Craft chocolate makers press for better conditions
To continue thriving amid competition from large manufacturers, craft chocolate makers must do a better job of setting quality standards and explaining the value of their higher-priced products to the public, says Alexis Villacis, assistant professor at the Morrison School of Agribusiness.
Not so long ago, when you had a chocolate craving, you’d scan the shelves and choose: Hershey bar or Nestlé Crunch? M&M’s or Reese’s Peanut Butter Cups?
But today, the selection has broadened significantly. You can satisfy your sweet tooth and your hunger for social justice with a Fairly Traded Organic bar, or sample the unique flavors of Caramel Spiced Apple + Dark Chocolate while donating 10% to help endangered species. Or perhaps you’d prefer the purity of a Single-Origin bar made with just two ingredients: specialty cacao beans and organic sugar.
The craft chocolate industry — also known as specialty or artisanal chocolate — has experienced phenomenal growth over the past 20 years. But to continue thriving amid competition from large manufacturers, the scattered chocolatiers who produce these craft bars must do a better job of setting quality standards and explaining the value of their higher-priced products to the public, says Alexis Villacis, assistant professor at the W. P. Carey School of Business, Morrison School of Agribusiness.
The grandson of Ecuadorean cacao farmers, Villacis developed an interest in the subject early on. Before coming to ASU, he led cacao programs for the Ecuadorean government and studied agricultural economics at Purdue and Virginia Tech, where he researched the cacao industry and was struck by the differences between small producers and large manufacturers.
For a recent paper, “Breaking the mold: Craft chocolate makers prioritize quality, ethical and direct sourcing, and environmental welfare,” published by the Journal of Agriculture and Food Research, Villacis and colleagues Jeana Cadby and Tetsuya Araki of the University of Tokyo interviewed more than a hundred craft chocolate producers around the world to learn about the challenges they face and their efforts to improve their methods and messaging amid corporate competition.
The rise of craft chocolate
Two trends have collided in recent years to create the craft chocolate boom. The first is the rise of the persnickety customer. Today’s shoppers are paying more attention to the ingredients and nutritional value of the food and drinks they consume. The person who orders a cinnamon soy latte with coconut sugar may also want to snack on a 90%-cacao craft chocolate bar — or maybe even spring for a sampler of chocolate made of To’ak Heirloom Ecuadorean cacao, where prices start at $65 for nine mini-bars.
The second trend is a growing preference for brands that contribute to social justice or environmental sustainability. Most craft producers do that, and consumers have demonstrated a willingness to pay higher prices to support them.
The contrast between craft and industrial chocolate
Despite the recent success of craft brands, the chocolate market remains dominated by a handful of large manufacturers.
Mars, Mondelez, and Hershey's account for over 77% of the chocolate market share in the U.S., with Nestle, Ferrero, and Lindt occupying a similar position in Europe.
Large producers, who source bulk cacao beans mostly from West Africa, are not known for their social and environmental responsibility. Cacao plantations in Ghana and the Ivory Coast cover vast open fields of monocrops, at the expense of local forest lands and biodiversity. As a result, farmers are susceptible to droughts and erosion of soil nutrients.
Many receive wages below the poverty line, and conditions are growing worse. Average pay fell from 16% of marketed product in 1980 to 6 or 7% in 2013, with some studies estimating returns as low as 3 to 5%, Villacis’ paper shows.
And media reports have repeatedly accused large manufacturers of child labor, despite longstanding promises to end such practices.
In contrast, craft chocolate producers source specialty cacao beans mainly from South and Central America, reward the practice of sustainable agriculture, and encourage good working conditions and living wages. But to compete with their larger rivals, these chocolatiers must help specialty cacao producers overcome a host of hurdles.
Craft chocolate and specialty cacao producer challenges
Some of the challenges small growers of specialty cacao face result from their product and market size. Specialty beans, also known as fine and flavor cacao beans, are more sensitive to weather and harder to grow than bulk varieties, Villacis says. Because they are grown typically by smallholders, farms lack economies of scale and face higher production costs.
But the industry also suffers from a lack of standardized procedures. “In Latin America, smallholder farmers don’t have access to proper technologies for drying the beans. Some put them alongside highways to dry in the sun,” Villacis says. Unpredictable rains can ruin the drying process, and fumes from passing vehicles can disrupt aroma.
Before the cacao is dried, it must be fermented. “Fermentation is where aroma and flavor develop,” Villacis says. Depending on their access to technology, farmers have a range of methods for controlling temperature, humidity, and fermentation rate, with some using instruments and others relying on their observations.
Some put the beans on the ground and cover them with banana leaves and others use wood boxes. Some believe the type of wood affects flavor. Some add oranges or bananas to the boxes in the hope the beans will absorb their aromas.
– Alexis Villacis Aveiga, assistant professor at the W. P. Carey Morrison School of Agribusiness
If farmers documented and quantified these procedures, they could create new standards and more interesting marketing messages, but few are doing so.
“There is a great need for the craft industry to organize, define standards, and differentiate themselves,” Villacis says. In the meantime, nothing is stopping Big Chocolate from claiming they source specialty beans, too. If they enter this market en masse, their influence is likely to depress wages and perhaps drive specialty cacao farmers, who already spend more to produce their beans, out of business, Villacis says.
There’s no arguing about the taste of craft chocolate
One of the hardest ways for craft producers to distinguish themselves is also the most compelling: superior taste. Craft bars from Peru and Ecuador consistently rank highly in the International Chocolate Competition. But while they’re flattering, awards don’t help producers create standards that would demonstrate quality.
Once again, further research would help. Taste may be subjective, but that doesn’t mean it can’t be measured.
“There’s chemistry behind it,” Villacis says. For example, the industry could study the ratio between theobromine and caffeine, which work together to provide distinctive flavor and aroma profiles to different varieties of cacao beans.
A brighter future for craft chocolate makers
Villacis hopes his study will encourage further research on craft chocolate production. With better information, trade groups could set clearer standards for production quality, fair trade, and sustainability criteria — and perhaps also create a new certification ensuring against child labor.
Researchers could also calculate how profits are distributed not only to farmers but along the whole industry value chain, from transporters and exporters to brokers and other intermediaries.
“The craft chocolate industry is still young, and lots of work still needs to be done,” Villacis says. “It’s fascinating research that might help improve living standards around the world, and I hope that in some small way, I can help.”
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