COVID-19 Spreading Its Tentacles Into West Africa; Could Chocolate Farmers Be Their Next Casualty?

Long lines at grocery stores for customers worried about looming lockdowns

The COVID-19 pandemic has had a devastating global impact with lockdowns being the order of the day. Naturally, there was panic induced buying amongst customers for items deemed to be essentials. While chocolate can hardly be considered essential, it may well be for those with an incessant sugar craving. In the first few months of 2020, customers rushed to grocery stores to stockpile food because economic uncertainty had become the norm and not the exception. Chocolate is a comfort food and a source of indulgence that customers, regardless of age, ethnicity, gender, and other demographics can largely agree upon. So will the COVID-19 virus lead to misery in the global chocolate market?

Cacao industry skirting around event cancellations through online shift

Consumption patterns have already begun to change on account of a near-certain recession we are barrelling towards. Stockpiling has led to moderate growth of lower-priced and private label items, and this includes the chocolate market. Simultaneously, lockdowns kept consumers away from high-end and seasonal products. Easter, one of the biggest gift-giving holidays, was quite disappointing in terms of sales figures, especially in key markets such as Belgium and France. It is widely anticipated that small and craft chocolatiers will bear the maximum brunt of COVID-19. In a recent survey, the Fine Cacao and Chocolate Institute (FCCI) carried out a survey to examine the impact of COVID-19 on small businesses. It suggested that the cancellation of industry events was a major factor responsible for the fall in craft chocolate sales, along with lower customer demand. Chocolate makers are seeking workarounds by moving their business models online with platforms such as Stay Home with Chocolate. This endeavor, spearheaded by the Craft Chocolate Experience, Uncommon Cacao, and the FCCI, even offers live tastings and provides small businesses the support they need through high-quality and ethical sourcing methods. What if the supply of cacao itself gets nipped in the bud though?

West Africa decides if the cacao supply chain flies high or crashes and burns

Two nations, the Ivory Coast and Ghana, will set the pulse of the market as they comprise roughly 3/5th of global cacao production, meaning any supply chain disruptions in either or both will have a domino effect. These countries have made considerable efforts to keep their supply chains flowing as they receive a large chunk of their foreign exchange reserves from exporting cacao. The efforts undertaken by large chocolate and cocoa companies must not be forgotten as they have taken a leading role in enforcing guidelines from healthcare professionals and government authorities. The organizations have streamlined digital tools and local networks to deliver technical assistance, grant funds for emergency responses, and honor long-term commitments given to cacao farmers. A few local initiatives such as Farmerline in Ghana, run a health and safety campaign in 14 languages to maximize their reach within the country.

Cacao supply chain not yet disrupted - Can this optimal scenario remain a reality?

In terms of immediate effects, the fine flavor cacao segment is predicted to witness a greater impact. Maintaining crops and implementing post-harvest protocols necessitates both capital and a labor force. The impact of COVID-19 induced lockdowns would vary from country to country and even in different regions. For example - Guatemala and Honduras have some of the strictest lockdowns, reducing their export of cacao into the global marketplace. Nonetheless, this has not yet disrupted the global supply chain as of mid 2020. The FCCI survey states that small chocolatiers have not reported any supply shortages yet but akin to the COVID-19 virus, the situation is ever-changing and needs constant surveillance.

Loyalty and pragmatism critical in a market where customers typically display neither

Future developments in the global chocolate market depend to a great extent on demand getting back to pre-lockdown levels. While supermarkets continue to stock premium chocolates, restaurants, specialty chocolate makers, and other channels using cocoa in its various forms are currently closed. Although the success of small chocolatiers hinges on consumer loyalty and pragmatism - two difficult characteristics in a market characterized by limitless choice and impulse spending -, they must rapidly learn to tickle customers' taste buds, else their very survival is at stake.