Agriculture

Bittersweet…the African Cocoa Story

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BITTERSWEET
Europe is the world’s biggest chocolate market. That’s not just as a consumer market, Europe is also the world’s largest producer and exporter of chocolate with 70% of global exports.

As this is a newsletter about African business, you can guess where we’re going with this. Just as consumption, production and exportation of finished chocolate goods are concentrated in Europe, African countries produce and export over two-thirds of global cocoa, chocolate’s raw material. Côte d’Ivoire alone accounts for third of all cocoa produced in the world.

A white paper by Gro Intelligence, an agribusiness data company, delves into the numbers and history of the chocolate trade and it makes for sober reading from an African perspective. In many ways Europe’s hold on the chocolate trade is unsurprising given it was the innovations of European companies that turned cocoa trade into the chocolate industry in the first place. What is surprising is how little involvement Africa has had in over 200 years of the chocolate business given it has been the major source of the raw material since most of the second half of the 20th century. From 1961, when data has been available, to 2016, Africa’s share of total chocolate exports inched up by a miserly 0.9%.

In fact, Europe’s “competition” such as it is, comes from Asia, where Indonesia, in particular, has been growing cocoa and building an industry which taps into the fast-growing middle class of China. Despite Chinese taste for chocolate growing slowly, China is already the world’s largest 11th largest chocolate market.

And yet, despite all that, Africa is still where the biggest untapped opportunity remains for production, export and consumption. Indonesia can’t expand its cocoa production much more than it has, cocoa is a labor intensive crop (at least it is today) and labor costs in Asia are rising. More importantly, as we’ve written here, local entrepreneurs and the governments of Africa’s largest producers Cote d’Ivoire and Ghana, are getting serious about the opportunity to move higher up the cocoa-to-chocolate value supply chain. And as chocolate has traditionally been a fixture of middle class tastes around the world, it’s unlikely Africa’s still small, but fast-growing, middle classes will be that different. They might just enjoy their own locally-produced products.

As Gro Intelligence analysts note: “If African governments are serious about diversifying their economies and providing higher-paying manufacturing jobs to their people, chocolate production is an obvious industry to pursue. The perfect conditions exist for chocolate producers to take root.”

— Yinka Adegoke, Quartz Africa editor

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