The Changing Landscape of Cocoa Sourcing: Part 1
For decades, large traders have dominated cocoa sourcing ecosystems. While that is still true, there are many new, alternative, sourcing options these days. But do all of them (any of them?) offer meaningful alternatives to the status quo? Part 1 of 4 parts.
The Ethics of Cocoa Sourcing: 200 Years of Progress and Paradox
The chocolate on your local supermarket shelf or online store connects you to a 200-year-old mystery that reveals much about how institutionalized power works across globalized economies.
We’ve known about illegal labor (slavery) in cocoa production for over two centuries. In that time there have been consumer boycotts, corporate social responsibility programs, “fair” trade certification, government regulatory regimes, and international coordination by civil society. Yet today human and environmental exploitation still exist.
The mystery?
After 200 years, how and why can this exploitation still exist?
Starting with Joseph Fry in 1759, the Quaker families who would come to dominate the chocolate industry in the UK, (Fry, Cadbury, and Rowntree; and later Hershey in the US) entered the chocolate business because they saw it as an “innocent trade.” Unlike alcohol, which they opposed on religious grounds, cocoa and chocolate were considered healthy and moral.
The objections to slave labor in cacao came to public attention during the Quaker-led Free Produce Movement, which represented an early example of what we now might call “ethical consumption” or “conscious capitalism.”
In 1827, Quakers in Wilmington, Delaware launched a boycott, refusing to buy anything made by enslaved people, including chocolate, coffee, sugar, and tea. These Quakers created alternative supply chains, opened “free produce” stores, and convinced thousands of families to pay more for ethically-sourced goods.
The leaders of the Free Produce Movement understood something fundamental: you cannot separate the morality of consumption from the morality of production.
By the late-1800s, Fry, Cadbury, and Rowntree had built formidable reputations based in part on ethical business practices. They provided their workers in the UK with model villages, healthcare, and pensions; they were among the corporate social responsibility pioneers of their era.
When William Cadbury first learned about the use of slave labor in cocoa plantations on the Portuguese colony of São Tomé and Príncipe (where Cadbury sourced a majority of their cocoa) in 1901, this created an ethical dilemma:
Cocoa and chocolate were no longer “innocent trade.”
Was the reputation for ethical business practices that Cadbury had carefully nurtured built on an intolerable lie?
While Cadbury had definitive proof of slavery by 1903, it took until 1908 for them to stop buying cocoa from São Tomé. The delay reveals some relationships between ethics and business that remains relevant to this day.
Cadbury faced the same pressures specialty chocolate makers face today: quality concerns, supply chain disruption, competitive disadvantage, and cost increases. Cadbury ultimately did act, absorbing the costs of developing alternative sources and they publicly campaigned for labor reform in São Tomé. It was corporate activism before the term existed.
But by 1910 public outcry over illegal labor on cacao plantations went silent.
The Period of Silence (1910 – Post WWII)
Several factors help to explain why public calls to end slavery in cacao quieted between roughly 1910 and the post-WWII beginnings of the “fair” trade movement:
- The Immediate Crisis had a Resolution: The Cadbury-led boycott of São Tomé cocoa ended in 1908-1909 when reforms, though incomplete, were implemented.
- Changing Economic Priorities: The period from 1910-1945 encompassed two world wars and the Great Depression. Public attention and resources were redirected toward these massive global crises, making consumer activism around labor practices in distant colonies a much lower priority.
- The Inertia of Colonialism: Much of the world’s cocoa production remained within European colonial systems (production moved from São Tomé, a Portuguese colony to Ghana, a British colony), making it easier to obscure working conditions in an increasingly global chocolate industry from public scrutiny.
- Nascent Information Networks: Without modern communications technology, it was difficult for labor abuses in remote agricultural areas to gain international attention. The São Tomé case had been unusual in generating publicity partly due to Cadbury’s (and Fry’s and Rowntree’s) Quaker religious beliefs and the contradiction with their stated values.
- Corporate Consolidation: As the chocolate industry matured and consolidated, the resulting more complex supply chains that obscured the origins of their raw materials (and origin stories), making consumer awareness and activism more difficult.
Ethics as a Market Category
The “fair” trade movement re-emerged post-WWII with initiatives like Ten Thousand Villages, which represented a renewal of earlier Quaker-led ethical consumption principles.
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But it took decades for the movements of modern consumer activism and international human rights awareness to gather the momentum necessary to apply and sustain pressure on global supply chains.
The “Fairtrade” label, the world's first “Fair”trade Certification Mark, was officially launched by Stichting Max Havelaar in November 1988, propelled by the efforts of Nico Roozen, Frans van der Hoff, and the Dutch NGO Solidaridad. This was during a market crisis in which the price of coffee cratered, and farmers bore the brunt of the downturn (as they always do).
Unlike previous patterns where ethical concerns emerged during periods of relative market stability, Max Havelaar emerged as a direct response to economic crisis.,
Unintended Consequences: The Commodification of Ethics
The “fair” trade model creates a two-tier system:
- “ethical” products for consumers who are interested in the topic and can afford to pay extra, and
- “conventional” products that maintain exploitative conditions for consumers who don’t know, don‘t care, or can’t afford them.
Rather than challenging the fundamental structures that create exploitation, so-called “fair” trade systems create a premium market segment that allows consumers to purchase moral absolution while leaving the underlying systems intact.
The Max Havelaar model also created what can be called the “certification industrial complex” – a system whereby ethical legitimacy depends on adhering to complex (and expensive) bureaucratic processes that almost universally exclude small producers who cannot afford the costs of certification and navigate institutional requirements.
This combination:
- Legitimizes Exploitation: By creating an “ethical” alternative, it implicitly accepts that exploitation is the status quo for products that are not “fair“ trade certified.
- Shifts Responsibility: Makes individual consumers responsible for addressing systemic problems rather than requiring structural changes in how global trade operates.
- Rewards the Appearance of Doing Good: Corporations can continue exploitative practices while pointing to their “fair” trade lines as evidence of their ethical commitment, paving the way for greenwashing.
What HAS Changed: Institutional Infrastructure
To be fair, the modern “fair” trade movement has created broad consumer awareness of labor conditions on farms and in workshops. “Fair” trade products now occupy significant mind share and shelf space in mainstream retailers, representing a scale of “ethical consumption” unimaginable in earlier eras.
Modern “fair” trade systems have facilitated the organization of producer cooperatives and fostered direct relationships between producers and makers that bypass some traditional intermediaries who have, historically, captured the lions’ share of upstream value addition.
Certification and monitoring systems, despite their limitations, have created more systematic documentation of labor conditions than existed historically.
Clay Gordon
But are systematic documentation (monitoring and reporting) enough? Are they merely pointing out the symptoms or are they treating the root causes?
What Has NOT Changed: Structural Power Relationships
- Colonial Economic Relations: The fundamental structure remains: wealthy consumers (often in former colonial powers) purchase products produced by impoverished workers in former colonies. “Fair” trade premiums, while beneficial in some instances, do not fundamentally alter these power relationships.
- Corporate Concentration: The Harkin-Engel Protocol was signed by several of the largest companies in the chocolate industry. However, exploitive market practices remain dominated by the same multinational corporations that benefit from cheap labor, even as they participate in “fair” trade initiatives as a form of reputation management (aka greenwashing).
- Consumer Distance: Despite increased awareness, consumers remain fundamentally disconnected from cocoa farms and farmers. “Ethical consumption” has become a form of moral outsourcing for many – paying slightly more to avoid having to confront uncomfortable issues.
What Does This Mean for Specialty Chocolate?
The Specialty Chocolate (aka bean-to-bar chocolate aka craft chocolate) movement became a thing in the late 1990s with the launch of Scharffen Berger Chocolate Maker in Berkeley, CA.
The first single-origin chocolate bars in the modern era were launched in 1984 for the 100th anniversary of the French company Bonnat, continuing a history of direct sourcing relationships that can be traced back to the mid-1700s.
In its early years, Scharffen Berger did not produce any single-origin bars, and its cocoa sourcing was outsourced to the multinational Mitsubishi.
While better known in the US since the early 1980s for automobiles, Mitsubishi has been involved in the cocoa trade since 1989 (originally in W Africa through an investment/partnership with OLAM [now OFI]), and has offered ocean freight logistics services since the 1880s.
So, while important to the broader history of Specialty Chocolate, notions of ethical, sustainable, and traceable were not a part of Scharffen Berger’s original brand promise.
The first time I remember encountering “fair” trade chocolate was at the Summer 2001 Fancy Food Show, where Dagoba made its debut, showcasing chocolate made with beans sourced through Max Havelaar.
From there, in what might be an example of frequency illusion (a form of cognitive bias in which a person encounters a concept, word, or object more frequently after becoming aware of it), I remember starting to see “Fair” trade products more regularly. In 2003, on my first trip to Ecuador, one of the participants was an employee of the Rainforest Alliance.
But it was not until October 2005 when I met Shawn Askinosie in Ecuador and then joined him on his first bean-buying trips (Chiapas, Mexico, and Barlovento in Miranda State, Venezuela) in April 2006, that I was introduced, up close and personal, to the notion of direct trade in cocoa and what that could mean for cocoa farmers and chocolate makers.
I was witness to several of these negotiations (in Mexico and Venezuela but not in the Philippines or Tanzania) and his interactions with farmers in Ecuador. The were always respectful of cultural differences and I never saw Shawn try to advantage of a dominant bargaining position.
Twenty years later, the ideas of direct trade, sustainability, ethical sourcing, transparency, and fairness are central to a key differentiator between “Specialty” and “Industrial” chocolate.
While at first, industrial makers ignored the nascent but growing bean-to-bar market (and its sourcing ethics), all that changed in 2005 when The Hershey Company created its Artisan Confections subsidiary and purchased Scharffen Berger and Dagoba as well as the venerable San Francisco confectionery brand Joseph Schmidt.
Thus began the blurring of the lines between craft/specialty and industrial chocolate by big players as they began to co-opt the language of Specialty Chocolate.
The Cocoa Sourcing Connection
It is rare for small chocolate makers to take on 100% of their logistics.
- The Mast Brothers relied on Atlantic Cocoa (the dedicated cocoa trading arm of giant ECOM, which exported ~25,000MT from Côte d’Ivoire alone in 2024) to transport much of its cocoa before holes in its origin story came under widespread scrutiny beginning in 2015.
- Uncommon Cacao has acknowledged that it has used ECOM for some of its international logistics requirements.
- While Tony’s Chocolonely does have its own bean supply chain, it is dependent on Barry Callebaut to transform those beans into butter (in W Africa) and upon Barry Callebaut to transform beans into chocolate at its plant in Wieze, Belgium, transporting the chocolate by tanker trunk (the innovation in 1958 that launched Callebaut as a major industry player) to a Tony’s-owned plant in The Netherlands where the chocolate is transformed into bars.
Everywhere you look, there are tangled webs of relationships. Some are relatively benign, but some are toxic to specialty chocolate makers – maybe you. Some are openly communicated, some are not, and some appear to be deliberately downplayed, if not intentionally obfuscated.
As a specialty chocolate maker committed to ethical sourcing of beans and butter, it’s very difficult, especially with recent price increases (even before tariffs here in the US), to do everything yourself. You have to rely on others.
In Parts 2 and 3:
The topics to be addressed in the next two articles in this series are how to come to good decisions about who to partner with.
Names will be named.
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