Tag Archives: madagascar

Madécasse: Conscious Chocolate for a Better Madagascar

One of the most pressing ethical issues concerning the chocolate industry is the poverty suffered by many cacao farmers around the world. Cacao farmers in Ghana, for example, generally make less than $2USD per day, which is insufficient for farmers to feed themselves and their families, even though the cost of living in Ghana is much lower than in the United States and other Western nations (Leissle 2018). Farmers also rarely have any control over the price of their cacao, as large corporations, weather, and politics all exert a large amount of influence on the price of cacao beans. Furthermore, this economic poverty is only amplified by the environmental degradation that often accompanies large amounts of agriculture. Recently, there has been a movement among chocolate companies, facilitated by consumer demand, to produce chocolate using ethically-sourced cacao in order to mitigate the destructive forces of capitalism in the Global South. One company working in this realm is Madécasse. By facilitating close relationships with cacao producers in Madagascar, Madécasse demonstrates how chocolate companies can work to provide better pay and living conditions for cacao farmers and invest in an environmentally sustainable enterprise – all while making chocolate that tastes great.

Madécasse was founded in 2008 by two Americans, Tim McCollum and Brett Beach, who had both previously served on the Peace Corps in Madagascar (Madécasse LLC 2019). This experience prompted McCollum and Beach to want to do more to help the people of Madagascar, and thus Madécasse was born. On the Madécasse website, their mission is stated as “a journey to flip the chocolate world right-side up” (Madécasse LLC 2019). This suggests that their purpose is revolutionary, and that in their view, the chocolate industry is in need of serious reform. Their stated mission is two-fold: first, to make the best-tasting, highest-quality chocolate from organic, “heirloom cacao” from Madagascar, and second, to remove middlemen from the chocolate production chain (Madécasse LLC 2019). One of the biggest problems in the chocolate industry that they aim to tackle through their business is “the thousands of miles and layers of middlemen” that separate farmers from chocolate producers and consumers, and they do this by conducting every stage of the chocolate production chain in Madagascar itself (Madécasse LLC 2019). 

One major way in which Madécasse is working to create a better Madagascar is by implementing business processes that work to ameliorate the poverty suffered by farmers in Madagascar. This is incredibly important, as Madagascar is considered one of the poorest countries in the world today, with 90% of people living on less than $2 USD per day, and 62% of the population living below the extreme poverty line, which is defined by the International Monetary Fund as an income that is less than what it would cost to consume 2,100 calories per day (Engstrom et al. 2015). Additionally, approximately 80% of the population lives in rural areas, and most of these people rely on subsistence farming to make a living. 

The cacao industry in Madagascar is also relatively small compared to that of nations such as Côte d’Ivoire and Ghana, as Madagascar produces less than 1% of the world’s cacao (Schatz 2016). However, Malagasy cacao is very highly-valued among Western chocolate companies, because it is genetically distinct and has a unique flavor (Watkins 2012). Combined with the high poverty in Madagascar, the value of cacao has led people to start stealing it (Katz 2014). The photo below depicts a cacao producer who keeps a gun at his desk to deter thieves. This display highlights not only how valuable cacao is to the farmers that grow it in Madagascar, but also how desperately poor so many Malagasy people are. 

Photo by Giulio di Sturco. From: http://time.com/3809538/madagascar-cocoa-chocolate-war-giulio-di-sturco/

But despite how coveted cacao is as a primary product, cacao farmers globally tend to only receive an extremely small proportion of the profits from sales of chocolate. In the diagram below from Make Chocolate Fair!, a European organization that advocates for fair trade in the chocolate industry, cocoa producers on average only receive approximately 6.6% of the profits from chocolate. 

Additionally, prices for primary agricultural products such as cacao tend to have the most volatile prices. Prices are not determined by typical supply and demand processes, rather, these products are treated as investments, and prices are determined by investor speculation (Sylla 2014). Both the low share of the profits from chocolate given to farmers and the unstable prices contribute to the economic inequalities between the Global North and South. However, there has been a growing movement to correct these issues and achieve greater equity in global trade. As a result, a few different strategies have been implemented, with the goal of correcting the trade injustice that leads to the majority of the profits going to the company, while farmers live in poverty. One of the most well-known of these initiatives is Fairtrade.

Fairtrade is a label overseen by Fairtrade International, a non-profit organization that oversees third-party labelling of products that confirms that both companies and farmers are complying with specific trade terms (Leissle 2018). Fairtrade has several requirements, including that producers must practice environmentally sustainable farming, and that they adhere to International Labor Organization rules for hired workers, including protecting children from the worst forms of child labor. Fairtrade producers also receive a minimum price for their cocoa, as well as a price premium for upholding Fairtrade policies, which both serve to protect producers from price volatility. The major benefit of Fairtrade is that this labelling helps to make consumers more aware of where their food is coming from, which can create greater accountability among consumers when they are choosing which products to buy.

However, Fairtrade is not a perfect system. For example, producer organizations are required to pay a fee to be certified, which can add to the financial challenges that producers of agricultural products already face (Leissle 2018). It becomes increasingly problematic because this cost is not passed on to consumers through, for example, making Fairtrade chocolate more expensive. This is done to keep Fairtrade chocolate competitively priced. Furthermore, the price floor set by Fairtrade International is still quite low, at around $2000 USD per metric ton of cacao (Leissle 2018). While this prevents cacao prices from dropping below that value, it does not incentivize chocolate companies to pay any more for their cacao, and thus the Fairtrade price of cacao has remained fairly stagnant. Finally, Fairtrade labelling can have the negative side effect of decreasing transparency among major players in the chocolate industry. While the increase in demand for ethically-sourced cacao has pressured major chocolate producers to communicate more information about the sources of their cacao, some companies like Cadbury have opted to use internal certification schemes, which are difficult to assess the robustness of (Leissle 2018). 

According to Madécasse, Fairtrade is simply a label that allows large chocolate companies to remain disconnected from cacao producers, but to still indicate to some unspecified extent that they are ethically sourcing their cacao (Madécasse LLC 2019). Madécasse is not Fairtrade certified; rather, they are Direct Trade certified, and they believe that this distinction not only makes their operations more transparent to consumers, but also allows them to do a better job than other companies of improving conditions for cocoa farmers.

In contrast to Fairtrade, which is basically just a labelling system, Direct Trade actually alters the structure of the commodity chain in chocolate production. Essentially, Direct Trade removes middle men from the commodity chain (Leissle 2018; Madécasse LLC 2019). Companies buy directly from farmers, which increases the amount that farmers can make for their products. In her book, Cocoa, Kristy Leissle describes the process of Direct Trade with the example of Taza Chocolate. Taza’s goal is primarily to source the highest-quality cacao, but in order to do that, they are willing to pay a higher price for the beans (Leissle 2018). For example, Taza paid cacao suppliers Maya Mountain Cacao and Cacao Verapaz over 75% more than the 2015 average price of bulk cacao. Not only does Taza pay more, but they pay farmers directly, and this also allows them to invest resources to help producers maintain a high standard of quality of their cacao. 

Similarly, Madécasse emphasizes the importance of maintaining close relationships with cacao farmers in Madagascar and paying producers more than average for their cacao. On the company website, Madécasse emphasizes that they are fully integrated into communities in Madagascar, and it is this close connection with the local people that allows them to make a positive impact. One way in which Madécasse has contributed to growth of the cacao and chocolate industry in Madagascar is by providing farmers with the infrastructure to ferment and dry cacao beans themselves so that they can sell dried cacao beans instead of wet ones, which allowed farmers to increase their income by 60% (Madécasse LLC 2019). Dry beans are much more profitable than wet cacao beans because they have gone through the extra processing steps of fermenting and drying (Leissle 2018). By providing Malagasy cacao farmers with the equipment to begin the processing of cacao, Madécasse has made an investment that will help cacao farmers begin to make more money for their product in the long term. 

Furthermore, Madécasse is unique because they have pledged to make chocolate where it is grown in Madagascar. To date, they have made over 4 million chocolate bars in Madagascar (Madécasse LLC 2019). By integrating cocoa farmers and the Malagasy people into the commodity chain of chocolate production, it gives them more agency over the final product. Additionally, it helps to expand the chocolate market beyond just Western nations. For example, South African consumers have expressed a demand for chocolate made in Madagascar (Watkins 2012), which indicates that high-quality chocolate can be made in Africa, and the demand for it does exist. 

However, the work that Madécasse is doing in Madagascar is not without its challenges. One major issue is scaling the business up in order to meet increasing demand, as Madécasse chocolate can now be found in Whole Foods stores in the U.S. (Schatz 2016). The challenges with producing chocolate in the country where it is grown are exemplified in the graph below, from the Madécasse website, which depicts the proportion of their chocolate that is made in Madagascar. 

From: https://madecasse.com/made-at-the-source/

In the initial years of the business, 100% of their chocolate was produced in Madagascar, but as demand increased, Madécasse elected to move a large percentage of their production outside of Madagascar (Schatz 2016). Madécasse states that they are committed to eventually moving 100% of their production back to Madagascar in the next few years (Madécasse LLC 2019). However, the necessity of moving production outside of Madagascar until factories have the capacity to produce a sufficient volume of chocolate highlights one of the major issues with the ethical, bean-to-bar chocolate business model, which is that making a tangible difference for cacao farmers and their families requires well-developed infrastructure that many cacao-producing countries simply lack. Therefore, the challenge of scale is one that small chocolate companies like Madécasse must address going forward. 

A second problem that Madécasse is becoming increasingly involved in helping to fix is deforestation and biodiversity loss in Madagascar. Madagascar is home to a large number of endemic species – over 85% of the animals on Madagascar are unique to the island – and over 90% of those species depend on the forest as their habitat (England, Ratsimbazafy, and Andrianarinana 2017; Harper et al. 2007). Furthermore, between 1950 and 2000, Madagascar lost 40% of its already-diminishing forest cover, and much of that deforestation can be linked to subsistence farming (Harper et al. 2007).

Madécasse has become increasingly vocal about environmental issues in Madagascar; the company recently published a report on their environmental impact, based on work with local people (England, Ratsimbazafy, and Andrianarinana 2017). This report demonstrated that cacao farms are actually a common habitat for many of Madagascar’s endemic species. This discovery led to a partnership with Conservation International and the Bristol Zoo to research the lemurs that live in the cacao forests. The importance of conservation in the company’s values is reflected in their packaging. As of 2016, Madécasse has redesigned their logo to include a lemur holding a cacao pod, which signifies that the company is aware that their business is tightly intertwined with the ecosystem of Madagascar. Furthermore, this packaging signals to consumers that Madécasse is interested in working to save and expand habitats for endangered species in Madagascar. Indeed, in an interview with Forbes, Madécasse co-founder Tim McCollum says that the company hopes to reforest an entire valley to use as a habitat for rescue lemurs (Schatz 2016). This is possible, he says, because the increased value of their cacao has allowed some farmers to replant old rice land, previously used for subsistence farming, into cacao forests. Thus, Madécasse is aware that their business’ positive impact on the people of Madagascar can also extend to the island’s ecosystem. 

Madécasse is thus an exceptional model for other chocolate companies. The goal of making chocolate from start to finish in the places where it is grown provides companies a great opportunity to make a positive impact on cacao farmers who today often barely make enough income to feed their families. Maintaining close relationships with cacao farmers and providing them with the resources to earn a sustainable, higher income is beneficial for the cacao farmers, chocolate producers, chocolate consumers, and for the environment as a whole. The result of business practices, such as those applied by Madécasse, is a high-quality product that consumers can feel good about purchasing and that truly makes a difference for those involved in every stage of its production.

Works Cited

England, Kate, Hajaniaina Ratsimbazafy, and Sitraka Andrianarinana. 2017. “Madécasse Impact Report.” Wildlife Returns. https://madecasse.com/wp-content/uploads/2016/09/Made%CC%81casse-2017-Impact-Report.pdf.

Engstrom, Lars, Patrick Imam, Priscilla Muthoora, and Alex Pienkowski. 2015. “Republic of Madagascar: Selected Issues.” 15. IMF Country Report. Washington, D.C.: International Monetary Fund.

Harper, Grady J., Marc K. Steininger, Compton J. Tucker, Daniel Juhn, and Frank Hawkins. 2007. “Fifty Years of Deforestation and Forest Fragmentation in Madagascar.” Environmental Conservation34 (4): 325–33. https://doi.org/10.1017/S0376892907004262.

Katz, Andrew. 2014. “Dark Gold: Giulio Di Sturco Goes Inside Madagascar’s Cocoa War.” Time. May 27, 2014. http://time.com/3809538/madagascar-cocoa-chocolate-war-giulio-di-sturco/.

Leissle, Kristy. 2018. Cocoa. Cambridge: Polity Press.

Madécasse LLC. 2019. “Madécasse – Direct Trade Chocolate and Vanilla.” 2019. https://madecasse.com/.

Schatz, Robin D. 2016. “Can A Brooklyn Chocolate Maker With A Social Mission Stand Out From The Crowd?” Forbes. April 25, 2016. https://www.forbes.com/sites/robindschatz/2016/04/25/can-a-brooklyn-chocolate-maker-with-a-social-mission-stand-out-from-the-crowd/.

Sylla, Ndongo S. 2014. The Fair Trade Scandal: Marketing Poverty to Benefit the Rich. Athens, Ohio: Ohio University Press.

Watkins, Tate. 2012. “Cuckoo for Cocoa Processing: Making Chocolate—Not Just Picking It—Helps Madagascar Develop.” GOOD. February 9, 2012. https://www.good.is/articles/cuckoo-for-cocoa-processing-making-chocolate-not-just-picking-it-helps-madagascar-develop.

Multimedia Sources

“Cocoa Prices and Income of Farmers.” 2013. Make Chocolate Fair! August 13, 2013. https://makechocolatefair.org/issues/cocoa-prices-and-income-farmers-0.

Katz, Andrew. 2014. “Dark Gold: Giulio Di Sturco Goes Inside Madagascar’s Cocoa War.” Time. May 27, 2014. http://time.com/3809538/madagascar-cocoa-chocolate-war-giulio-di-sturco/.

Madécasse LLC. 2019a. “Made At The Source.” Madécasse(blog). 2019. https://madecasse.com/made-at-the-source/.

———. 2019b. “Madécasse – Shop Direct Trade Chocolate.” Madécasse(blog). 2019. https://madecasse.com/shop/.

Madécasse: Fueling Economic Growth in Madagascar

The chocolate industry is afflicted by a number of issues ranging from child labor, low standards of living for cocoa farmers, and environmental degradation. In recent years, consumer dialogue around choosing a brand of chocolate on merits other than price has gained momentum. Now more than ever before, consumers want to know how ethical the chocolate they are purchasing is. Many smaller chocolate companies believe in careful sourcing of beans and labor as a way of assuring their customers that their chocolate is indeed ethical. A company that seeks to eliminate questionable practices while promoting economic growth and prosperity for the farmers and workers is Madécasse. In this article, I will briefly elaborate on the prevalent issues that plague the chocolate industry, then closely examine the operations of Madécasse and discuss how this company is tackling such issues. Lastly, I will elaborate on responses from a survey study done among students asking about their opinions on the Madécasse brand.

Prevalent Problems in the Chocolate Industry

Child labor is a major problem in the chocolate industry. It is common across West Africa and other cocoa growing regions to have children working on plantations. A large portion of child labor is rooted in family and socioeconomic pressures. This personal connection makes it harder to tackle the problem. Regardless, many large corporations look past the issue and benefit from low labor costs. Despite international efforts to end such practices, it is a reality that child labor is a prevailing problem in cocoa plantations (Berlan, 1091).

Standards of living for cocoa farmers are low as a result of their minimal and volatile incomes. In 2016, the chocolate market sold an estimated $100 billion, yet only $12 billion was allocated to the value of the raw cacao (Leissle, 30). This serves to show how little of the value extracted from chocolate in the global market is given to farmers. Cocoa farmers are subject to price fluctuations as well as oligopolistic power in cocoa purchasing. This leaves farmers powerless and suffering from price instability.

Environmental degradation is prevalent in cocoa growing regions. Farmers seeking to maximize profits to earn livable wages, commonly employ practices that contribute to environmental problems. For example, excessive use of fertilizers and pesticides or clearing cocoa fields to begin growing other cash crops (Marshall, R. Scott, et al., 7). These practices also affect endemic species that have to adjust to changing landscapes.

How does Madécasse approach these problems?

The founders of Madécasse are Brett Beach and Tim McCollum. They spent two years in Madagascar while they were volunteering for the Peace Corps and fell in love with the country’s culture, people and landscape. Years after returning to the U.S they decided that they wanted to give back to Madagascar by fueling economic growth for its people. They landed on the idea of creating a chocolate company entirely run in Madagascar to provide jobs and fair wages. They sought to leverage the high quality cocoa already in the region to produce high quality chocolate. They wanted to create chocolate entirely made in Madagascar that could be sold in global markets, but whose profits would be more evenly distributed along the supply chain.

The founders of Madécasse call their business model the Direct Trade model. This model seeks to maximize the value added to the final product in Madagascar. Essentially deliver four times the value as other companies would. This business model is composed of four main parts: 1. Building strong relationship with cocoa farmers; 2. Collaborating with a chocolate factory in Madagascar; 3. Sourcing ingredients and materials from Madagascar; 4. Exporting the finished product to global markets. It is through this holistic four fold system that the founders of Madécasse were able to create a model that delivers four times the social and economic benefit than the standard Fair Trade system (Marshall, R. Scott, et al., 15). The video below summarizes what the brand is about and their business model. It shows the artisanal values that the company holds and how closely they work with the people from Madagascar.

Step 1: Relationship with Cocoa Farmers

Madécasse partners with 70 cocoa farmers in the Sambirano Valley of Madagascar. The founders had to invest time and money when determining which farmers to partner with, as they were looking for farmers committed to fostering long-term relationships. Madécasse provides training to farmers on fermentation and drying of cocoa beans. By introducing these farmers to new techniques, equipment and training, Madécasse helps them substantially increase the value of the beans they are selling. It is estimated that on average, Madécasse offers farmers a price that is 20% higher than the market price for cured beans. It is worth nothing that farmers are allowed to sell to other buyers, however they rarely choose to. The partnership in turn provides farmers with financial stability through higher income streams to help cover costs and provide for their families.

The image above shows how a Madécasse worker is teaching the farmers on site about cocoa production techniques.

Step 2: Collaboration with Chocolate Factory

Madécasse partners with a chocolate factory in Antananarivo, the capital city of Madagascar to process the high quality beans they sourced from local farmers. This factory employs 20 Malagasy men and 20 Malagasy women, in addition to a full-time manager. The process of making chocolate begins with trucks that bring the beans into the factory, where they are roasted in large batches. Ingredients are then added to create a wide range of flavors in the Madécasse product line. The chocolate is conched on site. It is then wrapped in foil and inserted into the wrapper and placed in 12 count display boxes. All the processing steps are done by hand in the factory.

The image above shows a completed box of chocolate in the classic wrapping.

Step 3: Sourcing from Madagascar

As mentioned previously, all of the beans and materials for making the chocolate and processing it are obtained from Madagascar. The only material that is imported is the French wrapper paper but otherwise all color printing is done on site. It is important to highlight that Madécasse’s production chocolate has resulted in the establishment of secondary industries in Madagascar. These secondary industries include utilities and packaging. In this way, along with the direct benefits to the farmers, Madécasse generates much greater social impact than exporting Fair trade cocoa alone.

Step 4: Exporting the finished product to global markets

The finished boxes of chocolates are transported in trucks owned by the chocolate factory. Madécasse chocolates are shipped to international markets, mostly to the United States and Europe. In terms of the U.S, the chocolates are shipped overseas and they arrive in Brooklyn where they are then distributed to stores all over the country. As of July 2012, there were more than 1,250 stores in the U.S carrying Madécasse chocolate, including 300 Whole Foods stores (Marshall, R. Scott, et al., 17)

Social and Environmental Impact

Madécasse’s measure of social and environmental impact is measured in “bars.” For example, the company estimates that it takes about 18 minutes to produce a bar. Of those minutes, farm labor accounts for 8 minutes of 43%. This shows that the labor in Madagascar is almost doubled due to Madécasse’s business model. This additional labor is met in the form of utilities or packaging and it essentially increases the number of people employed in the country. Additionally, $0.88 per bar is kept in country as opposed to $0.13 per bar kept when using the fair trade system. This means that seven times more profits are staying in Madagascar (Marshall, R. Scott, et al., 19). In terms of environmental impact, Madécasse is committed to preserving the natural environment. It is common in Madagascar for farmers to turn cocoa plantations into plantations of other more profitable cash crops. This damages the ecosystem of the area by eliminating the biodiversity that exists. To prevent this, Madécasse trains farmers on how to increase crop yields and use techniques that will allow them to get more money for the cocoa they grow. Additionally, the company started to collaborate with Conservation International organization and the Bristol Zoological Society to monitor species like lemurs that live in cocoa plantations in Madagascar. These efforts help protect endemic species in the area (Mironska and Steuwe, 89).

The image above shows a special edition wrapper created by Madécasse to promote a campaign to save the lemur.

In an effort to increase transparency and objectivity in measuring social impact, Madécasse entered into a partnership with Wildlife Returns organization. This third party entity helps in tracking the environmental and social impact of the company’s activities. The company published the first iteration of their analysis in 2017. The report outlines specific economic benefits as well as interviews with farmers who work with Madécasse. These farmers cite how much the company has done to train them and allow them to obtain higher crop yields and subsequently how much more they pay them for their cocoa (Madécasse Impact Report, 5-9).

Survey Results

The market for ethical chocolate is growing rapidly. This makes it ever more pressing for Madécasse to project to customers what makes their model for producing chocolate unique. In an effort to test if the story Madécasse is selling to customers is working, I interviewed two students to gauge their response to the brand. I first showed them the bar of chocolate and had them look at the wrapping that had the certifications listed and comment. Next I had them taste it and comment on the flavor. Lastly, I had them read “Direct Trade” tab on the website that explains what makes them better than the conventional “Fair Trade” system and comment (“Madécasse Direct Trade”, 1). Part of it is reproduced below.

Fair trade is a label. It’s used by large companies, to verify that farmers who live thousands of miles away from where the chocolate is made are paid a fair price for their cocoa … We go way beyond fair trade. We know the farmers we work with on a daily basis. And they know us. We share meals in their homes and we share a vision for prosperity.

The first student commented on the lemur on the wrapper and wondered if it was endemic to Madagascar. The student commented on the direct trade certification but did not know how it differed from fair trade. In terms of flavor, they liked the taste and said it tasted much more bold than regular dark chocolate. Lastly, after reading the website the student said he would be more willing to buy the bar because he saw the value of a direct trade system as opposed to the traditional fair trade certification. The second student had similar initial thoughts about the wrapper and the flavor. However, this student’s ending conclusion was distinct. The student felt that the direct trade website was not convincing enough. He felt that the fact that it was their “direct trade” certification instead of an institutional certification took away from their credibility. These varying conclusions speak to the fact that the company should consider doing more to explain the validity of their system.

Madécasse has a unique business model that strives to produce the maximum economic and social benefit for the people in Madagascar. Through their Direct Trade model they are able to educate farmers, provide higher cocoa prices to them, and create new jobs for locals in Madagascar. However, the small survey shows that Madécasse should strive to tell their story to attract customers as to why their brand is unique. As a whole, it is encouraging to see brands like Madécasse who are making an effort to tackle the issues that prevail in the chocolate industry.

Works Cited

Scholarly Sources

Berlan, Amanda. “Social Sustainability in Agriculture: An Anthropological Perspective on Child Labour in Cocoa Production in Ghana.” pp. 1088-1100

“Madécasse Impact Report (2017).” Madécasse, 2017, madecasse.com/wp-content/uploads/2016/09/Madécasse-2017-Impact-Report.pdf.

“Madécasse Direct Trade”, Madécasse, 2019, http://www.madecasse.com/direct-trade

Marshall, R. Scott, et al. “Case 3. Madécasse: Competing with a ‘4x Fair Trade’ Business Model.” Case Studies in Social Entrepreneurship: The Oikos Collection Vol. 4, pp. 54–86., doi:10.9774/gleaf.978-1-78353-049-6_5.

Mironska, Dominika, and Inga Steuwe. Journal of Corporate Responsibility and Leadership, vol. 5, no. 2, ser. 2018, 3 Jan. 2018. 2018, doi:http://dx.doi.org/10.12775/JCRL.2018.013.

Leissle, Kristy. Cocoa. Polity Press, 2018.

Multimedia Sources

Madécasse Cocoa Bars. Digital image. Couture Candies. 2019 http://www.couturecandies.com/madecasse-dark-chocolate-mint-crunch-2-64-oz-bar/

Madécasse Save the Lemur. Digital image. FoodBev. June 8, 2016. https://www.foodbev.com/news/madecasse-launches-line-of-bars-to-help-protect-endangered-lemurs/

Madécasse Teaching Farmers. RSF. July 5, 2015. https://rsfsocialfinance.org/2015/07/09/madecasse-breaks-the-mold-by-making-chocolate-at-the-source/

“We Are Madécasse.” YouTube, Madécasse Chocolate & Vanilla, 20 Oct. 2013, https://www.youtube.com/watch?v=JUxhgqyYuGk.

HEXX Chocolate – A Super. Natural. Story on the Las Vegas Strip

Situated in the shadow of a half-sized replica of the Eiffel Tower, amidst the glitz and glamour of the Las Vegas Strip, we find the unlikely presence of Nevada’s sole bean-to-bar chocolate concept called HEXX Chocolate (Feldberg). In a city where audacious and artificial are the norm – HEXX’s authentic approach to chocolate they call “Super. Natural.” is breaking the mold of industry paradigms and bridging the huge chasm between chocolate’s primary consumers in the global north and cacao producers in the global south (“Authentic”). In HEXX’s unique approach, they are taking on one of the most pressing social and ethical challenges facing the chocolate industry today – the plight of farmers in cacao producing nations and the general lack of awareness amongst consumers. By examining four key aspects of HEXX: The unique DNA of its leadership; the original way it is presenting its chocolate story to customers; its intentional cultivation of long-term, ethical relationship with its farmers; and its unique challenges, we will see HEXX molding chocolate’s present and future for the better.

HEXX’s Founders and Chocolate Makers – As Unique as Its Brand

As unique as HEXX’s presence is on the Las Vegas Strip, equally as original are its founders and chocolate makers. In the emerging craft chocolate space that has grown from a single company to 200 in the past two decades (Leissle 3; Giller), one might imagine a chocolate maker as a geeky chocolate scientist perfecting chocolate for other geeks (Giller) or perhaps a hipster with a cause (“MAST”). However, at HEXX, we find something quite different. The brain-trust and chocolate makers at HEXX are Matthew Silverman and Matthew Piekarski – established, culinary heavyweights in the Las Vegas dining scene who also lead HEXX’s 24×7 restaurant operation, which shares the same space and name (“Meet Our Chefs”).

Silverman and Piekarski
Chefs Matthew Silverman and Matthew Piekarski head up HEXX’s Restaurant and Chocolate Operations in the heart of the Las Vegas Strip (Morris).

In a town chock-full of celebrities, one could argue Silverman and Piekarski are celebrities in their own right. Silverman traces his culinary roots to the acclaimed Wolfgang Puck (Leach). Piekarski’s resume not only includes an Executive Chef stint working with Eva Longoria Parker but he has the distinction of being named “Las Vegas’ Hottest Chef” (“Chef Matt Piekarski”; Stapleton). Silverman and Piekarski’s culinary chops and earned reputations provide them a perfect platform to share HEXX’s chocolate story from their headquarters on the Las Vegas Strip, which they have been doing since 2015. In doing so, they are not only sharing the story of HEXX, but also the unique locales where its chocolate originates from and the oft-untold stories of farmers who cultivate and harvest cacao – the raw materials from which chocolate is made.

Engaging, Educating, and Expanding Chocolate’s Consumer Base

It is impossible to step-off of Las Vegas Boulevard, into HEXX’s 30,000 square foot restaurant and chocolate factory and not leave with a better appreciation for its chocolate and its origin stories (Womack).

HEXX's Logo
HEXX’s logo highlights the story of cacao farmers 20 degrees north and south of the equator (“HEXX Logo”).

That is exactly Silverman and Piekarski’s intent. From HEXX’s name and chocolate packaging to how it creatively engages customers throughout their restaurant dining experience, HEXX is educating its customers and changing their perceptions about chocolate (Piekarski). Says Silverman about the name HEXX, “The XX represents Roman numerals and speaks to the farms we source our cacao beans from, all of which are located 20 degrees above or below the equator” (Vintage View). Before unwrapping any of HEXX’s 2-oz, single-origin chocolate bars, one learns about the country and farm its cacao is sourced from and the unique flavors and terroir of the region (“Product”).

HEXX Chocoate Bars
HEXX’s single-orgin bars from different regions around the world (from left to right): Venezuela, Tanzania, Peru, Ecuador, and Madagascar (not pictured: Dominican Republic) (“About Our Chocolate”).

HEXX Dark Chocolate - Ecuador, Camino Verde Farm
HEXX’s most popular bar from the Camino Verde Farm in Ecuador (Vintage View). Its flavorings are “well-rounded with sweet marzipan and floral notes” (“Product Catalog”. It contains 73% cacao content (“HEXX Chocolate – Camino Verde Bar”).

Venezuelan Milk Chocolate Cheesecake
Venezuelan Milk Chocolate Cheesecake – one of the ways HEXX highlights chocolate throughout its menu (“Venezuelan Cheesecake”).

HEXX also sprinkles in subtle chocolate highlights throughout its restaurant dining experience – from its use of cocoa nibs as a nut replacement in muffins and salads to its use of Venezuelan Milk Chocolate in a luxurious cheesecake (Piekarski; That’s So Vegas). At the end of each meal, diners are given a petit four, which offers a taste of one of HEXX’s six single-origin chocolates. This end-of-meal ceremony not only serves as a decadent way to culminate one’s gastronomic experience but is an invitation to its patrons to learn more about HEXX’s chocolate story and more importantly connect with its cacao farmers – 20 degrees above and below the equator. 

Petit Four
A petit four, emblazoned with HEXX’s signature XX, and accompanied by a “spell-binding” message similar to those inscribed on the back of HEXX’s chocolate bars (HEXX Chocolate).

While HEXX’s chocolate message to its customers is subtle and sophisticated, its commitment to its farmers is clear and direct and can be traced to Silverman and Piekarski’s own personal culinary backgrounds: “Coming from our roots as chefs we have an appreciation for the farmers and purveyors who grow and raise our food. Developing relationships with the people who grow and import our ingredients is the most important thing that we do. Knowing who grows the ingredients, how they are grown and ensuring that the people growing them are paid a fair price is at the core of our beliefs as chefs and chocolate makers” (“Direct Trade”). It is HEXX’s relationship with its cacao farmers and how it is addressing current labor issues in the chocolate industry that we will explore next.

Cultivating Long-Term, Ethical Trade Relationships

One of the most pressing issues facing the chocolate industry today is the dichotomy between the wealth generated by big chocolate companies in the global north and the extremely low and inconsistent wages of cacao farmers in the global south (Martin “Introduction”). In 2014, the chocolate industry registered over $100 billion dollars in worldwide sales (“Cocoa Prices”). At the same time, in the two highest producing cacao nations of Côte d’Ivoire and Ghana – responsible for 60 percent of world cacao production – farmers are paid on average $.50 and $.84 a day, respectively (Martin “Introduction”). This is far below the World Bank’s poverty line of $1.90 per day and well below other global minimum wage standards (“FAQs: Global Poverty”; Martin “Introduction”).

Cocoa Barometer
Cacao farmers in Côte d’Ivoire and Ghana make $0.50 and $0.84 a day on average. Additionally wages are often irregular, creating other challenges for farmers (“Cocoa Barometer”; Martin “Introduction”).

Cocoa Barometer
While chocolate is a $100 billion dollar industry, just a small percentage of it makes its way back to farmers in cacao producing nations (“Real Cost”).

In response to this disparity, over the years a number of solutions have been developed including coalitions, government initiatives, civil society organizations and ethical trade models (Martin “Introduction”). The most recognizable of these today are the certifications emblazoned on the front of chocolate bars and other food products like Fair-Trade, UTZ, USDA Organic, and Rainforest Alliance (Martin and Sampeck 51; Martin “Alternative Trade”). While HEXX does purchase certified beans from at least two of its six cacao suppliers, in its choice not to exclusively source certified beans, HEXX is highlighting the limitations and critiques leveled against the certification model itself – that it is not always most beneficial to farmers (“About Our Chocolate”; Martin and Sampeck 52). While certifications generate big dollars – over $3 billion in revenue worldwide – very little of it makes its way back to producers (Martin “Alternative Trade”). By some estimations, for every dollar an American consumer pays for a Fair Trade product, a meager $.03 makes its way back to farmers (Sylla 125). Of its decision not to solely purchase certified organic beans in particular, HEXX states, “Not all of our cacao beans are certified organic, because certifications can be a costly expense for our farmers, but all are produced to the same standards that organic certifiers adhere to” (“Direct Trade”). Thus, while quality is of great importance to HEXX, consideration for its farmers is paramount.

Certifications
Certifications generate big dollars but by some estimations, for every dollar an American consumer pays for a Fair Trade product, just $.03 trickles down to farmers (Sylla 125; Martin “Alternative Trade”).

HEXX’s answer to the social and economic conditions of its farmers and the less-than-effective certification model is clear: the cultivation of long-term, direct trade relationships (“Direct Trade”). Advocates of direct trade, including HEXX, argue three primary benefits: first, it enables farmers to negotiate price, resulting in generally higher premiums. Second, it incentivizes farmers to produce higher-quality beans. Lastly and most importantly, it eliminates the layers of middlemen that have historically been a part of the chocolate trade. This fosters learning and mutually beneficial relationships between farmers and chocolate makers (“Direct Trade”; Martin “Alternative Trade”).

Conventional Cocoa Value Chain
Direct trade eliminates the layers of middlemen historically a part of the chocolate supply chain (Phillips).

Their relationships with cacao farmers is something Piekarski and Silverman take very personally. While potential partners are first identified by friend and “Chocolate Sourcerer,” Greg D’Alesandre of Dandelion Chocolate, Piekarski and Silverman take it from there (Piekarski). They travel to each country to meet and establish relationships with potential partners, and see the conditions farmers work under. Piekarski describes these trips as “life changing experiences” that have altered both his business and personal perspectives. Silverman adds, “When we form a partnership with a cacao farm, we are looking to build a long-term relationship with them. There’s no way to do that without going to the farm, trying and testing their cacao beans, and getting to know the owners and operators. Plus, we need to feel good about the culture of the cacao farm. Establishing a business relationship . . . is like getting to know extended family” (“Behind the Scenes”). HEXX’s verbal commitment translates into action. While the global commodity price for cacao has hovered around $1 a pound in recent years, HEXX pays its farmers between $5 and $10 a pound, according to Piekarski.

Silverman and Piekarski - Camino Verde
Piekarski (second from right) and Silverman (far right) visiting Camino Verde in Ecuador – one of the farms HEXX sources its cacao from (“Camino Verde”).

Direct trade is not without its limitations and critiques as well. Critics, particularly as it relates to craft chocolate, point to at least three limitations: first, its reach is very limited. For instance, of the 4.8 million metric tons of cacao purchased each year, HEXX purchases just 30 tons of it (Martin “Alternative Trade”; Martin and Sampeck 55; Piekarski). Second, direct trade partnerships tend to be devoid of farms in West African countries which account for 70 percent of the world’s cacao production (Martin and Sampeck 55; Wessel and Quist-Wessel). This is true of HEXX’s partnerships as well, which are in Madagascar, Peru, Ecuador, Venezuela, Tanzania, and the Dominican Republic (“Product”). Lastly, direct trade relationships can be fragile, in part, because craft chocolate companies that favor these relationships may lack industry experience, financial stability, and face steep learning-curves (Martin and Sampeck 55). To this final critique, HEXX’s response is strong. Silverman and Piekarski’s culinary pedigree and HEXX’s business model set them apart from other craft chocolate companies. While chocolate will always be the foundation and cornerstone on which HEXX is built, its sales account for just $1 million of HEXX’s $30 million in annual combined revenue (Piekarski). This fact puts HEXX in an extremely strong position and affords them creative liberties to take risks with its chocolate brand – a luxury most craft chocolate companies do not have.

When one looks at the entirety of HEXX: The culinary and celebrity gravitas of its two chocolate makers, a $30 million restaurant behind it, and its prime location on the Las Vegas Strip, it is easy to assume HEXX holds the perfect hand in the burgeoning craft chocolate market. However, HEXX is not without its challenges. The very things that make HEXX distinct, also contribute to its biggest challenges. We will close by exploring these challenges and the opportunities that lie ahead for HEXX.

HEXX’s Challenges and Its Future

With its prime location and Silverman and Piekarski at the helm, HEXX has unrivaled access to two atypical markets for a craft chocolate company: the casual consumer dining at its restaurant and the vast number of restaurateurs in Las Vegas, whom HEXX could source its chocolate to. However, in its outreach to both groups, HEXX has faced some resistance. While chocolate is featured throughout HEXX’s menu, Piekarski said they have scaled back use particularly in some of its main dishes. While chocolate connoisseurs might swoon over a chicken mole or steak finished-off with condensed cocoa butter, not all of HEXX’s customers have taken to these flavors. Further, Piekarski said they have reached out to “every casino in town” to offer their chocolate as a source ingredient that could potentially be incorporated into other restaurants’ dishes. This has also been met with resistance. Piekarski states, “We want people to incorporate our chocolate in everything they do not necessarily because we want our brand out there but we want to supply people with a superior quality product at a cheaper price. We understand, as chefs, restaurants operate on very thin margins and this is as important for [other restaurants] as it is for us.”

Alexxa
HEXX’s Book of Chocolate Stories features Alexxa, HEXX’s “mystical muse” who is featured prominently throughout its brand. While appealing to mainstream customers, Alexxa’s presence as well as the absence of certification labels on HEXX’s products may be a hurdle for gourmet grocery stores (“Alexxa”).

HEXX’s location and popular appeal has also proved perplexingly problematic to a typical craft chocolate ally: gourmet grocery stores like Whole Foods. While HEXX has been well-received at events like the Fancy Food Show – the largest food show on the West Coast – it has faced a vexing, uphill battle with gourmet grocery stores precisely because of its mainstream appeal and Las Vegas Strip location (That’s So Vegas; Piekarski). Piekarski explains, “It took us a year and a half to get into Whole Foods in Las Vegas. And we only got there because we are [local].” He continues, “Everything about what we do is not what they look for in terms of craft chocolate. People ask, ‘Where do you produce? On the Las Vegas Strip?’ And that can be the end of the conversation 7 times out of 10.” In just its third year of operations, as the only craft chocolate producer in Nevada, challenges such as these should not come as a total surprise.  And as HEXX steps out further to explore new territory, its opportunities for growth are abundant.

HEXX’s future plans include developing its restaurant presence locally, growing retail sales nationally, and forming new cacao partnerships internationally. After recent renovations to its dining facilities, HEXX is purposefully reintegrating chocolate into its food program in a distinct way, says Piekarski. Weekend diners will now find a cart-wheeling Chocolate Sommelier offering up chocolate for guests to sample, adding another chocolate connection point for its customers. HEXX also recently hired a former Mars and Hershey employee tasked with expanding its retail presence in the Northwest and Midwest, in addition to Central Markets in Texas and Carr Valley Cheese Stores in Wisconsin where HEXX is currently sold (Piekarski; “Where to Find”). Finally, HEXX is looking to extend its international reach to cacao farmers in two additional countries – Trinidad and Granada (Piekarski).

HEXX - James Beard Foundation
Piekarski (third from left) and Silverman (far right) with fellow chefs and friends presenting a 6-course Chocolate Themed Valentine’s Eve Dinner at the historic James Beard Foundation House in New York City (“James Beard”).

Conclusion

In HEXX, we see an immensely compelling craft chocolate concept, connecting multitudes of atypical consumers to the story of its cacao farmers – 20 degrees above and below the equator. Through its authentic message to its customers and ethical relationships with farmers, HEXX is artfully bringing two worlds together that could not be further apart. While HEXX has faced challenges on multiple fronts during its first years, it is impossible not to be incredibly optimistic about HEXX’s industry-altering potential. With two talented and resolute chefs at the helm of its $30 million restaurant and chocolate operations, HEXX has both the gastronomic and financial chops to challenge the chocolate industry’s status-quo, transforming the way consumers see chocolate, and elevating the plight of cacao farmers in the process. In a city built on big wagers, perhaps there is none bigger and more important to chocolate’s sustainable future than HEXX.

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