Divine Chocolate the Future of Business is Social

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This superb presentation was given by Sophi Tranchell MBE to the Business Teacher National Conference 2013 on 25 June 2013.

Sohi has kindly agreed to allow the presentation to be shared by tutor2u teachers and students.

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  • Business as usual – isn’t working The aggressive pursuit of growth and delivering narrowly defined shareholder value is unsustainable The making of money has been separated from how you are making it Shareholder value must be about more than just financial return Business hasn’t always been like this – really only the last 30 years. When the Cadbury Brothers first set up their chocolate business in England they invested in the workforce, the built houses and schools, they worked with the farmers to develop techniques to improve the quality of cocoa that they are still using today. Business like this had philanthropic principles at its core – and they took great pride in their total impact Other ways of doing business are thriving The Co-op Economy is now worth £35.6 billion (and growing faster than the overall UK economy) Employee-owned business is worth £25 billion As business people we have a choice: The world is changing – for better or for worse There is the opportunity to make your business part of the solution
  • Undaunted Divine Chocolate was established with a bold mission…..
  • It was a smart move – after all once cocoa is made into chocolate it is worth many times more than the raw cocoa. But it was a bold move in a market dominated by big global players. There were those that said “…a chocolate company owned by farmers…. It’s a great idea.. But it will never work!”
  • What makes Divine quite different is that it has an amazing story at its heart – the story of cocoa farmers who voted to start their own chocolate company
  • The story starts in Ghana in 1993 when the economy there was semi-liberalised and people could set up their own cocoa buying companies for the first time. A group of cocoa farmers got together and set up their own cocoa buying association – with the farmers’ welfare at its heart. It was called Kuapa Kokoo – or ‘good cocoa farmers’ in Twi.
  • Fairtrade ensures a guaranteed minimum price – and in addition a social premium which the farmers themselves decide how to invest. Their priorities are community improving projects such as sinking drinking water bores holes
  • Building and refurbishing schools, and incentivising teachers – to ensure their children get the best educational start in life
  • Fairtrade also encourages equal opportunities for women – delivering training, materials and credit loans giving them a number of income-generating skills allowing them to contribute to the family income and bring in money in between harvests when there is no cocoa to sell. These include making soap (from the cocoa husks), making palm oil, designing batik and tie-dye fabrics Women are also encouraged to take leading roles in their communities
  • So Divine was established as a Fairtrade company co-owned by a cooperative of 45000 farmers built on Fairtrade principles The only Fairtrade chocolate company owned by cocoa farmers For those farmers, Fairtrade delivers…. Over and above that, company ownership delivers….
  • What does ownership deliver? Firstly – additional income streams Product Support & Development = 2% of Divine turnover Hustings = voting process
  • Secondly knowledge and experience…. NB Because Kuapa Kokoo has other income streams from Divine over and above the Fairtrade income they are in a position to help fellow African cocoa farmers. They share their learning with farmers all over Africa – and particularly with a group in Sierra Leone – a country desparately in need of business and trading opportunities which benefit Sierra Leoneans – who they have helped with organisational skills and improving the quality of their cocoa. KK also approved a decision that Divine should buy their first containers of Fairtrade cocoa – so the farmers in Sierra Leone receive the price and premium for a small percentage of the cocoa in Divine Gordon Brown saw farmers for 3 consecutive years before becoming PM
  • And importantly – more power and influence in the industry they are part of…. Recognised as influential participants in Cocoa industry , invited to cocoa forums
  • Kuapa Kokoo receives four income streams from Divine….
  • Who owns who? My early interest in who owns who was sparked by the development of hybrid seeds (before GM) which don’t self-propogate and I wanted to know who would do such a thing. I looked up and found the company was wholly owned by Shell. Campaigning: Lots of time spent outside shops and garages asking people to boycott SA products Then my first real job was in the art film industry..worked my way up from bookkeeper to PR and Marketing, then running the company for the owners Distributed some great films which show people another world But I realised I wanted to do something different, something I could be really proud about, and tell my mum about, when I released this film!! (I was having to negotiate with the censors to release The Idiots – I had to promote it and defend it) A really different chocolate company Ad in the newspaper Irresistible combination Great brand, great product, + farmer-owned The chance to convert the energy of boycotting into positive purchasing
  • Lots of people said – “Oh that’s a really nice idea – but it could never work” People said you will never break in to the chocolate market – dominated by three big corporates People said you’ll never be able to pay the Fairtrade price and premium and deliver a product consumers can afford People said you’ll never be able to make a company like this work in the USA You need to access appropriate finance Farmer-ownership is fundamental to our USP and our mission so we needed to find finance that respected that and brought more than money Body Shop – Gordon Roddick vision - gave us retail reach DFID – backing - meant people took us seriously – however unlikely the proposition seemed Retailer power: Retailers own more than 50% of the chocolate market + for a small company they are hugely the most efficient way to get market – and (if you can actually get in to see them) there are huge cost barriers to getting in and doing well So we mobilised consumer support as a way of breaking into the supermarkets – we ran the stock the choc campaign with CA
  • Chocolate opens doors Amazing things are possible…. You just have to be able to imagine them!! Secured the idents on the first Celebrity Big Brother (through our partnership with Comic Relief) Working with The Co-operative we helped them be the first supermarket to change a whole category to Fairtrade – using our chocolate (NB it tripled our turnover and gave us amazing reach AND delivered great category growth for The Co-op) Joy of Collaboration As a small company it’s great to work with big companies and big brands – you get the benefit of their reputation and reach and they get the association with a delicious product and an inspiring story (sometimes – not always – it will be with brands with values in common. Last year for example we were chosen as the chocolate partner for the iconic Glastonbury festival because they liked what we stand for – a brilliant collaboration)
  • This is me last week attending the 18 th AGM of Kuapa Kokoo – sitting at the top table with the first woman President and an Ashanti chief in full ceremonial gear. Gathered there were representatives from 57 districts – in turn representing 65,000 farmer members – who last year turned over 42000 tonnes of cocoa – nearly 1% of the world’s cocoa What’s true of all entrepreneurs – you in this room, the farmers who set up this cooperative in Ghana – is the ability to innovate, take the right risks, and do it all with passion and persistence What makes a successful social entrepreneur? All of the above PLUS the rigour and discipline of good business + enjoyment of working with and bringing together very diverse groups of people + be rewarded and fulfilled by the social impact you help create, as well as the money you make from it
  • Social enterprise cannot live on good deeds alone And the social mission needs to be really well articulated so everyone gets it, is inspired by it, and wants to join in. Your mission helps you attract and retain talent. It is core to your business Seek out partners to help you grow – but where there is trust and mutual benefit
  • We are all part of something global Emerging markets – great opportunity – but needs to be approached responsibly. In the food industry we all need to be conscious that now more people dangerously overweight (1.5bn) than dangerously underweight (925m) You need to ask these fundamental questions…. How is your business making money? Who is getting the money? How is your business creating a positive legacy?
  • Divine Chocolate the Future of Business is Social

    1. 1. Owned by cocoa farmers, made for chocolate lovers The future of business is social
    2. 2. Why social enterprise now? • ‘Business as usual’ isn’t working • It’s taken a banking crisis for more people to realise • It’s unaccountable, soulless, unfulfilling • It’s driven by the blind pursuit of growth
    3. 3. • We’ve forgotten what ‘enough’ is • Now more people dangerously overweight (1.5bn) than dangerously underweight (925m) • Businesses have to take responsibility • Make your business part of the world you’d like to see enough is enough
    4. 4. Social Enterprise SOCIAL ENTERPRISE = BUSINESS DRIVEN BY SOCIAL MISSION The heart of what we do It is gives us our reason to be It makes us good at what we do It gives us our competitive edge It defines where the money goes
    5. 5. Divine Chocolate Mission Founded in 1998 to improve the lives and opportunities of small-scale cocoa farmers in West Africa by establishing a dynamic, branded fair trade chocolate marketing company in the large UK chocolate market thus putting the farmers higher up the value chain.
    6. 6. The Market • Very mature and competitive market • Dominated by 3 companies • £6.2 billion = World Cocoa Market • £49.3 billion = World Chocolate Market
    7. 7. The amazing story of the cocoa farmers who voted to start their own chocolate company
    8. 8. Kuapa Kokoo the good cocoa farmer A cooperative of Ghanaian Cocoa Farmers • Established in 1993 in response to liberalisation of the market • Set up on Fairtrade principles and democratically organised • Started with 2,000 members in 22 village societies • Now 65,000 members in 1,400 village societies • In 1997 Kuapa Kokoo farmers vote to set up their own chocolate company • In 1998, Divine Chocolate launched – the first mainstream Fairtrade chocolate company
    9. 9. Fairtrade Cocoa • Fairtrade Guarantees minimum price $2,000 per tonne • Fairtrade Social Premium $200 per tonne • Long term contracts • Guaranteed minimum health and safety conditions • Education and training • Empowerment of women • Independently audited, ISO65, 3rd party verification
    10. 10. WHAT FAIRTRADE DELIVERS
    11. 11. WHAT FAIRTRADE DELIVERS
    12. 12. WHAT FAIRTRADE DELIVERS
    13. 13. • The only Fairtrade chocolate company owned by cocoa farmers • Fairtrade delivers reliable income and funds to invest in better living and working standards • Company ownership delivers profits, knowledge and power Fairtrade and beyond
    14. 14. What ownership means for the farmers Profits • Sole supplier of cocoa • Fairtrade price for their cocoa • Additional income to invest in business development, skills, and democratic process • 45% of the company’s distributable profits • A share in the wealth they have helped create • Collateral against which to attract loans
    15. 15. Knowledge • Understanding of the cocoa industry • Firsthand experience of chocolate market • Face to face communication with UK consumers, retailers, politicians and activists • Knowledge they can share with other farmers (eg in Sierra Leone) What ownership means for the farmers
    16. 16. Power • Seats on the Divine board • Influence in the business development of Divine • Status in the cocoa industry • A voice in the chocolate market What ownership means for the farmers
    17. 17. What success looks like Kuapa Kokoo receives four income streams from Divine SIGNIFICANT BENEFITS TO FARMERS Minimum Fairtrade price Fairtrade social premium PS&D Profit dividend 2006/07 $2,272,000 $213,000 £209,500 £47,352 2007/08 $2,705,600 $253,650 £246,021 £44,602 2008/09 $2,558,400 $239,850 £235,335 £33,602 2009/10 $1,900,800 $178,200 £208,307 £25,352
    18. 18. How was it for me • Early interest in who owns who • Campaigning for social justice • Can you tell your mum? • A really different chocolate company – what’s not to like? • From boycotting to positive purchasing
    19. 19. The challenges and obstacles • All the people who say things “aren’t possible” • Access to appropriate finance • Retailer power
    20. 20. What i have learned • Chocolate opens doors • Amazing things are possible • The joy of collaboration
    21. 21. What makes a successful entrepreneur • Innovation, risk, passion, persistence • What makes a successful social entrepreneur?
    22. 22. Learning i can share • An excellent product or service and a gap in the market • Driven by a social mission – not bolted on like CSR • Pick good partners
    23. 23. What’s next? • We’re all part of something global • There are great opportunity for business, but needs to be approached responsibly • How is your business making money? • Who is getting the money? • How is your business creating a positive legacy?
    24. 24. Make it happen! • Go forth and create the new businesses of the 21st century! • Take your values into work with you • It’s not that radical to propose socially-driven business (Cadbury’s started like that a century ago) • Imagine it – and make it happen!
    25. 25. Great resources • Pa pa paa – multimedia materials & lesson plans on cocoa farming, chocolate and Fairtrade www.papapaa.org • Pa pa paa LIVE – webcasts linking Ghanaian school children in cocoa farming communities with schoolchildren here www.papapaaLIVE.org • Trading Visions – lesson plans introducing students to social enterprise http://www.tradingvisions.org/content/social-enterprise
    26. 26. Thank you!

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