Blueprint 4 – Switzerland’s dependence on West Africa’s cocoaAlejandro Litovsky
Switzerland’s dependence on West Africa’s cocoa
The taste for chocolate in emerging markets will continue to increase the global demand for cocoa. However, supply shortages of this pressured commodity are expected as early as 2020. Ghana and Côte d’Ivoire are the world’s largest producers of cocoa, providing 60% of global supplies. Yet most of the hundreds of thousands of smallholder farmers supplying the world’s cocoa have never tasted a bar of chocolate and live in poverty under worsening environmental conditions.
Switzerland is a global commodities hub with Swiss chocolate at the heart of its international brand. Multinationals headquartered in or operating out of the country are leaders in the $9 billion global cocoa industry. Despite its perception of being a largely self-sufficient country, Switzerland imports over half of its grain commodities. The water used to irrigate these crops in producing countries is ‘virtually exported’ to Switzerland. Most of the country’s water footprint lies outside its borders. 16% of Switzerland’s total virtual water imported is embedded in cocoa imports.
Ghana and Côte d’Ivoire are Switzerland’s top cocoa suppliers; both face production bottlenecks that threaten cocoa exports in the coming years. Swiss-based multinationals must go beyond traditional development and CSR approaches to think more creatively about business model innovations that will help smallholder farmers capture more value from the global chocolate market.
Strategic Opportunity 1
The Swiss government
As an international commodity hub with an interest in its impacts on global sustainability, Switzerland has the opportunity to orient its commodities sector policies and development to help stimulate an innovative response from Swiss companies. Building the capacity of smallholders in Ghana and Côte d’Ivoire must also enable them to capture enough value from global chocolate market so as to remain its sustainable suppliers.
Strategic Opportunity 2
Multinationals in Switzerland’s chocolate industry
To lead a response to the supply shortage challenge by orienting innovations in the business models of big chocolate brands and give farmers in Ghana and Côte d’Ivoire a bigger stake in market value creation. As established chocolate brands position their growth in emerging markets they must provide farmers with a more attractive stake in their long-term success.
Development conditions in producer countries to constrain cocoa supplies
The combination of resource, demographic and governance pressures in Ghana and Côte d’Ivoire will induce a shortage of global cocoa supplies as early as 2020. Business model innovations by large companies in the chocolate market must help farmers to capture the value of the global market in order to unlock the development, citizenship and environmental outcomes that are needed.
Switzerland’s external dependence
Over 80% of Switzerland’s water footprint lies outside the country as its imports of cotton, livestock products and grains carry the embedded water of sourcing countries where they were irrigated, 16% is attributed to cocoa imports. Ghana and Côte d’Ivoire contribute the most significant embedded water in total cocoa imports.
“We’d like to be the Cadbury’s of the future.”
Sophi Tranchell Managing Director, Divine Chocolate Ltd.