Sizing the craft chocolate market

by Carla D. Martin, PhD, Executive Director of FCCI

One of the most consistent questions I’m asked as a researcher is: “Do you have any stats on the craft chocolate market?” Providing a simple answer to this question is a challenge due to the niche character of craft chocolate and specialty cacao. Specifically, the market currently lacks:

  • an industry definition of craft chocolate,
  • standards for defining specialty or fine cacao,
  • differentiation from or within the so-called premium chocolate sector,
  • data collection and verifiability on any of the above,
  • transparency into cacao and chocolate production size and specialty pricing at the level of individual companies, and
  • institutional resources to support collecting and publishing any of these statistics.

Nevertheless, by drawing some common-sense parameters around what we do know and can count, we’re able to calculate baseline numbers that provide a better understanding of the current size and scale of this segment of the cacao-chocolate industry. I’ve done the following below.

Undoubtedly some will find these metrics and the calculations underlying them unsatisfying due to the above-referenced lack of standard definitions or inevitable quibbles around cherry-picked individual cases that do not match self-prescribed values. That’s fine and to be expected. I plan to continue to refine and expand these numbers as better data becomes available over time. This is part of my own craft as an academic.

However, I insist that even with a lack of standard definitions and existing reporting, we can and must work to at least estimate the size of this market. Craft chocolate and specialty cacao exist at a disadvantage to the bulk, industrial market, as they often operate along lines less traditional to capitalist production. For example, this is a heterogeneous, polymorphous, small marketplace by design. Relying on standard supply chain metrics as defined by the large-scale industrial chocolate sector is not possible given this category’s current multiformity. With preliminary figures such as those shared in this post, we can move closer to understanding what matters most for sizing craft chocolate moving forward.

In addition, we cannot overlook the importance of these figures to responsible communication among stakeholders. Cacao producers, in particular, exist in the most precarious, resource-limited position in the supply chain, and are tasked with determining which varieties of cacao to grow, how to access a poorly-differentiated and unbalanced market, whether to invest in the adoption of certification schemes, and how to plan for their own livelihoods. They do all this while facing an overall information gap and education deficit on the specialty market and its actors. Increasingly, the cacao producers with whom I work report that they have been given misleading figures about specialty pricing and buying possibilities. They receive this misinformation “through the grapevine,” so to speak. Upon investigation, it is clear that it most often stems from craft chocolate industry stakeholders who, with excitement and interest in promoting this specialty category, have been known to pass along casual, uninformed, and plainly inflated statistics at salons, festivals, or farm visits, as well as in print and digital communications. While perhaps this is not surprising – modern capitalist business production relies on size and quantity metrics and notions of continuous growth and aggregation to determine value – it stands opposite to many of the values expressed by those involved in craft production. It is also unethical, as the spread of misstatements on the size of the market can result in cacao producers making decisions based on falsehoods rather than the critical information necessary to ensure their self-determined success.

For readers of this post, I encourage you to engage with the figures stated here actively, to interrogate them, and to contribute to improving them over time. Most of all, I ask that if you use these figures to educate or communicate with other supply chain stakeholders, that you present them critically and contextually, with a sense of the accountability that comes with providing information to others that will potentially impact their life decisions. I do not publish these figures lightly, but rather base them on years of information gathered through field research, interviews, participant observation, close reading of primary and secondary sources, and empirical data collection. Likewise, I ask that when discussing these numbers, you cite this post as the source (more on how to do that below), so that people can read and think for themselves as they consider this information.

Getting theoretical: what is craft chocolate?

At the simplest level of explanation, bean to bar chocolate makers or manufacturers transform cacao beans into finished chocolate products in-house. This is different than the work done by chocolatiers, who transform chocolate from another manufacturer into different finished products like truffles, bonbons, barks, or bars. The Fine Chocolate Industry Association glossary provides the following brief definitions:

Chocolate maker: This term usually refers to those companies that produce chocolate in small batches from fermented and dried specialty cacao. [Note: the term craft is often used along with the term chocolate maker, but not always.]

Chocolate manufacturer: This term usually refers to those large companies that produce a broad range of mass market and/or specialty chocolate from dried cocoa beans.

Debates on the meaning of craft, bean to bar chocolate making and manufacturing are common in the industry. While societies have long debated the definition of craft, this particular debate appears to be a relatively new historical phenomenon: Bernachon’s small-scale chocolate production began in the 1950s, companies like Bonnat and Valrhona have been exploring single-origin chocolate production since the 1980s, North American small-batch, single-origin processing began in the 1990s with Scharffen Berger (now owned by Hershey’s), and individuals and companies who have been called/are calling themselves craft chocolate makers have been growing in number for over a decade. This market niche is actively working out its value system. Recent years have seen attempts to create a (now-defunct) Craft Chocolate Makers of America group, a (three company-drafted) Craft Chocolate Manifesto, and many published lists of craft chocolate companies as variably defined by retailers, bloggers, journalists, and other industry players. Actors in this space have often prioritized chocolate made from the bean, small processing capacity (for example, less than 200 metric tons of cacao per year), primary business ownership by involved craftspeople rather than outside investors, and batch production that avoids homogenization of flavor and standardization of product lines. Beyond this, craft chocolate makers also often claim to value skilled production by an artisan, participation in a heritage revival or type of vintage re-pioneering, and the development of a market segment that resists the type of capitalist production that distances producers and consumers. Despite these trends, much of the above is flexibly interpreted by companies claiming to engage in craft chocolate production.

My own thoughts on the definition of craft are highly informed by economic, political, and cultural theories of value. As an anthropologist, I try to understand how human beings make meaning out of their labor and how they effectively produce their world together. Craft is a term used in this loosely bounded chocolate community with conflicting meaning and great flexibility, most frequently without full acknowledgement of its inextricable link to the work of people of color, and especially women. For more on this, see Critical Craft: Technology, Globalization, and Capitalism. Concerns about cooptation of the terms “craft” or “bean to bar” are rife, and given the wide variety of claims posited by actors in the craft chocolate space, it is also possible at present to identify craft chocolate as a category that results from individuals who see it in this way, who designate their labor as craft, and who are part of communities that claim the celebration of craft as their own.

Put differently, the notion of craft chocolate reflects a diverse group of people’s value systems and relationship to materials, other people, and the economy. By claiming that what they do is “craft,” people are saying “this is who we are” and “this is what we value.” They are organizing their lives – work, production, consumption – around the pursuit or furtherance of their desires. Contemporary notions of craft are as much about cosmopolitanism, power, and identity as they are about artisan skill and craftsmanship in the immediate sense. This can be a social force: as groups of people make their worlds collectively in this way, they can enact change, and that change can have elements of the revolutionary. Some individuals and companies that identify as part of the craft chocolate movement commit publicly to paying prices substantially above bulk commodity for cacao, building long-term, direct relationships with cacao producers, providing unprecedented transparency into their sourcing practices, actively focusing on artisan skill and fine flavor in chocolate production, and educating consumers about the supply chain and value.

Too often, however, actors in the chocolate industry neglect to fully recognize the labor and equality of the producers who craft the cacao that becomes chocolate. These actors are thus mutually recreating the inequality of which the cacao-chocolate supply chain was born. That, to me, is the urgent structural problem that needs addressing in this specialty category as much as in the industrial, bulk category, and thus it is the ethical imperative that drives the bulk of my work. More to come on all of the above in the future.

Number of chocolate makers and manufacturers working with specialty cacao

The cacao-chocolate industry currently tends to differentiate between craft chocolate makers and industrial chocolate manufacturers based on production size and scale. But size is just one part of the complex equation of craft value described above and therefore an inadequate sole measure for our purposes. In fact, it is important to acknowledge that the application of business and success metrics derived from large-scale industrial chocolate production might never be a good fit for the craft sector.

Given that there is not yet a clear definition of what production metrics matter most to this niche market segment, and that many companies are actively seeking to grow larger while continuing to employ the term craft to describe themselves, I sidestep the question of defining craft altogether. Of greater interest for this particular discussion, and for the cacao producers that are part of it, is the number of chocolate makers and manufacturers that choose to purchase specialty cacao at a price premium. While there is not (yet, though we at FCCI are working on it) an agreed-upon industry standard for specialty cacao, it is reasonable to define it for the purposes of this post as:

Specialty cacao: cacao produced with craftsmanship and intention toward the sales goal of receiving a premium above the bulk commodity market price. Specialty cacao production is based on a notion of quality that is linked to lack of defects and the presence of fine flavor and aroma(s).

For the purposes of this post and a first attempt to size this niche market segment with verifiable data, I have also defined the following:

Specialty chocolate maker: a bean to bar chocolate maker working with mostly specialty cacao and using less than or equal to 200 metric tons of cacao annually.

Specialty chocolate manufacturer: a bean to bar chocolate manufacturer working with mostly specialty cacao and using more than 200 metric tons of cacao annually.

To find chocolate companies that qualify as specialty chocolate makers or specialty chocolate manufacturers (meaning that they are focused on purchasing specialty cacao at a price premium), I have investigated whether a company is working from bean to bar in-house, whether it is using cacao from identifiable sources known to be sold for premium specialty prices, and whether its finished chocolate products are currently available for purchase. Within the group of qualified companies, there remains great variety in how they approach organoleptic evaluation of cacao, and privilege genetics, environmental factors, and farm management at origin. The wide-ranging price premiums that they pay for cacao thus include both tangible (e.g. flavor, variety) and sometimes intangible (e.g. sustainability certification, environmental protection, development potential) factors. Significantly, the thing that they most share in common is a claim that they actively seek to differentiate their end product by claiming superior flavor experience. This superiority is typically described as resulting from a combination of the quality of raw materials and chocolate production. (Whether these companies successfully achieve such flavor superiority is another matter best left for a later discussion.)

Following these criteria, there are around 480 specialty chocolate makers and manufacturers worldwide. Geographically, this breaks down as follows:

  • the United States: 192
  • Canada: 34
  • Europe: 92
  • Asia and Australia: 57
  • Africa: 6
  • Mexico, South America, and the Caribbean: 100
  • Total: 481

Keep in mind that tracking the companies in this category is difficult, and there is certainly some limited number that will have been missed. These figures are therefore best understood as estimates.

If, for the sake of argument, we designate companies in this segment that are processing more than 200 metric tons of specialty cacao per year as chocolate manufacturers (not chocolate makers), there are approximately 30 specialty chocolate manufacturers transparently working with specialty cacao around the world. That would then mean that smaller companies, the specialty chocolate makers, total approximately 450 globally, with variation in production size from less than one metric ton up to at most 200 metric tons of cacao per year. Given the current state of data available in this category, it is not yet possible to adequately distinguish among companies using a mix of specialty and bulk cacao, another reason that these figures should be understood as estimates.

Business size of chocolate makers and manufacturers working with specialty cacao in North America

The largest concentration of chocolate makers and manufacturers working with specialty cacao is in North America (here defined as the United States and Canada). This is a market segment typified by micro-businesses with single digit numbers of employees, with a low number of small businesses (10-99 employees), and a very small number (about a dozen globally) that would qualify as medium-size businesses (with 100-999 employees). Of the 226 North American specialty chocolate makers and manufacturers, approximately 40 have more than 5 employees and 62 have their own retail space.

Note that, beyond these 226 existing businesses, an additional 26 businesses have closed their doors since 2010. Technically speaking, this represents a relatively low failure rate for businesses in general and especially those in the food category, but given the young age of many of these companies only time will tell whether this failure rate remains low. For instance, it is not yet possible to accurately differentiate chocolate makers that are profitable and sustainable from those that are not.

In the context of chocolate and confectionery manufacturing more broadly, the United States Small Business Administration standards define any company working from cacao beans with 1,250 or fewer employees as a small business. To the best of my knowledge, none of the businesses that make up the data points I am considering here would qualify as large enterprises with a greater number of employees and annual revenue over $1 billion.

Production of specialty cacao

Of course, without specialty cacao producers, the craft chocolate sector would be something else entirely. Working within a number of constraints, we can also calculate some basic metrics related to the scale of the specialty cacao market.

The International Cocoa Organization (ICCO) Ad Hoc Panel on Fine or Flavour Cocoa publishes a list of countries that export “fine and flavour” cocoa, with estimates of the share of total exports that can be classified as fine and flavour cocoa. These percentages are largely unverifiable due to a lack of transparent data collection and, per my own ethnographic inquiry and forthcoming agricultural economic research from the Cacao para la Paz research team, are likely large overestimates in most cases.

At the last meeting of the panel in September 2015, the above recommendations were made, and subsequently approved by the International Cocoa Council at a meeting in May 2016.

In addition, the International Cocoa Organization (ICCO) tracks some data on cacao production and potential for price premiums. The statistics below were cited by Executive Director Jean-Marc Anga at the Foro Cacao in Nicaragua in November 2015. They show that production of cacao that is fine/specialty (not following a standard definition) made up roughly 6% of annual global production. The pricing numbers would likely look different this year given the structural surplus in cacao production, especially bulk cacao from West Africa, and the striking drop in cacao prices on the commodity (bulk) market, which has ricocheted throughout many specialty operations as well. Like the percentages from the Ad Hoc panel above, these figures are difficult to verify. In addition, the framing of these figures – currently the only “officially” collected about specialty cacao – neglects entirely the intention in raw material craftsmanship by cacao producers. If we are to recognize the crafting of chocolate, then should we not equally value the craftwork of cacao producers, and thus frame our inquiries around specialty cacao to include data beyond annual production and potential market price?

ICCO data 2015:

Cacao type Annual production (tonnes) Market price (USD/tonne)
Ultrapremium fine 12,000 5,000 – 10,000+
Fine 230,000 3,700 – 5,000
Bulk certified 600,000 3,100 – 3,700
Bulk 3,200,000 3,000 – 3,500

Use of specialty cacao by chocolate makers and manufacturers

Approximately 210 chocolate makers in the United States and Canada (processing at most 200 metric tons of cacao per year) use specialty cacao. Based on the data that I have gathered and cautious estimation, it is possible to estimate that these 210 companies use roughly 1,000 metric tons of specialty cacao per year collectively. Half of the total cacao being used is in the top 10% of this group – in other words, about 20 of these small companies use 500 of those tons; the other 190 use the other 500. The vast majority of the medium-sized companies in this space do not yet publish how much cacao they purchase per year, so I have refrained from estimating their volume here. One can reasonably imagine that the amount of cacao used by these companies adds up to thousands of tons per year, not necessarily all of it qualifying as specialty, and that there will be similar concentration with a small number of companies buying the largest percentage of the cacao. By extension, this means that the vast majority of the specialty cacao being purchased (per the numbers in the chart above) is being used by large companies that do not necessarily identify themselves as focused on specialty, and certainly not on craft. It is possible also that some of these companies might not be paying price premiums for cacao produced as specialty, meaning that there could be a substantial gap between specialty cacao production and sales, as has been well documented elsewhere in relation to certified cacao.

Number of specialty cacao production operations

Based on the data that I have collected so far, there are around 50 specialty cacao production operations serving the craft chocolate market globally, though this figure will vary depending on how it is measured. At present, I have collected data on those specialty cacao operations that aim to distinguish themselves along the tangible and intangible lines detailed above, and that provide at least enough transparency into their operations that one can determine through research that they sell cacao for quality premiums above the bulk commodity market price to chocolate makers and manufacturers.

These specialty cacao production operations break down along the following farming model lines:

  • private estates or research farms: 18
  • farmer-led cooperatives or associations: 9
  • contract farming/outgrower schemes (for those unfamiliar with this terminology, consult chapter 3 here): 25
  • Total: 52

Put another way, this means that, of specialty cacao production operations:

  • 50% are contract farming/outgrower schemes,
  • 35% are private estates or research farms, and
  • 15% are farmer-led cooperatives or associations.

Beyond this, surveying the field shows that the vast majority of specialty cacao producers are based in Latin America and the Caribbean. There are a few specialty cacao production operations in Asia and Africa (though the world’s largest cacao producers – Ghana, Cote d’Ivoire, Nigeria, and Cameroon – are so rarely represented in this market as to be virtually absent from it) and even fewer in Hawai’i.

The most popular origins are, in rough order of volume of cacao used by the specialty chocolate makers considered here:

  • Madagascar, by a significant margin (from Åkesson’s Estate specifically)
  • Dominican Republic
  • Peru
  • Ecuador
  • Bolivia
  • Belize

Other origins have smaller, still noticeable representations, including but not limited to: Guatemala, Venezuela, Tanzania, Papua New Guinea, Trinidad, Haiti, Philippines, Costa Rica, Congo, Colombia, Brazil, Nicaragua, Vietnam, Mexico, and Honduras. (Stay tuned for a forthcoming publication from Ryan Galt’s team at UC Davis for more on what they’ve found regarding the popularity of craft origins.) At present, it is very difficult to track the size of specialty cacao operations, a further indication of the inequality that shapes the supply chain. Ideally, I would like to be able to provide business size information on number of farmers, laborers, production size, and operation sustainability for the specialty cacao producers represented in this section. In order to do this, further transparency, reporting, research, and recognition of the craft value of farming work is necessary.

Sustainability standards and transparency in the specialty sector

When it comes to sustainability standards and transparency in the specialty sector, there is very little in the way of certifications. For example, if one compares the amount of cacao that is designated as fine production by the ICCO to the amount of cacao that is sold as certified in the relevant countries, it becomes clear that the amount of specialty cacao that is likely to also have a certification is very low. The sources of specialty cacao that are most likely to also have a sustainability certification are Peru, Mexico, Dominican Republic, Indonesia, Ecuador, Congo, Belize, and Tanzania, though the likelihood of cacao receiving specialty premiums linked to quality and also having a certification remains low in most of these cases. In this pool of countries, the most likely certification is organic, followed by Fair Trade USA, then Rainforest Alliance (now merging with UTZ) and Fair for Life. Beyond this, a small but notable amount of cacao (233 tons in 2016) is third-party, direct trade certified via the Taza Chocolate Direct Trade program.

There is variety among a small number of chocolate companies in this space in how they approach communication around sustainability and transparency. Theo Chocolate publishes a pricing matrix on its website. Taza Chocolate and Uncommon Cacao publish annual transparency reports. Dandelion Chocolate publishes a yearly sourcing report. Madécasse Chocolate recently published its first impact report. Askinosie Chocolate practices self-defined direct trade with profit-sharing and philanthropic projects. Ingemann Cocoa ID provides a searchable lot identity sheet for its cacao. Guittard Chocolate and Felchlin detail their sustainability values on their websites; Equal Exchange and TCHO collaborate directly with small farmer co-operatives on a USAID grant project. Valrhona has a Corporate Social Responsibility plan. Zotter Chocolate champions the use of certified cacao. Rogue Chocolatier recently published farm gate price for cacao and more in a chocolate bar package insert.

In the small, specialty chocolate maker category, there is some transparent trade, but in general the information about amount of specialty cacao purchased and price paid for that cacao provided by individual companies is minimal, and the burden thus falls to producers, consumers, or researchers to seek it out for themselves, an often impossible task. More often than not, companies in this space rely on relationships and/or annual visits to producers, complex notions of trust, and a “take our word for it” approach to ethics and sustainability. Given the fact that voluntary sustainability standards have now become mainstream in the chocolate industry, the specialty cacao and chocolate market faces a serious issue moving forward: it must prove that any claims made about sustainability, farmer livelihood, and more are evidence-based and that its ethics and value proposition is at least equivalent or even superior to that of the large-scale industrial chocolate manufacturers in the private sector. At present, leaving aside their often good faith intentions, self-identified craft chocolate and specialty cacao companies make many unverifiable claims. Even more, it is not uncommon to encounter the dangerous idea that quality of chocolate is directly linked with quality of life of cacao producers. That a cacao sample is of superior quality does not imply that those who produced it have better lives. Flavor is insufficient evidence.

Next steps

If you would like to explore some of the companies that make up the data for this post, check out the FCCI specialty cacao and chocolate map and spreadsheet, which will allow you to do some of your own research and calculating. This is the most comprehensive database of its kind, a volunteer-driven work in progress as the industry develops and further research is conducted.

Likewise, if you would like to comment on this post or contribute to future developments in the research, please reach out to FCCI at contact [at] chocolateinstitute [dot] org and someone from our team will respond to you as soon as possible. We look forward to hearing from and collaborating with you as we conduct further work in this area.

Cacao producers can continue to invest in improving the quality of their crops and the sustainability of their farming practices. Distributors can continue to increase transparency into cacao production and purchasing. Specialty chocolate makers and manufacturers can continue to push the envelope on what is possible by creating sustainable small business plans, encouraging consumption of a different type and higher level of quality of chocolate, being price flexible on cacao purchases, and resource- and profit-sharing with cacao producers. Retail outlets that focus on curating craft and fine chocolate (also listed on the map referenced above) can continue to present useful opportunities for consumers to learn and explore the vibrant options available to them. Awards systems can continue to refine their judging systems and communication about product value. Consumers can seek out better products where or when information is available. But all stakeholders should be mindful of the fact that marketing is not education and that voting with dollars or taste buds, while it certainly matters, is a highly individual act that does not automatically build the collective action necessary to change long-entrenched supply chain inequality.

The question remains: is the specialty market fundamentally transformative of the cacao-chocolate supply chain? Craftwork can and should be a source of economic and cultural value for producers from farm to factory. The overall deflated price of cacao, the figures above, and my ethnographic research into the financial struggles that actors in the craft/specialty sector face indicate that there is much left to be desired in this niche market. The fact that people find producing and consuming craftwork meaningful is not enough. People must also be liberated and able to live in a self-determined manner. It is likewise important to understand that we cannot rely on the market to reform the market. For that, what we need most is activism for social change: public denunciations of the power imbalances that define the cacao-chocolate market, clear institution building toward the goal of equality throughout the supply chain, and fighting for policies that undo the profits made off of structural inequality. Will specialty cacao and chocolate play a significant role in organizing toward these goals? We shall see.

Acknowledgments
I am grateful to colleagues who provided invaluable feedback on early versions of my thinking and/or drafts of this post: Summer Allen, Trevor Bass, Amanda Berlan, José David Contreras Monjarás, Chloe Doutre Roussel, Colin Gasko, Maria Fernanda di Giacobbe, Peter Giuliano, Charles Kerchner, Kraig Kraft, Nate Kostelnik, Cristina Liberati, José López Ganem, Mark Lundy, Adriana Reis Ferreira, Anthony Rue, Kathryn Sampeck, and Sunita de Tourreil. Special recognition is due to Irene Sotiropoulou, whose generous comments on heterodox economic analysis influenced my writing profoundly. Any errors herein are my own.

How to cite
Martin, Carla, “Sizing the craft chocolate market,” Fine Cacao and Chocolate Institute (blog), August 31, 2017, https://chocolateinstitute.org/blog/sizing-the-craft-chocolate-market/.

Copyright

This document is copyrighted under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (http://creativecommons.org/licenses/by-nc-nd/4.0/).