A Love Affair? How America’s Insatiable Appetite Is Inspiring Innovation In The Chocolate Sector

A decade ago the forecast was dire for America’s favorite sweet. The headlines came in hot: “Climate Change Could Melt Chocolate Production,” and “Cocoa Shortage Could Send Chocolate Prices Soaring.” The world’s top cocoa manufacturers rushed to address cocoa productivity, and cacao has made productivity gains in regions like Ecuador.

While these predictions did not materialize and a cocoa glut appeared on the market, challenges still abound. By 2050, researchers predict that 90% of West Africa’s cacao growing country will become unsuitable for the crop. Today around 60% of the world’s cacao comes from West Africa, and the region is impacted by climate change, poverty, and aging cocoa trees.

At the same time, Americans have an insatiable love affair with chocolate; it outsells non-chocolate candy by 2x and reached a record $29 billion in sales.

Both start ups and multi billion dollar food giants are looking at novel trading and technological techniques to find more socially just and environmentally sustainable ways to enjoy our nation’s favorite treat. Just in time for Valentine’s Day, here is a roundup of the top innovations in cacao.

Rethinking the Specialty Cacao Trade

The majority of the world’s cocoa is traded on the commodity market. This has historically driven deep poverty and environmental destruction, due to low prices. Despite years of multi-billion dollar commitments by the chocolate industry, there is little to no transparency around how much money makes it back to farmers, and poverty persists.

Only a portion of the commodity price makes it back to farmers. Emily Stone, the founder of Uncommon Cacao, shares, “Most farmers earn 20-40% under the world market price, even when they’re selling dried cacao.”

Uncommon Cacao is a cocoa trader that was founded in 2010 to help emerging specialty chocolate brands source high-quality cacao.  Uncommon Cacao pioneered the concept of Transparent Trade for the cocoa industry.

Stone explains, “Transparent Trade is verifiable, published pricing for every transaction related to a cacao purchase along the value chain, including information about who produced the cacao and where. This means we do business differently than essentially any other trader out there; we publish all of the prices and margins across our value chain.”

This is resulting in higher farm-gate prices for farmers, and long-term trading relationships with brands such as TCHO and Taza Chocolate. Uncommon Cacao works with 5,000 farmers in 12 countries and supplies cocoa beans to chocolate companies to process into chocolate.

Inaru Cacao goes a step further as trader, processor, and chocolate maker. Inaru Cacao is a a vertically integrated premium chocolate brand in the Dominican Republic. Janett and Erika Liriano, the founders of Inaru Cacao, found in their research that the farm-gate price was not reaching cocoa farmers at all.

Inaru’s model is unique. They directly contract with farmers, and they share 3% of their profits with farmers. The duo works with nonprofit Terra Genesis International to transition farmers to regenerative farming. They process cacao in country to reduce carbon impact and keep profits local.

Tony’s Chocoloney Drives Change in the Mainstream

Tony’s Chocoloney was founded in 2005 with the goal of a 100% slave-free supply chain. This €100 million business buys cocoa from West Africa, where the majority of the world’s cocoa is grown.  The company leans in on the most rampant issue in West African supply chains – poverty and child labor.

Chief Operating Officer Pascal Baltussen shares, “If we simply ignore the problems in West Africa, or switch sourcing away from this region, we will never solve the issue, which is why we go to where the problems are. These are the regions where the issues in cocoa – poverty, child labor, deforestation – are the most prevalent. We could have chosen to source our cocoa elsewhere, but we chose to source here, for this reason. To be able to bring structural change to the sector.”

The company recently reported instances of child-labor in their supply chain. According to the University of Chicago, 45% of children living in cocoa growing regions were involved in child labor. In the Tony’s Chocoloney supply chain, an independent report verified by PwC and the ICI showed that the rate dropped to 3.9%. The company pays farmers a living income and has implemented Child Labor Monitoring and Remediation Systems in the cooperatives with which it partners. It is one of the few examples of full supply chain traceability linked to child labor reporting in the cocoa industry.

Their goal is industry wide change, and their sourcing principals are open source, meaning anyone can use them. The result? Now 22% of chocolate bars on shelf in the Netherlands adhere to the Tony’s standard.

Growing Cocoa in New Jersey

Cocoa is traditionally grown the equatorial belt around the world, 10 degrees north and south of the equator. Late last year, Cargill and AeroFarms announced a partnership to grow cacao indoors in a greenhouse facility in New Jersey.

According to Niels Boetje, managing director Cargill Cocoa Europe, the initiative will, “research ways in which to improve cocoa bean yields and develop more climate-resilient farming practices.” He says that the company is the first to research cocoa in a fully controlled environment.

The purpose of is twofold – conduct controlled-environment research to better understand plant genetics and traits that could lead to more resilient cacao trees, and to develop a supply chain that can potentially supplement cacao production in niche markets.

Boetje shares, “This is a bold experiment, but one that we believe could yield new insights into optimal cocoa production, leading to faster tree growth and higher yields, as well as speed the development of varieties with enhanced disease and insect resistance or even help unlock the cocoa bean’s full flavor and color potential.”

Chocolate Without the Cocoa Beans

Fermentation technologies have been around for a millennia (beer, anyone?), but have met new applications, from the production of imitation meat and seafood to baby formula.

Enter chocolate. Germany-based QOA is using a developed a strain of microbes to mimic the raw ingredient of chocolate. Their aim is to become the ‘Oatly of Chocolate.’ Founder Nils Knoop says, “QOA has developed a precision fermentation platform comparable to how beer is brewed. Instead of cacao, we ferment regional, natural byproducts from food processes to create the same taste and texture we all love about chocolate.”

The company closed a $6 million funding round in late 2021. The founders aim to have their first cocoa free chocolate on retail shelves by next year, and their goal is to, “replace chocolate with QOA in mass-market products around the world by 2035.”

CA Cultured is also aiming to replace the bean, but with a different technology. The company makes cell-cultured chocolate using the stem cells from plants, one which founder Alan Perlstein calls, “a cross between clean meat and vertical agriculture.”  They are focusing on the lucrative cocoa flavanol industry, a compound that is naturally occurring in cacao and said to have a multitude of health benefits.

These technologies have yet to demonstrate commercial scalability and viability.

Expanding Home Grown Innovations

What is markedly missing this round up of chocolate innovations are those that are home-grown, or originating from the countries where cocoa has been domesticated for over 5,000 years.

Janett and Erika Liriano, the sisters who founded Inaru Cacao, share, “We started Inaru because we really believed that it was incredibly important for us to bring our skills and knowledge to an industry and country that we felt would benefit greatly from our mindset and skill set. Our parents always made sure that we understood that what slows the progress of a country, but especially the Dominican Republic, was not the lack of natural resources or ingenuity, but a lack of young people willing to come back and being what they learned to the country to innovate. We felt really called to return to our parents’ birthplace to really return the value that we received from being from such a rich culture.”