Chocolate is one of our favourite foods but cocoa farming comes with significant challenges. Primarily grown in Asia, Latin America and Africa, cocoa is a delicate crop which thrives in tropical climates. Unlike many other crops, which are benefitting from modern crop management techniques, thus enabling lower costs, higher yields and increased scale, 90% of the world’s cocoa is grown on small family farms, which rarely reap the benefits of the profitable global cocoa trade (cocoa farmers get just ≈6% from the sale of an average chocolate bar, down from 16% in 1980).

And the average age of cocoa farmers is steadily increasing. Younger generations don’t see a future in growing cocoa due to the complex farming process and low returns. Between this, illegal deforestation for growing ‘dirty beans’, and rising temperatures affecting yield, we might actually run out of chocolate. Not that it’s about us….

Sweet Success

(beware, the following statements may cause you to be able to eat chocolate and actually feel good about yourself…!)

Hotel Chocolat has defied high street woes with rapid store expansions and profit increases since its IPO in 2016. But what really sets it apart is the company’s disruptive approach and transparency around its mission to “democratise chocolate”. Hotel Chocolat has created its own sustainable supply chain management system through its ‘Engaged Ethics’ programme.

“You work too hard for bad chocolate. They work too hard for cheap cocoa. We’re reconnecting our love of chocolate with its roots – with the people who grow it and the natural world it comes from” 

Hotel Chocolat

Most of Hotel Chocolat’s cocoa comes from Ghana, where the company pay a premium of approximately 50% above the open market cost per tonne in order to source cocoa that meets its Engaged Ethics standards for sustainability. But let’s talk about the small (but impressive) percentage which comes from St. Lucia, used specifically for its premium Rare and Vintage range. The only company in the UK to actually grow its own cocoa, Hotel Chocolat owns a 250-year-old estate in St. Lucia where it works with over 180 farmers directly. The farmers benefit from advice and technical assistance, are provided with high quality St. Lucian Trinitario cocoa seedlings and, crucially, have a guaranteed market for their entire crop at prices above those available in the world market. St. Lucian farmers can now work with confidence, invest in their land knowing that they will see the benefits.

Hotel Chocolat thinks of chocolate much like wine, with the flavour reflecting where the beans were grown and how they were processed. They aren’t Fair Trade, and that’s ok. Whilst Fair Trade has been monumental in raising awareness of the problems farmers face in developing countries, it doesn’t work with this direct approach Hotel Chocolat has adopted in St. Lucia. Only smallholdings are eligible for Fair Trade accreditation, not company-owned plantations. It also doesn’t lend itself to the close management Hotel Chocolat want in terms of the specific beans used and the resulting flavours. Hotel Chocolat’s level of investment actually goes beyond many fair-trade agreements, but as with everything related to ESG: One size doesn’t fit all!

Oh and 95% of Hotel Chocolat’s products already meet the Public Health England targets to reduce sugar in products by 2018. The company’s “more cocoa, less sugar” philosophy, coupled with no artificial colours or flavourings, means its chocolate is as guilt-free as chocolate can be…

About the author

Georgina Laird is a sustainable investment analyst. She is responsible for analysing and monitoring environmental, social and governance factors within the Global Sustainable Equity Strategy. Georgina joined us in 2015 from Russell Investments where she was an index analyst. She joined Kames as a performance analyst before moving to the ESG Research team in 2016. Georgina has a BSc in Mathematics from Heriot-Watt University in Edinburgh. She has the IMC professional qualification and has 5 years’ industry experience*.

*As at 28 February 2018.

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