There has been huge growth in ethically-traded goods in recent years but some brands stand out from the crowd. Divine Chocolate would be among them. As the UK’s Fairtrade Fortnight draws to a close, Ben Cooper spoke with Sophi Tranchell, managing director of Divine Chocolate, about what differentiates Divine from many Fairtrade products, the brand’s international aspirations and whether Fairtrade can withstand the onslaught of recession.
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The growth in the Fairtrade market in recent years has been phenomenal and has attracted some extremely powerful multinationals to the sector. This has not always sat easily with the Fairtrade community, though most accept that their involvement is positive in terms of volume, and attests to the movement’s success in gaining mass appeal.
While the likes of Nestlé, Tesco and – most topically – Cadbury have to live with accusations of opportunistic bandwagon-jumping, there are others for whom ethical credibility is less of a problem. Divine Chocolate would be one such brand.
Thanks to listings with all major UK supermarket chains, Divine is one of the best known Fairtrade brands on the market. Underlining how the enormous success of Fairtrade in its own terms registers little more than a blip on the entire food market as a whole, Divine Chocolate is still a very small company. Turnover last year was GBP12.4m, around 90% of which came from the UK, with Divine Chocolate Inc. in the US generating a further US$2m in sales.
While gaining supermarket listings has been good for volume, Sophi Tranchell, Divine’s managing director, concedes that it inevitably means some compromise on pricing, particularly as products from smaller suppliers tend to become weapons in a retailer’s price war armoury. But being able to hit the 99p price point clearly has advantages.
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“I think the important thing for Divine all along has been that we set out to be a mainstream chocolate bar,” says Tranchell. “And by mainstream, we mean something that people can afford to have, that it’s in the places where they buy chocolate, and they like the taste when they taste it. And so I think that’s absolutely where we wanted to be.”
Tranchell, who has been managing director since the company was launched as the Day Chocolate Company in 1998, believes the brand’s high consumer awareness owes much to the fact that it is not only a Fairtrade-certified brand but the company is 45%-owned by the Kuapa Kokoo farmers’ cooperative in Ghana.
With multinationals arriving on the scene, this is perhaps a key point of difference, and it is one that Tranchell believes consumers relate to very readily, lending “genuineness to the proposition”. She says consumers pick up quickly on “which products come from multinationals and which do not”. It has also been significant in terms of media coverage and staff recruitment, she adds.
Another factor she believes has been important in building the brand’s profile is the use of networks as a means of communication, such as its links with Christian Aid.
Divine’s ownership structure is of course far from being just a marketing boon. As Tranchell points out, “it puts farmers higher up the value chain”. There is a debate in the Fairtrade sector about ‘added value’. Although in theory the further up the supply chain value is added to the products, the greater the return to farmers, Tranchell explains that in practice in the cocoa market, “things are more complicated”. Divine manufactures chocolate in Germany and Tranchell says manufacturing in Ghana would not be as cost-effective or as lucrative for the farmers.
Having the farmers as shareholders and returning value to them through dividends is “a better solution” to the value added challenge, says Tranchell. “If by manufacturing in Germany we get a product that is more compatible with the UK market, more affordably and more competitively, we are actually going to get them a bigger share.”
Kuapa Kokoo’s earnings on its shares provide a further income stream, in addition to the Fairtrade minimum price, the Fairtrade social premium and the 2% of the company’s turnover which goes to a producer support programme.
Unlike many of her peers in Fairtrade, Tranchell did not come from a background in either international development or brand marketing. In fact, before joining Divine she worked in promoting independent cinema.
The clearly adept marketing job behind Divine suggests the lack of a consumer goods background has not held her back. Indeed, Tranchell suggests a lack of knowledge of food retail may have been an advantage. “I think it’s been a huge strength not knowing about food retail because I didn’t take any of the givens,” Tranchell says. “If I had come from food retail I would have known it was an impossible proposition.” She adds that experience in marketing independent film, thinking creatively with small budgets and targeting well, was more relevant than might appear at first.
But above all, Tranchell stresses that her experience as a campaigner, notably in the anti-Apartheid movement, was extremely relevant.
Fairtrade may be a trademark and a business sector in its own right now – global sales under the Fairtrade mark alone in 2007 were around EUR2.3bn before any other ethical trade schemes are taken into consideration – but when it began it was more a campaign than anything else, and the campaigning ethos remains strong.
Tranchell tells of an epiphany on the steps of the Sainsbury’s head office. It was towards the end of the Apartheid era but black majority rule had still not been achieved. There to urge Sainsbury’s to boycott certain products, Tranchell says she was asked in by the wine buyer to give her views on “how we would like him to operate in a post-Apartheid South Africa”.
She says: “What that made me realise was that you had so much power in the idea of using people’s purchasing power in a positive way.”
Arguably it is the evolution from boycotters to proactive promoters of ethical alternatives which encapsulates the Fairtrade movement, and it is perhaps no surprise that this incident at Sainsbury’s has stuck in Tranchell’s memory.
But one reason why the campaigning spirit lives on is because Fairtrade marketers know there is still so much to be done. The UK chocolate market is worth around GBP4bn, so Divine’s share is microscopic. However, the brand is also expanding internationally, with Ireland, the Netherlands and particularly Scandinavia providing growth.
In the UK, Tranchell is relatively positive about the impact of the recession. Market research published by Mintel last year seemed to suggest that the ethical sector would be fairly resilient to the downturn, and Tranchell agrees.
Even so, she is only forecasting “moderate growth” for 2009. Also she points out that while volumes continue to hold up well, margins for Fairtrade companies are under pressure, both from keen pricing by retailers and exposure to adverse exchange rate fluctuations.
Regarding the announcement by Cadbury this week, Tranchell is also upbeat and shares the pragmatic view of many Fairtrade strategists that a major commitment by such a significant player can only be good news for the Fairtrade movement and in this instance for cocoa farmers in particular.
“I think it’s good that more consumers will be able to buy Fairtrade products and it’s great news in terms of volume for cocoa farmers,” she says. “I am hoping that by having Cadbury on board we really will be able to raise awareness for Fairtrade chocolate in Britain. We have an opportunity in chocolate, which we didn’t quite achieve in coffee, to create a step change which says that, as decent companies working in a civilised society where people have more than enough money, you should be paying the primary commodity suppliers enough money to send their children to school. And with a company as big and iconic as Cadbury joining we have the opportunity to make that step change.”
Of course, while positive for Fairtrade as a whole, when a powerful brand with massive ad spend and distribution muscle can put the same logo on its pack, it would not be surprising for smaller brands to have a little disquiet. Tranchell takes the JFK view here, that “a rising tide raises all ships”.
Moreover, the arrival of mainstream brands expands the market and begins to normalise the whole idea of Fairtrade, which is after all what the campaigners wanted to begin with. As Fairtrade becomes increasingly commonplace, it is then for individual brands, large and small, to differentiate themselves.
Cadbury may have the Fairtrade logo on a bar of Dairy Milk but it is not 45%-owned by those who farmed the cocoa beans that made it. As long as Divine can continue successfully to communicate its unique properties – as it has clearly done rather well up to now – it can probably take the heat.
