Market Trends of Cocoa Beans Value Chain Analysis
This section covers the major market trends shaping the Cocoa Beans Value Chain Analysis Market according to our research experts:
Sustainable Sourcing to Improve Economies for Stakeholders
Cocoa bean production faces many social and environmental sustainability risks. These include forced and child labor, unfavorable labor conditions, conflict over land rights, and the growing of cocoa in protected forests, which must be addressed. Also, the complexity of human rights and environmental issues, including poverty, child labor, forest destruction, and soil contamination, have been identified among cocoa farmers, who are primarily smallholders. Therefore, industry participants shifted their focus towards responsible or sustainable cocoa sourcing policy to undertake activities to support cacao farmers.
This includes enhancing the productivity and quality of cacao beans and improving farmers' living standards by providing farming support and education. UTZ Certified, Rainforest Alliance, Fairtrade, and Organic are the cocoa sector's primary Voluntary sustainability standards (VSS). Côte d'Ivoire, UTZ, Rainforest Alliance, and organic certifications rely on the CCC platform SYDORE to check volumes, dates, and seller/buyer information.
Many prominent players are targeted to achieve sustainable cocoa bean sourcing with quality standards and being utilized in delivering healthy cocoa bean products. For instance, in April 2021, Ferrero reached fully sustainable cocoa bean sourcing across its supply chain to help improve cocoa farmers' living conditions and foster sustainable practices. Ferrero sources sustainable cocoa through leading certification bodies and other independently managed standards such as Rainforest Alliance (UTZ), Fairtrade, and Cocoa Horizons. This ensures the company can optimally benefit from its different strengths, enriching its overarching cocoa sustainability strategy.
Concentration in the Global Cocoa Beans Value Chain
On the production side, the Ivory Coast and Ghana dominate the market together, accounting for more than 60% of the production. Any supply chain disruptions in these countries could lead to major cocoa shortages. The complexity of the cocoa market is characterized by corporations' ease of access to resources and achieving economies of scale. This has led to increased vertical and horizontal integration in the industry. As a result, a limited number of large trading and processing companies control a significant share of global and local cocoa markets.
Chocolate manufacturers in Europe tend to either process cocoa beans themselves or purchase semi-finished cocoa products from European processors, making competition for exporters of semi-finished cocoa products fierce. Multinationals such as Barry Callebaut, Cargill, ADM Cemoi, ECOM/Dutch Cocoa, Olam, Nederland SA, and Crown Holland (only organic) are based in Europe and supply the whole range of semi-finished cocoa products to the European food and confectionery industry. For instance, in October 2022, Barry Callebaut launched the second generation of the chocolate category by redesigning the farming, fermentation, and roasting of cocoa beans to address the changing consumer preferences. Further, in April 2021, Mondelez International and Olum Food Ingredients (OFI) has collabortaed in Indonesia with 2,000 hectare cocoa farming module to create the world's single largest sustainable commercial cocoa farm.
These ultimately increase the cost efficiency along the chain, which will finally be passed on to various stakeholders across the chain. Consolidations in cocoa processing over the past few years have been driven primarily by the boom in commodity prices. The industry has also well integrated vertically, expanding activities from sustainable sourcing beans to producing cocoa-based products.
