Tag Archives: West

Moving to Mars: Climate Change and Cacao’s Undying Lov

Two hours. That is the amount of time I spent scouring databases and newspaper articles attempting to find scientific (or non-scientific) evidence that would demonstrate the importance chocolate has in our world today. More specifically, I was looking for something titled Chocolate: The Most Significant Food in History. The best I could find was a TIME.com article titled “9 Weirdest Uses for Chocolate.” It was very insightful. However, when considering the amount of chocolate that is produced and consumed in the world each year, the picture of importance starts to become more clear. For businesses and consumers, chocolate and cacao is a great product, and in high demand. For producers and farmers, it is an important cash crop and essential to survival.

Figure 1.

Producing and Consuming

Source: http://www.oecd.org/swac/publications/39596493.pdf

The relevance and importance chocolate and cacao cultivation have on the world economy cannot be understated. According to the International Cacao Organization (ICCO,) the world’s top ten chocolate producing companies did $80 billion USD in sales in 2017. (https://www.icco.org/about-cocoa/chocolate-industry.html) Even beyond the money and global markets, there is a great deal of cultural significance that could never be quantified. The World Cocoa Foundation estimates that Cacao directly affects the livelihoods of approximately 50 million people (http://www.worldcocoafoundation.org/our-work/programs/). For chocolate lovers, the news that climate change could significantly impact our access to chocolate was devastating. Major players such as MARS Inc. have made significant investments for this eventuality, and are looking to be prepared for changes in the cacao marketplace. This will undoubtedly have significant impacts on the producers of cacao and encourages a deeper look at methods to adapt the farming and production practices.

Chocolate might go away?

Despite the fear-mongering on the internet, this is not totally accurate. It is important to point out that cacao will not be going extinct anytime soon. It will, however, face a potentially sharp and significant decline in production. This means that by 2050, you may have less access too chocolate than you do at this very moment. My advice is to stock up.

Cacao trees really depend on very specific criteria to be met in order for them to grow, thrive, and produce fruit (Lecture). Cacao can essentially only be grown when the right conditions are met. Those conditions apply to which areas in the world cacao can grow in, the temperature it prefers, and the surrounding plants that shield and shade it. The picky nature of Theobroma cannot be understated.

The challenge that the world’s cacao producers are facing is climate change. Those very specific conditions are projected to be harder to meet in the very near future. According to the National Oceanic and Atmospheric Administration (NOAA,) West African countries will experience an increase in evapotranspiration (Smith, 2016). Essentially, the amount of water plants will be able to retain will decrease due to higher temperatures. This will have an impact on what areas will later be suitable to grow cacao. Figure 2 highlights the estimated change in temperature in Africa’s top cacao producing regions according to research done by Peter Läderach and his team.

Figure 2.

Temp change

Source: Atlas on Regional Integration in West Africa

With 70% of the world’s chocolate finding its origin in western African countries like Cote d’Ivoire, a decrease in production from West Africa would have a worldwide impact. (http://www.oecd.org/swac/publications/39596493.pdf) For several countries that fall within the West African cacao belt, Cacao is the number one agricultural export. Any decline could potentially result in major economic impacts for those countries (Läderach, Martinez-Valle, Schroth, & Castro, 2013; Schroth, Läderach, Martinez-Valle, Bunn, & Jassogne, 2016). It would also result in consequences for the natural habitats and cacao growing regions of these states. The research that has been done in Ghana and Cote d’Ivoire has indicated that by 2050, almost 90% of the current farmland would be unsuitable to grow cacao, with only a 10% increase in suitability. This is alarming as the vast majority of cacao production in Africa, and worldwide, stems from this region.

Figure 3

cacao production

Source: Lecture slides

Additionally, this new farmland comes at a cost. That is to say, in order to capitalize on other areas that will be suitable to grow cacao, countries facing this challenge will have to sacrifice environmental conservation (Läderach et al., 2013). This still would not make up for the amount of farmland lost to the temperature increases, while contributing to the factors that influence climate change.

While a decrease in African production would have global consequences, it is unlikely that climate change will eliminate chocolate and cacao production. As cacao grows around the globe, we can expect it will continue to be around. One of the concerns currently is that it is very likely that other regions around the world will have to pick up the slack. And that is a lot of slack! With the top cacao producing countries losing close to 90% of suitable cacao growing areas, it is unclear at this point where it is possible to make up for this loss. Without an answer in the next 20-30 years, chocolate will likely be much less of a household item than it was the last 100 years.

Let’s move to Mar’s…Inc.

According to the Candy Industry’s 2017 Global Top 100 list, Mar’s Inc. is the world’s top-grossing candy company. In 2017, their net sales topped $18 billion USD! (https://www.candyindustry.com/2017-Global-Top-100-Part-4) With earnings like that, it is not difficult to understand the level of investment and commitment the company would have to the preservation of chocolate production.

mars

Source: https://pxhere.com/en/photo/794479

Mars Inc. has put their money where their mouth is…or rather, where the chocolate is. They have invested in a project run by the Innovative Genomics Institute, in an effort to ensure future production of cacao. So far they have pledged $1 billion USD to creating sustainability and reducing their footprint, and this includes the CRISPR project. The goal of the project is not to specifically save cacao production, but rather to combat diseases in humans and plants (IGI 2018). Lucky for us, Theobroma Cacao is a plant. Winning! Well, maybe. The CRISPR technology is aimed at altering the genes of plants in order to make them resistant to disease. So this might not really help West African farmers who will lose cacao growing areas. By investing in this technology, Mars Inc. hopes to expand the possible areas cacao can be grown in.

As it stands today, different diseases and insects make in very difficult to grow and produce cacao. It is estimated that about 40% of the crops in the Americas are lost to fungal infections like witches’ broom (Shapiro & Shapiro, 2015). By increasing the natural resistance of the fruit-bearing trees, the average yield would increase 3 fold. This means that places that have been traditionally very difficult to produce cacao in could now become production centers. This would effectively reduce the impacts on chocolate manufacturers if the climate predictions do create impediments to cacao production in West Africa.

In a recent story done on the use of CRISPR technology, scientists working with IGI explained the advancements they have made in changing the genes of many crops that are prone to disease. They explain that they have already used the technology to create a solution for the swollen shoot virus that plagues cacao trees. (Schlender, 2018)

Source: https://www.voanews.com/embed/player/0/4332190.html?type=video

The technology works so quickly that IGI can have plants develop the desired traits within one generation! This is very good news for chocolate lovers. Assuming everything works out. The plants that have and will undergo this process will need to be researched extensively before they can be consumed by the public. This will ensure that people eating these modified crops do not grow an extra set of toes afterward.

This past year, Mars Inc. also made a significant investment in addressing climate change, planning to cut its own carbon emissions by two-thirds. A big part of this investment will be assisting farmers in improving their yields while simultaneously reducing pressures underlying deforestation. The idea is that the more a farmer can produce from their crops, the less land they will need to do it (Madson, 2017). This investment totals $1 billion USD and has been proposed to be completed by 2050.

Other chocolate giants such as Cadbury and Mondelez have also become a part of developing solutions for creating sustainability in cacao farming. Mondelez International’s non-profit arm, Cocoa Life, is focused on improving the lives of farmers in cacao-growing regions around the world. (https://www.cocoalife.org/the-program/approach) With increased commitment from large organizations with vast resources, it is possible to combat the potential effects of climate change.

What about the little guy/gal?

While it appears that Mars Inc. has likely stumbled upon a viable solution to their future issue of supply, what about the small-holders. The potential to move cacao production elsewhere is not great news for all parties involved. It is possible that genetic modification could potentially change under what conditions cacao trees thrive. However, it is unclear if this route could help the trees overcome evapotranspiration in the projected West African environments. It is very probable that this cash crop could find a new capital in other region or regions in other parts of the world. For the millions of farmers who are vulnerable to this threat, this is a challenge they will be forced to adapt to.

There are organizations such as the Rainforest Alliance who are working toward preparing farmers, equipping them with new strategies to protect their crops. The strategy being used is called Climate-Smart Agriculture, and in principal focuses on the specific needs of the specific farm (de Groot, 2017). Cacao farmers using this tactic would conduct a needs assessment of their farm, and create a plan that directly corresponds to the challenges that are unique to them. Some of the strategies include planting shade trees, as well as developing water retaining systems to prepare for droughts. While these will improve overall yield from these farms, it is unclear at this point how these tactics will far against climate change.

The tactic of planting shade trees is, however, a recommended strategy for those who fall in the Western African cacao belt. Currently, the farming trend has been to reduce the shade on cacao farms, however, this may no longer be an option. By increasing the shade of the cacao trees, the temperatures of its leaves could drop up to 4 °C (Läderach et al., 2013). Not only could this help protect cacao cultivation in Western Africa, it also helps to increase crop diversification. If done correctly, this would make cacao farmers less vulnerable to changing temperatures and less frequent rainfall. A downside to this recommendation is the limitation on the amount of water available during the dry season. The increase in plant life means less water to satisfy the needs of the cacao trees, and potentially losing the entire crop.

Conclusion

Chocolate is important. It directly impacts the lives of people around the world, in ways that transcend taste. For some, it is a highly desired treat, and for others, it is a means of opportunity. The effects of climate change have given all sides of the cacao industry a wake-up call to the importance of sustainable farming and improving our carbon footprint. Large organizations have begun to change the way they operate in the world, by reducing their emissions and helping to improve farming practices. Climate change could result in significant impacts on the cacao industry the world over. Reducing the amount of product available for purchase, and decreasing the available wages that can be earned in regions that are the most affected. Scientists, chocolate companies, and cacao farmers are starting to come together in an attempt to better the practices in this very important industry. Each has a role to play to play in this improvement, as well as the preparation for effects climate change will play in cacao and other vital crops.

 

Sources:

de Groot, H. (2017). Preparing Cocoa Farmers for Climate Change. Retrieved May 9, 2018, from https://www.rainforest-alliance.org/article/preparing-cocoa-farmers-for-climate-change

Läderach, P., Martinez-Valle, A., Schroth, G., & Castro, N. (2013). Predicting the future climatic suitability for cocoa farming of the world’s leading producer countries, Ghana and Côte d’Ivoire. Climatic Change, 119(3–4), 841–854. https://doi.org/10.1007/s10584-013-0774-8

Madson. (2017, October 27). Climate change could hurt chocolate production » Yale Climate Connections. Retrieved May 10, 2018, from https://www.yaleclimateconnections.org/2017/10/climate-change-could-hurt-chocolate-production/

Schlender, S. (2018). New Gene Editing Tool May Yield Bigger Harvests. Retrieved May 10, 2018, from https://www.voanews.com/a/crispr-for-bread-chocolate/4330647.html

Schroth, G., Läderach, P., Martinez-Valle, A. I., Bunn, C., & Jassogne, L. (2016). Vulnerability to climate change of cocoa in West Africa: Patterns, opportunities and limits to adaptation. Science of The Total Environment, 556, 231–241. https://doi.org/10.1016/j.scitotenv.2016.03.024

Shapiro, H. S., Howard-Yana, & Shapiro, H. S., Howard-Yana. (2015). The Race to Save Chocolate. https://doi.org/10.1038/scientificamericanfood0615-28

Smith, M. (2016). Climate & Chocolate | NOAA Climate.gov. Retrieved May 9, 2018, from https://www.climate.gov/news-features/climate-and/climate-chocolate

 

East Meets West: Late 20th Century Competition for the Chinese Chocolate Market Among the Big Five

Globalization has created unique challenges for modern marketing, as companies must adapt to the completely different tastes and cultures of other civilizations. This is evident in the “East Meets West” culture clash, as Western companies navigate Eastern culture in order to market their Western products, especially apparent in the history of the global market for chocolate. Although the treat is extremely popular among consumers in the United States and United Kingdom, chocolate has been historically absent from the palate of Chinese peoples. However, after the overhaul of the Chinese economy from communism to market socialism in the mid-20th century, China began to open its economy to Western corporations in the 1980s.[1] This created the potential for one of the “Big Five” chocolate companies to capture the market and dominate Chinese chocolate consumption for generations to come. Despite competition from Cadbury, Hershey, Nestle, and Ferrero Rocher, Mars ultimately emerged as the champion of China’s chocolate market amidst the other companies’ failures due to its superior understanding of and total dedication to the Chinese consumer, demonstrated by Mars’s marketing of chocolate as an exotic delicacy and prized gift.

Chocolate was essentially a novel item in China, so the Big Five began competing for the palates of potential Chinese chocolate consumers in the early 1980s.[2] Because chocolate was essentially a luxury during at this time, a typical Chinese consumer justified their expense by giving chocolate as a gift.[3] Ferrero Rocher capitalized on this cultural perception. By keeping prices high and importing products to China through an independent distribution partner, Ferrero Rocher captured the gift-giving niche of the Chinese chocolate market. The golden, foil-wrapped, and elaborate containers successfully presented Ferrero Rocher’s chocolate as expensive, foreign, and luxurious.

Ferrero Rocher Chinese

Fig. 1. Ferrero Rocher Chocolate – Chinese New Year 2012 (http://www.scratchmarketing.com/ferrero-rocher-campaign-concept/)

Despite Ferrero Rocher’s success, the other four companies attempted to create and capitalize upon a sector of the chocolate market brand-new to China: the individual consumer.[4] By establishing a relationship with a new Chinese generation, one of these four companies could create a bond between Chinese citizens and chocolate lasting for generations.

The other three companies had difficulties with the Chinese chocolate market that Mars successfully navigated to become the winner. Cadbury began with the goal of selling one milk chocolate bar to every Chinese citizen. However, Cadbury failed to consider how hard it would be to get a regular supply of milk in China, as the Chinese are not avid milk drinkers. Unfortunately, Cadbury had to partner with a substandard milk supplier, leading to cheesy chocolate that did not at all appeal to Chinese consumers.[5] Next, although Hershey was initially successful with its bite-sized Hershey’s Kisses, bad management changes led to the 2004 collapse of Hershey’s Chinese organization. Within two years, this effectively eliminated the Chinese supply of Kisses. Hershey never recovered.[6] Finally, although Nestle aimed to use its reputation for producing safe and nutritious products to market their famous Kit Kat bar, their projections for Chinese demand were terribly wrong. In order to compensate for their lost costs, Nestle began using a cheap substitute for cocoa butter, lowering the quality of the chocolate bar. Chinese consumers noticed the change and would not buy the new Kit Kat bar, driving Nestle’s sales significantly behind those of the rest of the Big Five.[7]

Unlike the other companies, Mars succeeded by intensely focusing on both the culture surrounding Chinese chocolate consumption and the appetites of Chinese consumers. Mars became the first of the Big Five to build a chocolate plant in China in 1993 to market Dove Chocolate.[8] Dove was Mars’s high-end brand chocolate that captured both chocolate’s luxury for gift-givers and its superior taste for the individual consumer. By producing high-quality Dove chocolate, marketed as a mysterious and exotic luxury, Mars demonstrated a distinguished knowledge of and dedication to Chinese consumers. Mars spent more on advertising than the rest of the Big Five, and its chocolate has genuinely been consistently higher quality than that of its competitors.[9] The following commercial demonstrates Mars’s understanding of the gift-giving culture surrounding chocolate, as Chinese chocolate consumers rally Mars to support one man’s incredible present to his girlfriend on a lovers’ day. (https://www.youtube.com/watch?v=x9Yq-ASSc78)

By 2004, Mars had control of China’s retail chocolate market, dominating with a 39% share of the whole.[10] Current estimates put Mars’s share of China’s chocolate market at about 43.3%, as of 2013 (http://www.shanghaijungle.com/news/Chinas-Chocolate-Market-Dominated-by-Foreign-Brands). Mars’s continued preeminence in China stems directly from their capture of the Chinese chocolate market at the end of the 20th century. Although the other members of the Big Five continue to compete, Dove comfortably enjoys a place as the high-end and highly desired chocolate of choice among this first generation of Chinese consumers.

 

Works Cited

Allen, Lawrence. Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China’s Consumers.

“The Bitter and the Sweet: How Five Companies Competed to Bring Chocolate to China – Knowledge@Wharton.” KnowledgeWharton The Bitter and the Sweet How Five Companies Competed to Bring Chocolate to China Comments. Accessed March 22, 2015.

“China’s Chocolate Market Dominated by Foreign Brands.” China’s Chocolate Market Dominated by Foreign Brands. http://www.shanghaijungle.com/news/Chinas-Chocolate-Market-Dominated-by-Foreign-Brands. Accessed March 22, 2015.

“Dove Chocolate’s Chinese Valentine’s Day campaign.” YouTube video, 2:50. Posted by “Kestrel Lee,” January 9, 2012. https://www.youtube.com/watch?v=x9Yq-ASSc78. Accessed March 22, 2015.

Fig. 1. Ferrero Rocher – Chinese New Year Campaign Concept. Digital Image. Available from: http://www.scratchmarketing.com/ferrero-rocher-campaign-concept/. Accessed March 22, 2015.

[1] Lawrence L. Allen, Chocolate Fortunes: The Battle for the Hearts, Minds, and Wallets of China’s Consumers, 2.

[2] Allen, 24.

[3] Allen, 24-25.

[4] Wharton, n.p.

[5] Wharton, n.p.

[6] Allen, 202; Wharton, n.p.

[7] Wharton, n.p.

[8] Allen, 202; Wharton, n.p.

[9] Wharton, n.p.

[10] Wharton, n.p.