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Have an Ethical Xmas – the Tale of Boxed Chocolates

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December 4th, 2016

When the Christmas lights in London’s Oxford Street are switched on, it’s beginning to look a lot like Christmas, as the Great Johnny Mathis once sang. Over the next month, people who celebrate Christmas for religious reason, family gatherings – or perhaps they simply want to enjoy the festive atmosphere – will be looking for ideas to decorate the house, prepare a celebratory dining experience, and, of course, buy presents. While some will be planning to have a traditional Christmas, the more modern, forward-thinking man, woman or child may want to infuse ethical living concepts into their festivities. In Western Europe, there are plenty of products carrying ethical labels, from sustainable chocolates to Forest Stewardship Council (FSC) Christmas cards, trees and wrapping paper; from organic fresh meat to drinks with protected designation of origin (PDO). This piece focuses on boxed chocolates and emerging trends in ethical labelling.

The story of Lindt and Ferrero

For grocery retailers, Christmas-themed, festive food and beverages are given priority shelf-space during this season and boxed chocolates remain a favourite gift item, prominently on display. In many Western European countries, sales of boxed chocolates peak at Christmas, and a growing number now carry ethical labels. In Germany, for example, retail sales of boxed chocolates bearing at least one ethical label reached US$1.4 billion, and US$1.3 billion in the UK, in 2015.

Merci (Storck KG, August), Lindt (Chocoladefabriken Lindt & Sprüngli AG), Ferrero Rocher and Mon Chéri (Ferrero Group) are amongst the most popular brands in Germany. Consumers may not be aware that their favourite boxed chocolate brands are sometimes linked to third party certification or in-house sustainable development programmes. Thus far, there is no conclusive data to show that corporate engagement in sustainable agriculture practice and participation in programmes to care for the planet help generate sales ofboxed chocolates, but it is becoming a common practice for industry players to run their in-house programmes or co-operate with third party schemes to demonstrate their commitment. Chocolate makers realise that sustainable supply of their key commodity – cocoa – is crucial to business sustainability and spend millions on sustaining these programmes before they even start selling the actual chocolates.

In its corporate social responsibility report, Lindt & Sprüngli states that the cornerstone of its sustainable raw material sourcing strategy is the Lindt & Sprüngli Farming Program, which aims to trace ingredients back to their origin and support farmers according to their specific needs. The company sources 100% of its West African cocoa bean supply from Ghana because of the high quality of cocoa beans in the region. Like other multinationals, Ferrero has a comprehensive corporate social responsibility report (CSR). In the 2015 CSR report, Ferrero has a specific chapter for its commitments towards the planet, stating that by 2020, its cocoa and sugar cane will be 100% certified as sustainable; since January 2015, 100% palm oil was RSOP certified. Similarly to Nestlé, Ferrero has a versatile sustainability strategy, with three pillars: Development of projects and partnership (such as GeoTraceability), adoption of certificates and standards (such as the Rainforest Alliance), institutional and collective engagement (such as the World Cocoa Foundation). For cocoa, the company is sourcing sustainable raw material with the following certification standards: UTZ Certified, Rainforest Alliance Certified and Fairtrade.

It is noted that different countries may see the presence of different certifications. Our Ethical Labels database shows that UTZ certification is widely used in boxed and seasonal chocolates in Germany, the UK and Netherlands while the Fairtrade mark is prominent in Sweden. The questions as to which country and which brands should be best linked to specific schemes or certification is a complex issue and we will discuss this in later opinion pieces.

One chocolate, two ethical labelling approaches

Emerging markets show a mixed picture in terms of certification and labels indicating sustainability credentials. In China, retail sales of boxed chocolates totalled US$1.4 billion in 2015, according to our Packaged Food database; however, sales of brands carrying at least one ethical label were around US$60 million based on our Ethical Labels database, showing the current underdeveloped stage of the Chinese third-party certification industry. The top three brands – Galaxy/Dove (owned by Mars), Ferrero Rocher and Hershey’s – jointly account for around 70% of boxed chocolate sales in China, showing a highly consolidated boxed chocolate market. The labelling of these brands can potentially influence the practice of multinational counterparts and local players.

This can also mean that global brand owners are flexible in ethical labelling their international brands for different countries or regions, depending on the local business environment and regulatory framework. For countries like China, where cocoa sustainability and sustainable packaging are of little interest to consumers, it is possible that the same international brands here may be given different sustainable labelling than in the West. For example, Mars’s Dove boxed chocolates brand is labelled differently in Germany to China. In Germany, Dove is packaged in paper-based packaging type, labelled “Can be Recycled”; in China, Dove is packaged in rigid plastic with no recycling information on the label. Fewer labelling efforts also help reduce costs, thus saving money in production.

Encouragingly, urban Chinese consumers have adopted the Western tradition of giving boxed chocolates as Christmas presents, and the potential for future growth is substantial both in terms of rising consumption levels and for ethical labelling, the latter fuelled by rising interest in green living, ethical awareness and transparency in the food supply chain. In the long run, multinationals may need to look to upgrade their ethical labelling for the Chinese market, as consumer awareness and the regulatory progress lean towards the West.

Christmas is not only about indulgence and a restful holiday period; this example of the ethical story behind boxed chocolates in different countries tells of manufacturers’ massive responsibility to care for the planet, the farming community and the environmental impact and some of the different approaches towards these issues in different markets. International brand owners are not waiting until every single chocolate lover starts to fully appreciate the resources they spend on sustainable sourcing; they are making extensive efforts to run their initiatives, and these efforts in sustainable sourcing should be celebrated and applauded. But it will take time for them to standardise their ethical labelling efforts in both developed and developing markets.

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