolate consumed in the Belgian government, while other major Netherlands will be based on sustainably chocolate consuming countries like the produced cocoa by 2025. Netherlands, Germany or Switzerland and conching needs to be carried out the cocoa chain in Ivory Coast. This is in Belgium. Since then, ‘Belgian choco- Most Belgian companies are not involved late’ has built up its reputation of quality in the first phases of chocolate produc- chocolate. The Belgian Chocolate Code tion. This implies that they buy industrial When it boils down to the engagement but also in Ghana, Ecuador or Indonesia, assures that (industrial) chocolate pro- chocolate from other companies and are of the Belgian government for a more national round tables are set up to open duction will remain important for Belgium. not actively engaged in purchasing cocoa sustainable cocoa chain, Belgium lags the dialogue among stakeholders of the At the same time, the fact that ‘Belgian from producing countries. Although this behind. The Belgian government has national cocoa sector. In Belgium, there chocolate’ is such a strong brand creates makes it harder for those companies to gone to great lengths advocating for the is no similar initiative. Additionally, at the opportunities. It could be extended to trace back the origins of their supply, importance of the Belgian cocoa econo- International Cocoa Organization, Bel- 30 take a leading role. In the Netherlands, 31 8 | Recommendations gium is represented by the delegate of the Recommendations to the Belgian government European Commission. For a country with major interests in the cocoa economy, this is rather unusual. Be more actively involved in international processes Report on the dialogues of the current projects, about the topics discussed, conclusions and way forward. In November 2008, the Belgian Minister Take up a leading role in the international efforts towards a sustainable cocoa eco- of Cooperation for Development an- nomy. Take part in the discussions at the RSCE and ICCO. Use the global multi-sta- nounced that child rights and sustaina- keholder platform to exchange experiences and efforts made in the cocoa chain. bility in the cocoa economy are majorly important in the policy objectives of the Set up a national Round Table for a Sustainable Cocoa Economy federal department. This ambition was Convene the stakeholders of the Belgian cocoa economy, i.e. relevant adminis- welcomed since Belgium takes up a key tration, industry, NGOs and unions to discuss the key challenges to work towards role in the worldwide cocoa processing a sustainable cocoa chain in Belgium. With joint efforts, it is feasible to set up an and consumption. End 2010, the Belgian action plan to cover the Belgian chocolate market or Belgian products. government has taken modest steps to contribute to a sustainable cocoa sector, Work on full-fledged definition of Belgian chocolate: quality and sustainability but the results are fairly poor of what was The Belgian chocolate code refers to a geographical indication of where the cho- supposed to be an ambitious priority in colate is processed and implicitly, the adjective ‘Belgian’ is associated with quality. the policy of the Belgian Cooperation for This offers added value for processing companies located in Belgium and therefore Development. means an opportunity to attach an additional characteristic to the chocolates produced in Belgium, referring to their fair and child-friendly character. The Belgian Belgium plays a major role in the cocoa government can propose that the chocolate processed in Belgium should also be chain and it excels with its fine quality processed under sustainable and fair circumstances. In this way, Belgium can use chocolate. However, it sadly fails in its its key name and position in the cocoa sector to work towards a sustainable cocoa contribution to a fair chocolate sector. economy. 32 33 Set example through own procurement policy In the negotiations on public procurement guidelines, the public sector has an exemplary role as consumer and has to use its power to contribute to sustainable development by purchasing sustainable products for its own use and consumption. In the national guidelines on public procurement, the Belgian government chooses for fair and child-friendly chocolate. Sensitize consumers about challenges in the cocoa chain There are still a lot of issues to be tackled along the cocoa value chain, such as the lack of transparency, the need for decent working conditions or fair remunerations for cocoa farmers. Through the Trade for Development Centre, consumers need to be sensitized about these issues and informed about the initiatives of the government. Recommendations to Belgian cocoa and chocolate companies Be more actively involved in national and international efforts towards sustainability Engage in national and international multi-stakeholder initiatives, such as the RSCE and national roundtables. Invest in projects and programmes to increase the sustainability of the cocoa chain, and especially to improve the situation of cocoa farmers, following a holistic and integrated rather than an individual and ad hoc approach. Make the own supply chain more sustainable Chocolate companies care for the quality of their product, but should also take responsibility for the social and environmental circumstances in which it has been produced. They can for example do this by choosing a Fairtrade certification for their chocolate. Belgian cocoa and chocolate companies collaborate to make ‘Belgian chocolate’ into a strong brand, not only referring to the location of the chocolate production, but to quality and sustainability issues as well. 34 References Websites • Algemene beleidsnota van de Minister van Ontwikkelingssamenwerking. Belgische Kamer van Volksvertegenwoordigers. 5 November 2008. Barry Callebaut www.barry-callebaut.com • Bird & Bird, “This is not (Belgian) chocolate. When does chocolate qualify as ‘Belgian chocolate’?”, July 2010. • Centrale Raad voor het Bedrijfsleven, Studie over het concurrentievermogen van de Belgische voedingsindustrie, October 2010. • FOD Economie, KMO, Middenstand en Energie, de Algemene Directie Economisch Potentieel, Directie Agro-Voedingsnijverheid, De Belgische Voedingsindustrie, Kengetallen per sector 2008. January 2010. • ICCO, Quarterly Bulletin of Cocoa Statistics. • Oxfam International / IPIS. Towards a Sustainable Supply Chain. Power and possibilities within the cocoa chain. January 2009. • Oxfam Novib. Eerlijk duurt het langst. De Nederlandse chocoladebranche doorgelicht. November 2009. • Roundtable for a Sustainable Cocoa Economy. Social Issues. Paper for input second roundtable for a sustainable cocoa economy. March 2009. • Tropical Commodity Coalition. Cocoa Barometer 2009. March 2009. • Tropical Commodity Coalition. Cocoa Barometer 2010. October 2010. Belcolade www.belcolade.be Choprabisco www.choprabisco.be Deutsche Gesellschaft für Technische Zusammenarbeit www.gtz.de Federaal actieplan duurzame aankopen 2009-2011 Gids voor duurzame aankopen. www.gidsvoorduurzameaankopen.be Fenaco www.fenaco.be Foreign Affairs, Foreign Trade and Development Cooperation. Natural Resources. http://diplomatie.belgium.be/en/policy/policy_areas/ striving_for_global_solidarity/natural_resources/ International Cocoa Organization www.icco.org Nederlandse intentieverklaring voor duurzame cacao. http://www.minlnv.nl/portal/page?_ pageid=116,1640839&_dad=portal&_ schema=PORTAL&p_file_id=2000320 Organisation for Economic Cooperation and Development www.oecd.org Roundtable for a Sustainable Cocoa Economy www.roundtablecocoa.org Studiecentrum Snacks en Zoetwaren Benelux www.ssz.nl Trade for Development Centre www.befair.be Trends Top website, Sectorklassement, chocolade en suikerwaren. www.trendstop.be 35 Art. nr.: 000000 - ed. oww: nov 10 - 267 Role and importance of Belgium in the cocoa and chocolate chain
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