Hardly a month goes by without someone, somewhere in the food industry making a speech or taking part in a conference on sustainability. The sector has made some strides on alleviating its impact on the environment (just last week, UK manufacturers and retailers were highlighting the "progress" they had made on reducing packaging).

However, the scale of some of the sustainability challenges remains vast. Last week, chocolate giant Mars underlined the hard work that lies ahead on one particular issue - sustainable cocoa. Mars warned forming a sustainable cocoa sector that will meet the demands of the chocolate industry and improve the livelihoods of farmers will require "billions of dollars" of investment.

For all the chocolate industry's early work in investing in improving yields and, it claims, enhancing the living standards of producers, the Snickers and Maltesers group's warning underlined the size of the task that remains - and the sheer cost. Making cocoa yields more reliable is not just a case of ethics or corporate responsibility; the recent volatility of cocoa prices underlines the business case for investing to create a more sustainable cocoa sector.

Of course, a sustainable cocoa sector will not only be one with better yields. It will be one without the use of child labour. Mars has made public statements on the issue in the past but the industry will need to grasp the nettle on this issue to really make cocoa sustainable.

We need to look to Nestle for perhaps the most progressive work on child labour. In June, an investigation into Nestle's supply chain (set up by the food giant itself) found "numerous violations" of the company's "labour code". Nestle's work should be applauded. It has the potential to act as a catalyst for other players in the cocoa and chocolate sector to look into their own supply chain. Indeed, labour activists hope cocoa giants like Cargill and Archer Daniels Midland could be encouraged to follow Nestle's example and make further progress on what many have long seen as an intractable issue.

Elsewhere last week, there was further consolidation in the chocolate sector. UK firm Zetar, which supplies own-label chocolate to retailers and manufactures products on a contract basis under FMCG brands such as Baileys and entertainment brands including The Simpsons, looks set to move into German ownership.

The Zetar board has accepted a bid from privately-owned German confectioner Zertus. The deal, which values Zetar at GBP43m, hardly ranks as one of the most sizable in the sector but it does indicate the need for scale to expand. It also highlights how some smaller firms, with equity prices remaining under pressure, are finding it difficult to raise funds for expansion. Zetar's decision to accept a bid from Zertus raised eyebrows but the UK confectioner and snack firm, frustrated at not being able to grow as quickly as it wanted, sees the sale as a way to fulfil its European ambitions.

And the rumour mill around a much larger snacks business - United Biscuits' salty snacks arm - continues to turn. It has been reported US private-equity firm Clayton, Dubilier & Rice (CD&R) and Verlinvest, an investment vehicle that was a shareholder in the forerunners to Stella Artois brewer A-B InBev, are among those to have made offers for the UB unit. CD&R has ex-Unilever executive Vindi Banga as a partner and former Tesco CEO Sir Terry Leahy as an adviser. Trade buyers like Intersnack and Kellogg have been touted as front-runners but it is possible brands including Hula Hoops and McCoy's find a new private-equity owner.

Until next time...

Dean Best
Managing Editor
Web: http://www.just-food.com
Email: editor@just-food.com
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