Divine Chocolate sales soar 57% driven by US market

By Douglas Yu contact

- Last updated on GMT

Divine Chocolate's 44% part-owner Kuapa Kokoo, a cocoa farmer co-op in Ghana, receives higher dividends and social support as the company grows.  Source: Divine Chocolate
Divine Chocolate's 44% part-owner Kuapa Kokoo, a cocoa farmer co-op in Ghana, receives higher dividends and social support as the company grows. Source: Divine Chocolate

Related tags: Cocoa farmers, Sustainable development, Cooperative, Strategic management, Us, Fairtrade

Divine Chocolate has substantially increased group turnover to £12.6m (almost $18m) for the 12 months to June 2015 after merging its UK and US business units.

According to the company’s latest annual report 2014 - 2015, published this week, group sales were up over 57% to record levels, while net profit climbed 47% to £280,000 (around $280,000) and profits after tax were up 69% on the previous year, says the report. The business growth occurred during the time when the trading environment remained challenging.

Kuapa Kokoo, a Fairtrade certified farmers’ co-operative that supplies Divine with most of its cocoa and owns 44% of the business also benefits from the company’s sales growth, the report suggests.

The co-op received dividends and Fairtrade premiums. During the reporting reporting, Divine paid $204,000 in Fairtrade Social Premiums, up 43% from the same period last year. It came as the company upped its used cocoa volumes 45% to 1020

Managing director of Divine, Sophi Tranchell, said the company has just agreed a five-year strategy. "We are confident about the healthy growth in the US and Canada market, and [we] predict steady growth in the UK."

ConfectioneryNews previously reported Divine may also consider cocoa farmers from other African countries rather than Ghana to create a single-origin chocolate range​.​ 

Kuapa Kokoo is based in Ghana with over 80,000 members, and it produces around 6% of Ghana’s total cocoa output. Tranchell said the cocoa farmers co-owned chocolate business model is unique in the UK, and possibly in the world.

The US market growth

The US market drove Divine's 2015 growth after the business unit posted a profit for the first time.

Divine merged its UK and US businesses in July 2014, but it wasn't announced until the spring of 2015, according to Tranchell.

Divine’s finance director, David Upton, said: “Merging the businesses brings many benefits at this point in the company’s growth. We will be sharing best practice and be in a position to hedge our foreign exchange risk in both the US and the UK. The potential in the US is really exciting, and we will be focusing on continuing to deliver strong profitable growth.”

The Divine US branch experienced growth of 50.2% across channels last year, including in Whole Foods and Target, according to the annual report.

“The fiscal year 2015 provided us with a platform to establish and maintain our strategy of long-term sustainable growth in the US market,”​ vice president of sales for the Divine US, Troy Pearley, said in the report.

Divine will continue to build the business in the US, as well as its current export territories, Tranchell added.

“After a successful first time at ISM, we are also exploring possible partnerships with other selected overseas distributors who are a good fit with Divine, and share our values," ​she said.

More benefits to cocoa farmers

Divine’s US business merger also means  cocoa farmers own a larger company, said Tranchell. Two per cent of the company’s annual turnover is also invested in specific Kuapa Kokoo projects, such as adult literacy classes for women, model farm practice, and Kuapa’s own radio program.

Traditionally, how the farmers co-owned business model works is the farmers receive income for the cocoa bought with a guaranteed minimum of $2,000 per ton, the Fairtrade premium of $200 per ton, and 44% of distributed profit, Tranchell said.

Farmers decide collectively how to spend premium and dividends on individual volume-related bonuses, their own community projects, and their business, she added.

“Recently, this has included setting up a medical clinic and extending health insurance to members,”​ Tranchell said. “As Divine grows Kuapa Kokoo receives correspondingly growing income streams with which to improve the welfare and farming skills of its members.”

Increasing consumer Fairtrade awareness contributes to business growth

Tranchell believes Divine’s growth has shown that Fairtrade resonates with chocolate consumers around the world.

Fairtrade is the only certification system that has sustainable remuneration for farmers, as the leading cocoa certification worldwide, Tranchell claimed.

“Sustainable remuneration for cocoa farmers lies at the heart of a sustainable future for the cocoa industry,”​ she said.

In addition, Divine said it looks forward to contributing to the forthcomingdefinition of sustainable cocoa in EU​ along with representatives from Fairtrade-certified cocoa farmer organizations.

“It is important that Fairtrade continues to raise the bar, and live up to the expectations of all the consumers worldwide, who have championed and supported Fairtrade and its commitment to a fairer deal for farmers,”​ Tranchell said.

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