Divine Chocolate reports 40% profit growth in 2016
The UK premium chocolate firm – partly owned by Ghanaian cocoa cooperative Kuapa Kokoo – posted a 4% group revenue decline to £12m ($15.5m) in fiscal 2016, according to its annual report published last week.
The drop was driven by a fall in own label sales in the UK after a reduction in the number of lines Divine supplies to one customer in August 2015.
"Since then we have seen distribution gains in the same customer," said Charlotte Green, marketing director at Divine.
"We were delighted to announce that Divine branded sales for the group grew by 6%, with the launch of a range of new products and a thriving US business," she added.
Publix and CVS prop up US sales
But for the 12 months to June 2016, US sales grew 10% to $8.5m as Divine secured distribution at retailers such as Publix and CVS, adding to sales growth at existing outlets like Whole Foods Market.
Divine USA vice president of sales, Troy Pearley, said: “I anticipate as a result of our current growth trend we will gain everyday opportunities with national customers like Walgreen's and Target in the near future.”
He added there were opportunities to expand everyday distribution with existing customers like Harris Teeter, Ahold and Natural Co-ops.
Divine is planning to appoint a new US-based director this year. It comes as US operations manager Tamsen Fricke and national account manager Amanda White have left the company.
Profits benefit from foreign exchanges
Jamie Hartzell, chair of Divine, said: “[Group] profit for the year was up 40% (£443,000/$573,000), due in part to changes to the way in which foreign exchange contracts are reported.”
Divine made forward currency purchases before the UK’s Brexit referendum to mitigate the sterling's decline against the euro, while the strengthened US dollar against the euro, helped protect it from currency fluctuations.
Divine: Industry consolidation threatens competition
Divine wrote in its annual report that it had been an “interesting year for the chocolate industry”.
“Creeping consolidation continues with, for example, Cargill buying ADM’s chocolate business for $440m, following other major buyouts such as Kraft taking over Cadbury’s. Nearer to home Italian manufacturer Ferrero bought Thorntons.
“This is a worrying trend towards industry dominance, closing down competition and choice,” it said.
‘A re-engineering of capitalism’
Divine applauded efforts chocolate industry efforts to move to 100% sustainable cocoa by 2020 through certification such as Fairtrade, UTZ and Rainforest Allaince, big investment in corporate initiatives such as Mondelēz’s Cocoa Life, Nestlé’s Cocoa Plan and Barry Callebaut’s Cocoa Horizons, as well as The World Cocoa Foundation’s CocoaAction platform.
However, it said “most emphasis is being put on increasing yields which in turn requires more inputs and more labour, therefore not necessarily delivering better incomes to farmers.
“Divine sees securing a fair price for farmers and giving them more say in the trading system as important as increasing yields.”
“…What really needs to happen is a re-engineering of capitalism, retaining the drive for profit and competition, but with the aim of benefitting as many people as possible, as opposed to making a few extremely rich.”
Divine pays a Fairtrade premium for its cocoa and sugar and gives the Kuapa Kokoo cooperative a share of profits.
Also, 2% of annual turnover is invested in a Producer Support and Development fund (PS&D) to support Kuapa projects.
Divine procured 882 metric tons (MT) of Fairtrade cocoa from Africa during the year.