alt.chocolates | The Chocolate NewsWire

Dateline: December 19, 2024 — Prescott, AZ
Volume 0, Number 00

From the Editor

I am making this issue publicly accessible so interested readers can see how future issues will be organized – and what kinds of topics will be covered and how. Future issues will have just the In This Issue and From the Editor sections publicly visible.

Backstory: I was the freelance Technical Editor for International Confectionery Magazine (“ICMag”) for 3 1/2 years, submitting 35 articles covering topics in chocolate, cocoa, and confectionery – from ethical sourcing to ingredients to production technologies. Those articles took advantage of my ~40 years of experience contributing to trade journals, writing for and educating professional and general audiences, and consulting from the farm to the factory to the table. (I even have a piece of equipment named after me – the first purpose-specific conche created for craft chocolate makers; the Kleego from FBM!)

My relationship with Hand Media, the publisher of IC Mag, ended (amicably) after I submitted my article for the Nov/Dec issue.

I started this twice-monthly newsletter to enable me to continue the reporting and writing I did for the magazine in a less structured format. There is no fixed editorial calendar set a year in advance. There is no word count I have to write to. There are no restrictions on what I can and can’t say.

What that means for subscribers – for you, I hope – is an interactive relationship offered by no other resource covering topics in chocolate, cocoa, and confectionery.

Among other benefits, subscribers can a) comment (publicly and privately) on issues raised in each newsletter; b) submit press releases for expedited consideration; and c) suggest topics for future Long Read topics. More subscriber benefits can be found by clicking the button below.

In closing, I look forward to communicating with all of my subscribers to ensure that this newsletter provides a unique mix of news and analysis – all opinions will be my own – delivered in the clear, concise style I am known for, all delivered in a bite-sized format.

The Long Read:
alt.chocolate

Note: I first covered this topic for ICMag in the September 2021 issue, for which I interviewed Sara and Max Marquardt, founders of Qoa (now PlanetA Foods), and Alex Pearlstein and Steven Stearns, of California Cultured.

The TL;DR: The drive to create cocoa and chocolate analogs is born from recognizing that cocoa farming today has a broad range of consequential negative environmental and social consequences. Growing cacao requires tremendous amounts of water, is a driver of deforestation, can result in abusive labor practices including child slavery, and has a huge carbon footprint, especially when transportation and waste sidestreams (e.g., jute or polypropylene bags, wooden pallets), are factored in. Some of the most-cited advantages of non-cocoa chocolate are a) lower carbon footprint in particular; b) better for the environment more generally; and c) avoidance of abusive labor practices.

There are two general approaches to producing non-cocoa chocolates.

How 1: Precision Fermentation of non-cocoa feedstocks (e.g., upcycling spent grain from brewing beer or grains such as barley – the choice and mix is part of each company’s tech) to produce the non-fat solids component. Precision fermentation and other synthesis techniques (which take place in a bioreactor) can be used to create the lipid (fat) component, OR, cocoa butter equivalents (aka CBEs, often palm oil fractions) can be used. The non-fat solid component may be flavored using carob or other natural flavor, or the flavor may be a result of the fermentation process itself.

How 2: Cell Culturing starts with cells from actual cocoa beans. Cells are extracted from the cotyledons and grown in bioreactors where they multiply. As with other approaches, the lipid component may be produced using another technique in a bioreactor or be an added CBE.

How 3: Ingredient Sourcing: Feedstocks can be sourced locally, reducing transportation costs and environmental damage. For a factory located in Germany, it means the possibility of starting with agricultural products (e.g., barley) grown in Germany or within the EU. In some cases, the output of another manufacturing process – such as spent grain from brewing, aka BSG – can be used as the input.

Who #1-3: Early Adopters, Investors, & Partners. While some companies have incorporated a DTC strategy (Endless in Denmark is one), most companies in this space have sought out industrial customers and distribution partners, and have attracted considerable investment. Voyage Foods and Cargill “... are forming a commercial partnership [to] produce alternatives to cocoa-based products and nut spreads without using cocoa, peanuts[,] and hazelnuts.”

What #1: Market Acceptance. Most companies’ marketing seems to focus on messaging around reducing environmental (e.g., carbon footprint, deforestation, sustainability) and social (e.g., illegal labor practices) impact while proclaiming to be, “... the future” of chocolate (or coffee, or whatev).

What this messaging strategy overlooks:

Most consumers’ buying decisions are not influenced by these messages

No one knows where the price of cocoa will settle and what that will mean for prices on store shelves. There is always a segment of the population that values price over all other product attributes. (This is one factor contributing to the slowing sector growth in alt.meats – they are significantly more expensive than the proteins they replace.) For those consumers, a low-cost chocolate alternative, no matter what it tastes like, will be attractive.

This is especially the case where chocolate is an ingredient in a candy bar – the thin coating of an enrobed product, for example, or as an ingredient in a nougat. But for people looking for a full-impact chocolate experience and for whom cost is less of an issue ... adoption rate remains to be seen.

Manufacturers may force the issue through the wholesale replacement of real chocolate with alt.chocolate.

What #2: Regulation. Regulatory regimes worldwide do not recognize the ingredients in alt.chocolates produced using precision fermentation and so products made with these technologies cannot be labeled as chocolate without regulatory changes.

One question is if Big Chocolate will be able to lobby regulatory bodies to change the regulations or will they issue temporary marketing permits as they did in the US for white chocolate for decades.

It’s less clear if cell culturing approaches, which start with cells from cocoa beans are a closer fit to the existing regulations but a close reading leads to the conclusion they are not.

What #3: Hyper-processing. alt.chocolate products fall into the category of hyper-processed foods, and there is no way to know how they will affect our body’s metabolism over the long run. While they may be “better” for the environment, are they better for human health? Will anyone care? (You should.)

Who #1: Cocoa Farmers. The fate of cocoa farmers is the white elephant in the room and is a topic that alt.chocolate companies, in my discussions with them, tiptoe around.

There are millions of cocoa farmers (tens of millions of people when you include dependent family members) in the world and if alt.chocolates take off, the demand for their labor and livelihoods may be reduced dramatically.

After decades of systematic underpaying by Big Chocolate – one reason why the price for cocoa has skyrocketed – giving Big Chocolate an offramp that could lead to abandoning farmers – cocoa farmers, sugar farmers, oil palm farmers – abandoning the moral obligation to right the social and environmental damage caused by their functionally monopolistic sourcing practices will be a travesty.

Markets:
Cocoa

Summary: Comparing Futures, Historical, and Moving Average prices provides a more comprehensive view of market volatility. However, even this more comprehensive view does not provide a reliable guide to the direction of movement.

Why #1: Commodity markets are driven by uncertainty and a desire to gain some measure of control over that uncertainty. Cocoa supply concerns fueled by weather, disease, and the introduction of sweeping new regulatory regimes are compounded by speculators and hedging strategies reacting to short-term changes that do not reflect fundamental changes to underlying causes.

Topics related to Why #1 will be addressed in The Long Read in an upcoming issue.

Stats:
10 Biggest Confectionery/Snack Companies in 2024

The TL;DR: Ten companies have a combined turnover across all product lines totaling> US$121 billion. The top five companies account for about 75% of the total (> $95 billion).

What #1: It’s important to read lists like this (see Source link) very carefully: the order of Haribo and pladis are backwards, according to the revenue figures shown.

Which order is correct? Without independent sources, it’s impossible to know what the proper positions are.

What #2: Position number 100 reports two companies occupying that spot with $115 million in sales each. This means there are more than 100 companies on the list.

What #3: The entries on this list exhibit a classic long-tail progression.

What #4: Unless you’re a real industry geek deep into market research you haven’t heard of over half of the companies and the inclusion and ranking of some are really surprising.

People@
The Hershey Co

TL;DR: In 2022, it was estimated that Hershey had a 36% share of the US confectionery market.

Backstory: Mondelēz offered to buy Hershey (back in 2o16) but fell short when the Hershey Trust (the majority owner) rejected the offer.

There are statutory hurdles to overcome in Pennsylvania as well as federal anti-trust concerns.

With all the excitement (?) and tension (?) surrounding the proposed acquisition of Hershey by Mondelēz (the lastest rejection by The Hershey Trust was delivered on Friday the 13th of December), the announcement that the president of Hershey’s US confectionery business, Michael Del Pozzo, has left the company after three months to return to “an unspecified role” at former employer PepsiCo, ratchets up the drama.

There is speculation the possible acquisition triggered Del Pozzo’s departure, triggering even more speculation about the possible success of the acquisition. The acquisition, which would further consolidate power in global confectionery and snackfood markets, could simplify the Cadbury portfolio (a Mondelēz brand, Cadbury products are manufactured under license by Hershey in the US). Complicating matters further might be Nestlé – KitKats are also manufactured under license by Hershey in the US.

Featured Event:
The Salon du Chocolat Returns to NYC

The first Salon du Chocolat was held in NYC – called the New York Chocolate Show – in 1998 in the Puck Building in SoHo (I waited in line on day 1 in the rain). The show was held every year through 2012 when Hurricane Sandy slammed the East Coast just a week or so before the Salon was to take place.

The Salon did not return to NYC until 2019.

After a rocky road in 2o-22 due to COVID-19 lockdowns, multiple acquisitions (the current owner is Messe Frankfurt), a false start or two, and other organizationa; changes, the Salon du Chocolat is set to return to NYC (Javits’ Center) in March 2025 from the 21st through the 23rd.

🗞️ One recently confirmed exhibitor is Jacques Torres – an enfant terrible in the New York chocolate scene – known by many as Mr Chocolate. Jacques is the youngest person to have been awarded the MOF in Pastry. Jacques helped launch Food Network into the stratosphere in its early days and has inspired countless chocolate fans, pastry chefs, and chocolatiers (professional and hobbyist) through his cookbooks, television appearances, and his support for many charitable causes.

Confirmed international exhibitors at the 2025 Salon, so far, include companies from Brazil, the Dominican Republic, Ecuador, Japan, and Taiwan.

Quote of the Issue:
The Irony of Trust

“The irony is that we live in an age where there is so much information at our fingertips, but there’s less trust.”
— Marta Tellado, President of Consumer Reports

Errata:
Scratched Stat

I jokingly define trivia as, “Very important facts not worth knowing.”

I spent a not-inconsiderable amount of time looking up carob production stats for The Long Read and decided not to include them. Here are two carob resources I found that you might find to be trivially useful:

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