Sophi Tranchell Big Interview: after the Divine intervention

Nobody knew where chocolate came from in the 1990s. “They might’ve said Birmingham because of Cadbury” recalls Sophi Tranchell, MD of Divine Chocolate. “Or maybe Belgium. But nobody really thought about it.”

By contrast, the chocolate supply chain is “common currency” for major brands today. And Divine can claim much of the credit as it “changed the way people think about chocolate”.

It was always part of the plan. Owned and set up by the Ghanaian farmer’s co-operative Kuapa Kokoo, when Divine launched its original 150g milk chocolate bar in 1998, its vision was nothing less than to be the first mainstream Fairtrade chocolate.

“The intention was to demonstrate you could do business differently and through that you would catalyse the industry. Because if we could do it at the scale we’re operating in, why shouldn’t everybody do it?”

It was a steep mission for Tranchell, who arrived at Divine in 1999 with a background in arthouse film and anti-apartheid campaigning, rather than any retail or fmcg experience. And at first, with a team of “four-and-a-half” and a single product she admits she struggled with “aggressive and stretched” buyers at the major grocers. But she says her team were “unrelentingly persistent” which led to listings at Sainsbury’s, Iceland and The Body Shop.

And a lack of experience did have its advantages. “It meant you asked questions people who’d been in the industry longer wouldn’t have dreamt of asking and that was useful,” she says. For example ‘why do we have to pay listing fees?’ I didn’t pay it in loads of places simply because I asked the question.”

But the challenges went beyond supermarket negotiations. Divine also had to forge a traceable Fairtrade supply chain with enough capacity for a chocolate bar aimed at the mass market, when up until then only specialist or super premium bars had held the Fairtrade stamp.

A ready supply of accredited cocoa wasn’t the problem. The co-operative has “always had more capacity than we’ve had ability to pull down”. But the cocoa beans had to be stuffed in carefully coded sacks by the smallholders, then sold via Ghana’s Cocoa Board, the only body able to export the commodity. These same sacks then had to be shipped to the few factories in Europe capable of batch manufacturing.

This capacity to stop and start production in batches means Divine - and consumers - can be certain the same Fairtrade cocoa beans are used in their chocolate bars, Tranchell explains. And it’s all worth it, she says.

The Fairtrade premium paid to smallholders as a result has led the co-operative’s numbers to swell to 85,000 across Ghana’s cocoa growing belt, with output at 48,000 tonnes (6% of Ghana’s output).

That growth means the group had the capacity to supply Cadbury when it switched its Dairy Milk bars to Fairtrade back in 2009, a move swiftly copied by Kit Kat, Maltesers and Mars.

“In 1999 Fairtrade had an awareness of 7% so the idea these big companies would choose to pay more for the cocoa and choose certification was unthinkable,” says Tranchell. Yet “all of the chocolate companies over the last few years have made a commitment to sustainable cocoa” and awareness of the Fairtrade symbol has soared to 93%.

Delistings

It’s both a blessing and a curse for Divine. “It’s a fantastic thing, it’s what we set out to do but you have to be careful what you wish for don’t you?” she adds. Fighting for space against fmcg giants that also now brandish Fairtrade logos has “made business harder,” she admits, and could explain why the brand found four of its 100g bars unceremoniously delisted by Tesco in 2014. Sainsbury’s dropped five the next month.

The delistings contributed to an 8.4% drop in UK revenues taking sales to £7.6m in 2015. “Getting delisted in the supermarkets will have a significant impact on sales,” says Tranchell. “But when they rationalised their ranges we were able to concentrate on our sales in Waitrose and we’ve seen really significant growth there - 25% year on year.”

New product development also helped the brand claw back sales. For example, Tesco agreed to list its new chocolate caramel bars in 400 shops in November 2015 as a lack of palm oil in the recipe “put us in a different place to other people,” she adds. “So innovation is really important.”

The biggest boost came from across the Atlantic, with a merger between the UK and US businesses in 2014 adding £4.9m of sales last year. “Fantastic new listings” at US retailers Kroger and CVS in the last few months will help drive growth further, says Tranchell.

And Divine has one other advantage over the confectionery giants: a higher level of traceability. The so-called ‘mass balance’ system means a Fairtrade Dairy Milk might not have a scrap of Fairtrade cocoa inside. “I’m not judging it, it’s a way of working,” says Tranchell. “The commitment is still there. Say Cadbury are using 20,000 tons of cocoa to make a product,” she explains. “They’re making a commitment to buy 20,000 tons of cocoa but it might be from anywhere in the system.

“So as someone who’s been a consumer activist all my life I know the farmers are getting the benefit of the economic transaction using mass balance, which is an important part of it. But we as consumers aren’t getting the benefit of knowing it is the cocoa from those farmers. That’s the difference.”

So how does Tranchell view the looming cocoa shortage? Should we be concerned? And what is Divine doing about it?

“The problem has probably been overstated but I do think there is an issue,” she says. And big companies “throwing money” at the problem won’t make it go away. “You’ve got to make it an attractive proposition for a younger generation” to farm cocoa. “You’ve got to make it something that has status. We need to work with farmers, improve their income [further], and we’re not managing to do that at the moment,” she admits.

Failing to tackle this issue could ultimately push up the price of a chocolate bar, she believes. But it could also have a positive side effect for smaller producers, with “smaller, nicer bars” starting to appear and “chocolate lovers in Britain and America cherishing the chocolate they’re eating” more.

After all, Tranchell is in no doubt it’s great chocolate, rather than ethical values, which have driven Divine’s growth over the past 17 years. “We learned really early on the only way you’re going to buy a chocolate bar twice is because it’s fantastic,” she says. “So that has to be the top priority of your communication. It doesn’t matter how good the story is. It has to be a great product.”