Theo Chocolate: Trendsetters and Pioneers for Bean-to-Bar Companies and Socially Conscious Consumers Alike

Theo Chocolate is the first bean-to-bar chocolate company that is an organic fair trade-certified and GMO-free cocoa producer in the United States. Based out of Seattle starting in 2006, Theo Chocolate is a pioneer of a shared value for-profit company.  By expanding economic value and social value simultaneously to the cost of the goods they are selling, they are an exemplary leader of how companies can be more socially and environmentally responsible. When they first were founded, they applied creative entrepreneurial solutions to capture a small share of a large market and ultimately forever influenced the way consumers interact with the products they choose to purchase. Consumers of Theo Chocolate better understand the supply chains of the product they are consuming, naturally develop loyalty to brands they trust and faithfully believe in, and shape market perceptions of the fundamental value of chocolate by increasing demand (Butcher 2014). This paper is an ethnographic analysis of Theo Chocolate that will examine their mission as an ethical and sustainable chocolate maker, how that has changed since conception, and how successful the company has been on the basis of their own metrics.

This first section will discuss their founding and original mission statement to focus on their social and environmental success since conception. Theo Chocolate was founded by Joe Whinney, when he wanted to fundamentally challenge the answer to two questions: do chocolate manufacturers bear responsibility for producers of cocoa beans? And do they bear responsibility for how they are produced? As Carol Off describes in her publishing Bitter Chocolate: The Dark Side of the World’s Most Seductive Sweet, responsibility regarding who should monitor farming practices has traditionally been pushed around between chocolate companies, large corporations, and even the US and African governments where the beans were being produced (Off 2008). There was no general consensus as to how far the orgins of the cocoa bags of beans should be monitored and tracked. Whinney wanted to break this cycle and take on this responsibility while still being a for-profit company. Whinney’s first founding mission was that “the finest artisan chocolate in the world can and should be produced in an entirely ethical, sustainable fashion”(Butcher 2014). His initial aims were to more concretely improve the growing conditions for farmers and to promote fair trade practices for cocoa bean farmers.

Social Work and Responsibility

With regards to the farmer’s role in the chocolate supply chain, he wanted to make sure they were environmentally and sustainably creating higher quality, larger yields, while also raising the farmers standard of living. Whinney after doing much market research felt that the key to higher quality chocolate was the fermentation of the beans. Fermentation removed the acids and tannins that created bitterness. He felt strongly that the farmers should understand and be educated on the role of fermentation. Consequently, he worked side by side with the farmers to help them adopt the best fermentation practices (Butcher 2014). Not only was it beneficial for Whinney to be able to develop a reliable relationship with farmers that were loyal to the quality he wanted, but it also economically was efficient because the higher percentage of beans that were correctly fermented, the higher prices the farmers were able to demand. Selling beans at higher prices meant that the farmers collected more money to sustain their livelihood. It was a welfare-enhancing transaction for both Whinney as well as the farmers, what he referred to as “enlightened capitalism”. Whinney hoped in the future of sustainable and modern cocoa production, the farmers would take on more of a responsible role controlling the quality of their beans, as well as marketing their own cocoa. He believed that if the farmers could adopt this commanding mentality, their livelihoods wouldn’t be so subject to the prices negotiated by larger chocolate companies.

Whinney was a huge contributor to helping develop price transparency. He established a pricing grid which provided complete information for consumers of the chocolate, the retailers selling the chocolate, but most importantly the bean farmers as well. Educating the farmers about prices allowed them to understand what factors are key determinants to price input. It was essential the farmers understand that when they can utilize proper quality tests and post-harvest practices, they create independent value for themselves as well as Whinney. Theo Chocolate reported that in 2009 when most bulk cocoa was selling for $2,000 a metric ton, they were willing to pay $3,600-$6,000 a metric ton for quality beans, which at this time was highly unpopular (Butcher 2014). Theo Chocolate prided themselves on the high quality of organic and fair trade cocoa they brought in and believed it provided real incentivization for farmers.

Interview of Co-founder Debra Music about Theo Chocolate values

Theo Chocolate wanted to ensure that their business reflected their social responsibility, not only to the farmer but toward the consumer as well. They used only organic ingredients, green energy sources in their operations, as well as sustainable wrapping. Theo Chocolate often donated many of their proceeds towards notable causes that aligned with their company’s values. For example, in 2010 after an earthquake in Haiti, a certain portion of chocolate proceeds were donated to CARE, a relief organization fighting global poverty. With the proceeds, CARE delivered 600,000 water purification tablets to make contaminated water drinkable (Butcher 2014). Additionally, Theo Chocolate had a signature Cherry and Chili Bar, whose proceeds were donated to PCC Farmland Trust, the local food co-op where the cherries and chilies were grown in Washington state. Theo’s World Bicycle Relief Sea Salt Bar was created with the proceeds going towards the World Bicycle Relief Program, who donated bicycles to health care workers in Africa. Two featured bars displayed the Jane Goodall stamp. The stamp was a signal that the bars were an ethically and quality produced product coming from the developing world, and the proceeds promoted forest conservation through the Jane Goodall foundation. Finally, it is notable that locally Theo wanted to help the community whom it hired from and interacted with (Butcher 2014). The company often used the factory store as an events space to help support local businesses, hunger, and other community initiatives.

Entrepreneurial Strategy: Owning the Chocolate Niche

Theo Chocolate developed a unique business marketing and entrepreneurial strategy to generate profits. Their first success as a company came when they understood the market they were dealing with and saw the unrealized opportunity. Whinney observed very early on that they were in a growing market, and that high-quality product would be the future for profits. In 2010, premium chocolate sales, premium chocolate being chocolate that sold for more than $.50/ounce, were about $2.1-2.4 billion total (Butcher 2014). From 2006-2009, the sale of premium chocolate had grown 5 times the rate compared to regular chocolate, and in the US market, there were not many players. When Theo Chocolate was founded there were only approximately only 15 chocolate producers. Most were confectioners who purchased blocks of chocolate and remelted it to make their own chocolate products (Butcher 2014). No bean-to-bar chocolate maker had ever been Fairtrade, organic, and non-GMO. Theo’s quality was certainly the finest as well as the most socially responsible. Whinney was able to recognize many changing chocolate trends and take advantage of them at the forefront. He implemented exotic flavors, savory inspired flavors, raw cocoa, and upscale packaging to be at the forefront of the changing market.

Whinney was a firm believer that chocolate needed to taste extraordinary or else nobody would buy it the second time: “Without having amazing products nothing else matters” (Butcher 2014). His chocolate bars had higher quality cocoa percentages and while expensive to produce, the quality was uncontested. A huge competitive advantage that Theo Chocolate had being a bean-to-bar company rather than a confectioner was full control over the quality. They essentially had full vertical control of the entire chocolate making process from bean sourcing to the chocolate manufacturing. This was essential to keep up with the fast-paced consumer preference changes and trends, allowing them to flexibly adapt to their consumer demand.

Examples of their current, more non-traditional seasonal flavors

Theo chocolate did something never before done in chocolate wrapping marketing in the United States at the time, they received multiple certifications and displayed them on the wrapping of every chocolate bar. Theo Chocolate was the first bean-to-bar company to do this. Currently, on their website, they promote 4 certifications: USDA Organic, Fair Trade for Life, Star-K Kosher Certification, and Non-GMO (Theo Chocolate 2019). Theo Chocolate states on their website: “Trust is fundamental to every relationship, including our relationships with our customers and suppliers. We believe transparency is an important component of trust and employ third-party verification for the claims we make” (Theo Chocolate 2019). Since conception, they have held true to this honest standard, and were the first ones to adopt using this marketing strategy for being fair trade and organic simultaneously. These certifications symbolize that Theo Chocolate prioritizes holding themselves to the highest standard and wants to foster such accountability towards their customers. They also demonstrated by their popularity that the marketing model works, as many more chocolate companies have sought out these very same badges.

Finally, Theo Chocolate is at the forefront of distribution. Premium chocolate has historically been and still is, sold through company-owned stores, specialty stores, and websites. However, they foresaw that organic food would become more sought after in the mid-2000s and correctly predicted there would be more demand for grocery stores that stocked organic chocolate. Theo Chocolate, in as early as 2008, partnered with Whole Foods to provide chocolate bars in their grocery stores. It has been a symbiotic relationship with the two companies because Whole Foods needs suppliers whos incentives aligned to provide the same quality products. According to Whole Foods, “Organic products have grown on average more than 20% per year over the last 7-10 years, making it the fastest growing segment of agriculture”(“Whole Foods UK” 2019). In many ways, Whole Foods acts as a middleman that is able to efficiently match the product produced to the consumer’s growing need. Theo Chocolate positioned themselves strongly within the growing Organic Industry, as well as in the responsible gourmet chocolate industry to catch two rising trends simultaneously and significantly boost demand for their product.

All of these marketing strategies are an indication that Theo deeply understood the new audience they were working with and trying to cater towards. On one hand, they pioneered the socially responsible chocolate, which you now see today in marketplaces as being much more commonplace. On the other hand, they also changed the way consumers think about responding to social responsibility, by developing this consumer consciousness in the typical millennial that is now commonplace. Theo Chocolate created unprecedented change on both the supply, as well as the demand side of organic fair trade chocolate.

Theo Chocolate and the Future

What does the mission statement look like today? Has it changed or strayed from its original intentions? Currently, they proclaim: “As a company rooted in cocoa, our mission is to create a more beautiful, compassionate, and enduring world by responsibly making delicious and inspiring products for everyone” (Theo Chocolate 2017). They are aware of the success their chocolate has received globally. Currently, they are now focusing on further developing the existing built connections between entities and people to make them stronger. One way they are doing this is by turning toward their internal operations to care for the employee base. Theo Chocolate has a strong commitment to developing their employees professionally but also educating them about the strength of social responsibility so each employee can hopefully go out one day and make a substantial impact one way or another.

Video of employees reflecting on company values

Ultimately I conclude that not only are they exemplary at the amount of social impact they have effectively brought about, but Theo Chocolate is one of the first shining examples within the American chocolate industry that could generate outstanding profits because they marketed such social responsibility. They sold America not only their product but their vision. Theo Chocolate made being a bean-to-bar company trendy while also on the consumer-facing side making socially conscious purchases trendy and feel good. Their small share in the chocolate market has set a rippling precedent for American markets to promote corporate social responsibility on any level of scale.

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Works Cited

Butcher, Alva Wright, and Paula A. Wilson. “Theo Choloclate-Doing Well By Doing Good.” Journal of Case Studies 32, no. 1 (2014): 19-36.

Off, Carol. 2008. Bitter Chocolate. New York: The New Press.

“Our Certifications – Theo Chocolate”. 2019. Theo Chocolate. https://www.theochocolate.com/blog/our-certifications/.

Tedxseattle – Debra Music & Joe Whinney – 4/16/10. 2010. Video. https://www.youtube.com/watch?v=IQUaUirxnwo.

Theo Chocolate Values. 2019. Video. https://vimeo.com/235404979.

“Whole Foods UK”. 2019. Wholefoodsmarket.Com. https://www.wholefoodsmarket.com/mission-values/organic/growth-organics-industry.

2018 Heart Of Seattle Winner – Swanson’S Nursery. 2019. Image. https://vimeo.com/265462272.

2019. Image. https://www.theochocolate.com/product/lemon/.

2019. Image. https://www.theochocolate.com/product/grapefruit-ginger/.

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