Along with a committee of experts from companies such as Nestlé, Olam and Valrhona, Ed Seguine, chair of ICCO ad hoc panel on fine or flavor cocoa, decides which countries’ cocoa exports are considered fine flavor under Annex C of the International Cocoa Agreement 2001.
Why fine flavor? Price premiums
Seventeen countries have fine flavor status for varying portions of their exports and Seguine says many more are seeking the coveted status.
The ICCO ad hoc panel on fine or flavor cocoa consists of experts from: Valrhona, Nestlé, Casa Luker, Walter Matter S.A., Daarnhouver & Co BV, Chocolate El Rey, Rausch Schokoladen, Ingemann, Olam, Cocoa Research Unit of T&T, Cocoa research Institute of Ghana. Chairman: Ed Seguine.
“Having the status recognized as fine flavor gives you a leg up in marketing your product to potential customers,” he told ConfectioneryNews at the recent Cocoa Revolution conference in Vietnam.
“The price is actually negotiated by the eventually buyer and the supplier. But when you have something that is deemed special you get people…prepared to pay some extra for it…”
The ICCO estimates fine flavor cocoa typically commands between $3,500 and $5,000 per metric ton (MT) compared to $3,000 to $3,500 for bulk cocoa. Some high-end fine cocoa can fetch as much as $10,000 per MT, it says.
Fine flavor market
ICCO estimates fine flavor cocoa accounts 6% of total cocoa exports. Ecuador is the leading exporter of fine flavor cocoa. It accounts for around two thirds of global fine flavor cocoa sales.
Laurent Pipitone, director of the ICCO's economic division, said at the Cocoa Revolution conference there was “strong growth in demand” for fine flavor cocoa.
It comes amid premiumization in chocolate within developed markets as manufactures experience growth in dark chocolate tablets with high cocoa percentages.
"We have more and more chocolate tablets and consumers willing to pay a higher price for chocolate tablets,” said Pipitone. “We are far from the wine market, but the wine market can be an example of how the trade can develop in future years.”
How to win the status
Only governments can apply for fine flavor status. The chocolate industry, cooperatives and organizations can support the application, but the dossier must be prepared and submitted by governments.
Vietnam’s recent successful application was supported by companies such as Puratos Grand-Place and Marou Chocolate, but it was the country that prepared the dossier to submit to the ICCO panel.
"The justification in the dossier begins with the history of your cocoa in your country,” said Seguine during his Cocoa Revolution presentation.
"Secondly, it's a discussion of the genetics that may be linked to the history…alternatively you can use the theobromine caffeine ratios, but they are very loose and unreliable - all they tell you is that it's a Forastero-type...It's like saying Saigon is on this particular continent - it's technically correct and functionally useless information."
Countries should ideally show the tonnage of exports sold above the ICCO daily market price to prove the cocoa is valued by the international market, he added.
"You want to ultimately recognize that what you're doing with your cocoa is creating a brand awareness when you go on Annex C,” said Seguine.
According to the panel chair, the best way to do that is by winning awards such as International Cocoa Awards (Cocoa of Excellence Program) or joining the Fine Chocolate Industry Association’s (FCIA) Heirloom Cacao Preservation program.
Under its standards, the ICCO panel assesses 46 attributes (see photo), including bitterness, total acidity and off-flavors, based on protocols used by the Heirloom and the Cocoa of Excellence programs.
Checks and balances
Ed Seguine is chairman of the ICCO fine flavor panel. He runs consultancy firm ‘Seguine Cacao, Cocoa & Chocolate Advisors’. He works with companies such as Guittard Chocolate, where he was vice president of R&D from 1983 to 2009. Seguine worked as a chocolate research fellow for Mars Chocolate between 2009 and 2013.
A country cannot have fine flavor status for volumes sold domestically. Fine flavor relates only to the identifiable percentage of exports sold above market price and deemed fine flavor by the expert panel.
The buyer must still verify a particular fine flavor cocoa lot meets his or her standards. “Not all containers do,” said Seguine.
Next fine flavor destinations
The ICCO fine flavor panel last met in September 2015 in London. There it conferred fine flavor status for 40% of Vietnam’s cocoa exports. Belize, Guatemala, Honduras and Panama are also on course to gain fine flavor status for 50% of exports, while 100% of Nicaragua’s exports is set to gain the title.
The panel also recommended that Peru’s fine flavor cocoa exports be cut from 90% to 75%.
The countries will be formally recognized at the World Cocoa Conference in Dominican Republic later this month.
The ICCO panel considers applications every two years with the next meeting due in 2017.