Divine Chocolate: A Fairtrade company co-owned by cocoa farmers

A Case Study in Social Enterprise

The amazing story of how small scale cocoa farmers in Ghana came to own 45% of Divine Chocolate Ltd

• A business is a legal entity that provides products or services to consumers. • Most are privately owned and exist to make money for their owners.• Businesses provide products and services that have to meet the needs of

consumers.

Let’s look at conventional business first

Divine Chocolate is a chocolate company. Making a good quality product that consumers want to buy is the starting point for everything Divine Chocolate does.

• In other words, it’s a marriage between business drive and social mission• Divine Chocolate aims to ‘walk the talk’; in other words, the brand values

reflect the business as a whole • At Divine Chocolate the farmers are shareholders too, taking social enterprise to

a new level; making a profit becomes a core element of meeting social objectives • Divine Chocolate has been a pioneer in the fair trade movement, demonstrating

how success can be achieved with an alternative model for business• Finally, Divine Chocolate is first and foremost a business that makes and sells

delicious chocolate!

So what is a Social EnterpriseOne definition is…

“A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community rather than being driven by the need

to maximise profit for shareholders and owners.” Source: UK DTI

So What is Divine’s Social Mission? Improving the lives of cocoa farmers

Divine Chocolate’s mission is to improve the livelihoods of West African cocoa farmers by creating a branded chocolate proposition that puts farmers higher up the value chain

• There are 1.4 billion smallholder farmers who support 2 billion people – nearly a third of humanity

• In Ghana domestic markets for crops such as rice and tomatoes are threatened because the EU, US, and even China, are importing their subsidised crops to Ghana

• Crops grown for foreign markets (eg cocoa) provide export earnings but the farmers often see little of the value from the end product (i.e. chocolate)

• Unfair trade is one of many factors which threatens the livelihood of small scale farmers, including cocoa farmers

Why cocoa farmers? Like other small scale farmers, cocoa farmers remain poor

Other threats to small scale farmers

Fluctuating oil pricesRising food prices

AgrofuelsClimate change

• Ghanaian cocoa farmers typically earn less than £1 each day

• Farmers have little control over the price they receive for their cocoa beans

• Wanting to gain more control, farmers pooled resources to create a co-operative of cocoa farmers, known as the Kuapa Kokoo Farmers Union

• Kuapa Kokoo means ‘good cocoa farmer’ in Twi, the language of the cocoa farmers

The Divine StoryBegins with cocoa farmers in Africa . . .

• Together the farmers of Kuapa Kokoo provide nearly 1% of world cocoa output

• Around 20% of beans are sold to Fairtrade buyers

• The Fairtrade market is not yet large enough for them to be able to sell all their beans this way

• As demand for Fairtrade products rise farmers will be able to sell more of their crop through Fairtrade channels

The Divine StoryThe Kuapa Kokoo Farmers Union

In 1997 Kuapa Kokoo made the major and innovative decision to set up a chocolate company in the UK in order to get more value from their cocoa

The Kuapa Kokoo slogan, Pa Pa Paa,

means “best of the best”

The Divine Story …Then moves to the UK where Divine is created

Divine produces and sells chocolate

sourced solely from Fairtrade cocoa

beans bought from Kuapa Kokoo

Farmers sell Fairtrade cocoa beans to Divine

Chocolate

The better Divine performs the more it can spend on improving the

supply chain, paying dividends to shareholders

and on education

The more Fairtrade beans are sold the more the

farmers income increases and the more social

premium is earned to the benefit of the community

The Divine Storyobjectives combine business drive and social mission

To make and sell delicious chocolate

• Divine aims to sell a quality and affordable range of Fairtrade chocolate bars in the mainstream market

• Competing in the mainstream market is a challenge but also gives credibility

To be a bridge between consumers and producers

• Raising awareness of fair trade issues among UK retailers and consumers of all age groups

To act as a passionate advocate for a trading system that brings dignity and respect to all its participants

• To be vocal, acting as a catalyst for change

• To be visible in the debate about fair trade

• Includes paying a Fairtrade price for all the cocoa used in products

• …VERY BIG! • A very mature and competitive market• Globally dominated by six companies • Global chocolate market worth £43 billion• Global cocoa market £5 billion• The average person in the UK eats 10kg each

year which is the highest per capita consumption in the world

• In the UK three companies share 70% of the market: Cadbury’s, Mars and Nestle

The Divine Storythe chocolate market is…

The average UK family spends

more on chocolate in a year than a cocoa farmer

earns in a year

• Partnership based• Committed to Fairtrade• Ownership

The Divine StoryHow is the Divine business model different?

The Divine product range36 Products

The Importance of Great marketingDivine does advertising with ethics

Marketing DivineEarlier Creative images

The Divine StoryMarketing – tapping into key trade events

Marketing DivineUse of Celebrity endorsement

A Story Within a StoryThe Dubble Bar … boldly going where no chocolate has gone before!In 2000, Comic Relief joined forces with Divine Chocolate Ltd to make the first Fairtrade product for young people – Dubble! Over 10 million Dubble bars have been sold and the Dubble family has also hatched an Easter egg and mini-eggs Over 50,000 young supporters of Fairtrade have signed up as Dubble Agents to change the world, chunk by chunk! www.dubble.co.uk is a source of fun and facts about Fairtrade for young people

Year Turnover Profit Sales Growth

2007/08 £12,376,340 £330,184 16%

• Profitable with good sales growth

• Able to pay dividends to shareholders

What Success looks LikeFor Divine Chocolate

But sales and profits are only one measure of success

What Success looks LikeDivine Chocolate income to kuapa kokoo

Year Fairtrade sales

Fairtrade Premium

Producer support

Shared profits

2007/08 $2,664,000 $249,750 £214,050 £47,352

• Kuapa Kokoo sold 1,665 tonnes of Fairtrade cocoa beans to Divine Chocolate in 2007/08

• Four incomes streams altogether from Divine to Kuapa Kokoo

“For us, farmer ownership always made Divine Chocolate special. For the first time our members benefit as owners of a wonderful chocolate brand, and not only as suppliers of excellent fairly traded cocoa.”Mr Ohemeng Tinyase, MD of Kuapa Kokoo Ltd until 2009

What Success looks Likefor the community – water wells

What Success looks Likefor the farmers’ children - schools

What Success looks LikeFor women - empowerment

Comfort Kumeah Chair of Farmers Trust

What Success looks Likefor the cocoa farmers themselves

Ownership in Divine

Tangible benefits for farmers

Move up value chain

Sit on the Divine Board

Part of decision-making process

Profit share

Access to capital

Intangible benefits for farmers

Pride

Respect

Status

Reputation

Inclusion

Knowledge

A ‘seat at the table’

Divine Chocolate Limited has shown that it is possible for small holder farmers from Africa to co-own a successful company in one of the most competitive and mature markets in the world

in Summary

Now its up to you. . . .Why not…• Tell your family, friends and neighbours about Divine

chocolate• Take part in the STOCK THE CHOC campaign

http://www.dubble.co.uk/stock_the_choc– Take action through the Chocolate Challenge Manifesto– Sign up to be a Dubble Agent and get on a

MISSION:POSSIBLE• Hold a chocolate tasting event with Divine chocolate• Sign a petition asking local shops to stock Fairtrade

chocolate• Estimate what you spend on chocolate each year and what

you could do with your ‘buying power’

A Decade of Divine

“With ‘Divine’ we all show that there is a way, where people from the

industrial nations and people of the non-developed countries are working

successfully hand in hand…”Corde Budde, chocolate

manufacturer

"We'd walk 500 miles for Divine -

but fortunately we can get it in our

local shop. Happy Birthday and keep up the good work“The Proclaimers

“Divine has surpassed expectations and proved a

beacon to all those working and praying for a better world…”

Daleep Mukarji,Director, Christian Aid

“I am more respected in my community and

my organization through my

involvement with Divine Chocolate…”

Comfort Kumeah, cocoa farmer