29th March 2024, Chennai, India. You might wonder why this article reads Cocoa Butter Prices in India specifically while the focus should have been on the raw material , i.e, cacao beans prices in india. We are currently seeing where we are seeing mayhem on the cacao stock exchanges worldwide. The future of a commodity we cannot easily assume.

Cacao, often referred to as the “food of the gods,” is a highly sought-after commodity globally, valued for its use in producing chocolate and other confectionery products. Derived from the seeds of the cacao tree (Theobroma cacao), this tropical plant is primarily cultivated in regions near the equator, including West Africa, Latin America, and Southeast Asia.

As a commodity, cacao holds significant economic importance, with a complex supply chain involving farmers, exporters, processors, and manufacturers. The market for cacao is influenced by various factors, including weather conditions, labor costs, ever increasing global demand for chocolate products, and government policies in producing countries.

The trade of cacao involves both raw cacao beans and processed products like cocoa powder and cocoa butter. Futures contracts for cacao are traded on commodity exchanges, allowing stakeholders to hedge against price fluctuations and manage risk in the volatile market.

Let’s take a brief detour into Coffee as a commodity has a cyclical price trend and estate owners make up for their losses to maintain an estate usually easily with every upturn in the cycle. A 10 year steep fall with several 3-4 year cycles is typical in coffee with ups and downs providing opportunities to one and all in the business. The graph below is self explanatory.https://tradingeconomics.com/commodity/coffee. But why are we still not talking about cacao?

Let’s now dive into cacao, a commodity or crop which makes our favourite chocolate! Most consumers do not associate this crop with their chocolate but the current news about it being valued the same as copper raises many eyebrows and garners the required attention to this commodity.

I’d like to bring to the table a few facts. In the last 50 years cacao has been a rather stable price crop with an exception of a price spike in 1977 and the increase caused due to extreme weather events that impacted the crops and hence production in West Africa. West Africa produces around two-thirds of the world’s cocoa and it is expected that any impact (small or big) is bound to imbalance the world’s demand/supply situation. The background behind the current unprecedented increase or spike in the pricing needs to be understood. Cacao prices have not seen this surge in the past ever. Cost of inputs to farmers have not changed in the last 8 months. The price difference Bulk Vs commodity cacao is narrowing and this does not augur well for either mass or speciality chocolate brands. While the earlier price differential used to be 50% (between bulk Vs speciality cacao). With the prices of bulk cacao increasing three times, that differential will now be unaffordable by both the speciality chocolate manufacturers and consumers alike.

What we expect: At Cocoashala, we expect the prices to start cooling off within the next 3-4 months and then we are looking at prices reducing over a 2 year period and stabilising at the 3500 USD/ton levels. Will the next 2 years impact the chocolate consumer? Yes! While manufacturers will find smart ways to keep the consumer happy to buy more chocolates, consumers would see their sweet treats becoming more expensive and they would basically have to pay more for lesser. Cocoa butter which costs 3 times the price usually will continue to remain the most critical input to the chocolate industry and the prices would take longer than the cacao bean to cool off.

As we eagerly count down the days to World Idli Day on March 30th, the celebration holds a special place at Cocoashala, Asia’s only Incubation center for Bean to Bar Chocolates & Kocoatrait Sustainable Chocolates. Over the last decade, L Nitin Chordia, Co-Founder of the venture, has embarked on extensive journeys across South India and Assam in pursuit of fine-flavored Indian cacao. Nitin’s mission involves administering farmer training programs, mentoring initiatives, and implementing cocoa post-harvest protocols to help establish India as a prominent player in the global fine flavor cocoa arena.

Interestingly, Nitin’s constant travel companion and go-to meal while exploring cocoa farms are idlis. Renowned for their availability, lightness, and ease of digestion, idlis serve as the perfect breakfast (or any-time meal) for Nitin. These traditional South Indian delicacies are not only a comfort food staple but also a rich source of dietary fiber, protein, calcium, and iron.

Much like the fermentation process crucial to the world of cacao, idlis undergo a transformative fermentation that enhances their nutritional and protein efficiency. The process begins with carefully selecting and soaking key ingredients, followed by meticulous grinding and fermentation, resulting in the creation of the perfect idli batter.

Nitin draws parallels between the fermentation of idlis and cacao/chocolate making, highlighting the role of yeast, lactic acid bacteria (LAB), environmental factors, containers, acidity levels, temperatures, and refining (grinding) processes. The south Indian stone grinder, a shared tool in both idli and chocolate making, contributes to the creation of award-winning chocolates and delicious idlis alike.

Intriguingly, the transfer of bacteria from the air and the hands of the operator plays a pivotal role in successful fermentation for both idlis and cacao. Nitin notes that just as a pinch of salt prevents over fermentation and fosters the growth of good bacteria in idlis, sugar in cacao aids in the fermentation of cacao. Starter cultures, in the absence of natural microflora, are employed for both idlis and cacao, with sensory profiles of idlis and chocolate prepared using starter cultures being deemed superior.

However, Nitin humorously asserts that chocolate idlis have not yet found their place, emphasizing that no one has successfully mastered this intriguing combination. As we approach World Idli Day, Cocoashala & Kocoatrait Sustainable Chocolates invite you to discover and savor the richness of idlis and appreciate the fascinating similarities between the world of fine-flavored Indian cacao and the beloved South Indian comfort food.

About L Nitin Chordia & Cocoashala

L Nitin Chordia is India’s 1st certified cacao and chocolate taster. Nitin works with an aim to transform India cacao and chocolate, doubling Indian cacao farmer income and placing India firmly in the world cacao map. Nitin has represented Indian cacao at various international forums. Nitin is the 1st Indian Judge at the International Chocolate Awards, London. Nitin is the 1st Non-founder teacher at the IICCT, London.

Nitin operates Cocoatrait with an aim to promote fine chocolate consumption. Cocoashala is a part of Cocoatrait which is an initiative to promote knowledge, production and consumption of fine chocolates in India. Cocoashala also aim to invest in research, development and enhancement of fine chocolate techniques, processes and recipes’.

Contact: L Nitin Chordia, nitin@cocoatrait.com; Whats app: +918248824723; Voice/Mobile: +919600064846

Disclaimer: It was the authors dream as a young adult, to build a brand (had no idea that it would be craft chocolates) that does not need to depend on advertising to sell (or survive!). Since undertaking the Post Graduate Diploma in Advertising Management at Advertising Club Madras, Nitin has conceptualised out of the box olutions. Nitin is a sparring partner/consultant and also provides business incubation services to startup craft chocolate brands. Views are strictly personal and may seem to be subject to some bias.

Back in July 2003, I clearly remember a day when a leading newspaper in India had more ads than news content during festive season and I had to shake off the (mostly) illegal inserts in the newspapers which dropped straight into the dustbin. Today, we see the same overload of digital advertisements invading into private spaces of our digital screens and the discovery platforms have been reduced to discount sites which attract deal seekers. With even luxury products being sold successfully with discounts online, it is clear who is shopping online.

In an era where digital marketing and social media advertising have dominated the world of commerce, it’s tempting for craft chocolate brands to allocate a significant portion of their marketing budgets to platforms like Facebook and Instagram. We see this with the launch of a brand a week! After all, these online channels promise vast audiences, potential customers and specific targeting. However, the reality is that online ads, instead of boosting profits, often make tech giants wealthier, while leaving brands in the lurch. Business continuity (a pillar of sustainability) is critical to any business and dependence on advertising to drive sales, does not talk well about a business model. In this blog post, we’ll explore the trend of returning to physical customers and the benefits this strategy can bring. We recently read a news article which reported how Walmart is handing out freebies since online ads are losing appeal.

The Online Advertising Conundrum

Online advertising is a double-edged sword for small craft chocolate brands. While it offers exposure to a global audience, the costs associated with acquiring customers through these platforms can be exorbitant. Ad spend on Facebook, Instagram, and Google often yields minimal profit margins because, in addition to paying for the ad space, businesses often need to partner with these tech giants, meaning they share a considerable portion of their revenue before a sale is even made AND they make each brand compete (and hence pay more) while targeting the same customer! Further, the skills needed to get a reasonable ROI from digital advertising is not available internally and would mean a retainer to be paid to an agency which a startup can afford.

This translates to, employing someone with no experience working on your brand and increased costs with no surety of any return! I say this because, I have connected with over 100 digital agencies and have not yet come across one which trusts in the brand they work for and are happy to work on a success based fee (100% sales linked). I would like to be proved wrong and meet an agency that can offer the right services with complete ownership for startups. All of this coupled, significantly erodes profits. It is a different debate as to who owns a customer? No craft chocolate brand should think of a customer as their customer. I shall save this discussion for my next few blog posts!

Moreover, most craft chocolate brands observe that customers acquired through online ads tend to lack loyalty. The online marketplace is saturated with options, and deal seeking consumers easily jump from one brand to another, often chasing the next shiny offer. This lack of loyalty makes it difficult for craft chocolate brands to establish long-term relationships with the right customers. The fact is that majority Indian consumers usually look online for price comparison & deals. We must also note that chocolate is an impulsive product category and not many daily shopping lists have them included. They are picked up impulsively. The same cannot be confidently be said about adding to cart impulsively in an online scenario. It is less likely as it takes the same number of steps as any other planned purchase AND there is no waiting periods during online checkouts.

The Return to Physical Customers

The tide is turning, however. Craft chocolate brands are realizing the importance of focusing on physical customers and prioritizing their marketing spends away from online ads. This shift is driven by a range of compelling reasons:

1. Direct Engagement: Interacting with customers in person or through non-digital channels allows brands to establish a personal connection. This can include events, tastings, and collaborations with local businesses. These interactions help to create a loyal customer base that values the brand and its values.
2. Word-of-Mouth Marketing: Satisfied customers are more likely to recommend a brand to friends and family. Positive word-of-mouth marketing is a powerful tool, and it can be a natural byproduct of in-person interactions and positive experiences.
3. Local Support: By investing in the local community and fostering relationships with customers, craft chocolate brands can tap into the support of their immediate geographic area. Local customers often become champions of the brand and provide a steady stream of business.
4. Profit Margins: Unlike online advertising, building a physical customer base can have a higher ROI. While the upfront costs of physical events and marketing might seem higher, the long-term benefits can outweigh the initial expenses. Loyal customers tend to make repeat purchases and are less sensitive to price fluctuations.

Crafting a Physical Customer Strategy

For craft chocolate brands considering a shift towards physical customers, here are some actionable strategies:

1. Host Tasting Events: Offer tasting sessions, workshops, and events at your factory or store. These create opportunities for direct engagement with your customers and provide them with an unforgettable, immersive experience.
2. Collaborate with Local Businesses: Partner with local cafes, restaurants, and artisanal food shops to showcase your chocolate. These partnerships can extend your reach while also supporting other local businesses.
3. Frequent Farmers’ Markets: Set up stalls at local farmers’ markets. This can be a great way to interact with potential customers, gather feedback, and build your brand’s presence.
4. Subscription Boxes: Create subscription boxes that include a selection of your products. Subscription services can be a bridge between online and physical customers, offering a recurring revenue stream.
5. Personalized Customer Service: Train your staff to provide excellent customer service. Building a reputation for exceptional service can set you apart from competitors.

In conclusion, while online advertising on social platforms may seem like a promising and easy way to reach a wide audience, it often leads to diluted profits and fickle customers. Craft chocolate brands can benefit immensely from investing time, effort, and resources in building a physical customer base. It is important to return to genuine, meaningful interactions which can foster loyalty, word-of-mouth marketing, and more robust profit margins. So, let’s make the chocolate industry sweeter by embracing the physical customer experience and turning the cocoa wheel full circle.

About the Author:

L Nitin Chordia has been awarded a M.Sc in Retail Management from the prestigious University of Surrey in Guildford, UK. Nitin is a Retail Business Consultant with over 15 years of experience in Indian FMCG and Retail Domain. He was instrumental in setting up Godrej Nature’s Basket Gourmet Food store as a retail business consultant (sourcing consultant). Nitin has 3 years of work experience in the USA and UK working for various retail food/grocery businesses. Nitin is India’s 1st Certified Chocolate Taster and Judge at the International Chocolate Awards (ICA), London and a Cocoa Post Harvest Professional.

His current consulting focus is Circular/Green Economy, Sustainability, Zero Waste & Net Zero Transitions with specific focus on Cocoa. Nitin is the 1st external faculty at the Institute of fine chocolate tasting (IICCT), UK. He works with the government to implement quality improvement projects with the government. Nitin has represented Indian Cacao overseas for several years and is among the few professionals in India who can evaluate defects in chocolates and cacao. Fun Fact: Nitin has tasted 3000+ chocolates (including bad ones!) in his 15+ years experience with chocolates.

In an era where environmental sustainability is more important than ever, businesses across the globe are striving to adopt eco-friendly practices. One such industry that has been undergoing a remarkable transformation is the craft chocolate industry. Among the pioneers in this journey towards sustainability is Kocoatrait, a brand that has recently achieved the remarkable milestone of India’s 1st craft chocolate brand to become “plastic positive.” In this blog post, we will explore what plastic positivity means and why Kocoatrait’s achievement is a significant milestone for the craft chocolate industry.

What is Plastic Positivity?

Before delving into Kocoatrait’s plastic positivity, let’s understand the concept itself. “Plastic positivity” is a term coined to describe the practice of removing more plastic from the environment than a company produces. In essence, it’s a commitment to not only minimize the use of plastic in their operations but also to actively contribute to the reduction of plastic waste. This approach is rooted in sustainability and a dedication to protecting the planet.

Kocoatrait’s Sweet Success: Chocolates with Plastic Positivity

Kocoatrait, a sustainable chocolate brand, has achieved plastic positivity, and it’s a big deal for several reasons:

1. Environmental Impact: Kocoatrait’s commitment to being plastic positive means that they are actively working towards removing more plastic from the environment than they introduce. They use innovative packaging solutions and are involved in clean-up initiatives, contributing to a cleaner, greener planet. This move aligns with the growing consumer demand for eco-friendly products, helping to reduce the chocolate industry’s environmental footprint.
2. Consumer Benefits: As consumers become increasingly conscious of their ecological footprint, the availability of plastic-positive chocolates is a welcome choice. Choosing Kocoatrait chocolates not only allows consumers to indulge in delicious treats but also empowers them to make a positive impact on the environment. This newfound awareness can lead to more responsible buying habits and help raise awareness about sustainability in the chocolate industry.
3. Industry Differentiation: The craft chocolate industry, often characterized by small-batch, artisanal production, now has the opportunity to set itself apart from the mainstream chocolate industry. Kocoatrait’s plastic positivity is a prime example of how small, niche players can lead the charge in adopting eco-friendly practices. As consumers increasingly seek sustainable alternatives, the craft chocolate industry can position itself as a leader in the responsible production of delectable treats.
4. Leading from the front: Kocoatrait’s achievement serves as an inspiration for other businesses within and outside the craft chocolate industry. It showcases that it’s not only feasible but also beneficial for companies to adopt plastic-positive practices. By doing so, they not only fulfill their corporate social responsibility but also gain the trust and loyalty of environmentally conscious consumers.
5. A Shift in Consumer Behavior: Kocoatrait’s journey to plastic positivity also has the potential to reshape consumer behavior. When consumers recognize the positive environmental impact of their choices, it can trigger a shift in their mindset, encouraging them to make more sustainable choices in other aspects of their lives.

Conclusion

Kocoatrait’s plastic positivity is a beacon of hope in the chocolate industry’s journey towards sustainability. It sets an example for other businesses and serves as a reminder that small changes can make a big difference in the world’s battle against plastic pollution. The achievement of being plastic positive not only benefits the environment but also empowers consumers to make more responsible choices. As the craft chocolate industry continues to differentiate itself from the conventional chocolate industry, Kocoatrait’s success will likely inspire others to follow suit, ultimately making a sweeter, more sustainable world for all. So, the next time you indulge in a piece of Kocoatrait chocolate, you can savor not only the exquisite taste but also the sweet knowledge that you’re contributing to a cleaner, plastic-positive planet. Learn more about us at: cocoatrait.com/about-us/

The certification and the plastic recycle program is Kocoatrait’s partnership with The Disposal Company which is a SAAS – Sustainability As A Solution Platform, backed by Accenture.