Big chocolate manufacturers got away smoothly with price increases of up to 20 % last year, but continue to refuse to pay cocoa farmers a living wage. The excuses are running out, Tony’s Chocolonely top executive Douglas Lamont believes.
“Big business can be good business”
“We are first and foremost an impact company, only secondarily a chocolate company”, ‘Chief Chocolonely’ Douglas Lamont states. He holds the title equivalent to CEO since October, as he made the move from Innocent Drinks, where he was at the helm for nine years. “The opportunity to join a purpose-driven company with such an important mission was too good to pass up. I believe big business can also be good business. We tried that with Innocent when we grew from virtually nothing to 500 million. Tony’s Chocolonely is a great brand and a great product. I am confident we can scale this up globally.”
The colourful chocolate brand wants to fix the broken chocolate industry, particularly addressing challenges around child labour, lack of living wage and deforestation. But the company also wants to make money: “We are not a charity, we need to show that there is a business model, that you can be a fast-growing and profitable business by doing things right. We are on the right track.”
To ensure the company stays on that right track, Tony’s Chocolonely just launched “Tony’s Mission Lock”, a legal mechanism to guarantee the company’s mission in perpetuity, regardless of its shareholder structure. Three independent “Mission Guardians” are given a golden share and thus the responsibility to act as guardians of Tony’s mission.
“This is about trust”, Lamont explains. “It is a message to everyone who works with us in our ecosystem: when we say we are an impact company, we really mean it now and forever. We have created a legal structure that really ensures that that mission endures. We are not just a marketing company, we are here for the right reasons, for the long term. We have a lot of different shareholders, from the original founders to more classic, family-oriented investment funds, who fully support this. That says a lot about what this company stands for and what the shareholders believe in.”
Working together in the supply chain
The problems in the cocoa sector are not new, but apparently do not get solved. What makes this chocolate supply chain so complex and difficult?
“You have a very fragmented supply chain with a lot of small-scale farms, so there is a huge power imbalance between those small farmers and the big companies, which make excessive profits by exploiting that fragmented group of small farmers. But just because it started this way, does not mean it cannot be changed. It takes time to organise and empower millions of smallholders using cooperative structures, but we are showing that it is possible. Big companies are focused on just maximising profits, and then you do not want the systems to change. We want to change the system: that is our starting point.”
As an impact company, Tony’s Chocolonely wants to bring other companies into that change. “That is why we are very transparent about everything we learn along the way. The good, the bad, the mistakes we make: we want everyone to learn from it. The next twenty years will be defined by collaboration, not competition. You can compete on the shelf, but let us join forces to find models to collaborate in the supply chain.”
Scaling up for more impact
Indeed, Tony’s Chocolonely is growing not only with its own chocolate brand, but also through Tony’s Open Chain. Other companies can buy traceable cocoa beans directly from Tony’s. “Besides being a chocolate company, we are also a sourcing company. Our ambition is to grow to 5 % of West African beans over the next five years, coming from about 0.5 % now. A significant part of that growth has to come from our Open Chain partners. We already have Aldi and Ahold Delhaize on board, and now Ben & Jerry’s is also joining us. They were struggling with their own cooperatives in West Africa and are now outsourcing their global cocoa sourcing to us. That is a huge endorsement of what we are doing.”
Tony’s Chocolonely, however, remains a very small player in an industry dominated by large multinationals. Is that sustainable in the long run, or should the company still form an alliance with larger peers, such as Innocent with Coca-Cola or Ben & Jerry’s with Unilever?
“We will see. That is a question for the future: within our existing structure, I can easily see our business double, even quadruple, without already thinking about step two or three. The focus for the next five years is this: how do we scale the business to have more impact? We proved the power of our model first in the Netherlands, but in the meantime also in the United Kingdom, the United States, Germany… In Australia, we are listed at Coles. Year on year, we are growing by 40 to 50 %: incredibly fast. There is a lot of positivity around the brand. We now need to structure and organise that.”
The problem with profit maximisation
Meanwhile, how does ‘big chocolate’ react to Tony’s Chocolonely’s initiatives? Lukewarm, it seems: “There is polite interaction, but their sustainability programmes are often mirages in my view. Unless you pay a living wage, set up cooperative structures that really put power in the hands of cocoa farmers, and focus on deforestation with 100 % traceable beans, you are only going to address the symptoms of deforestation and child labour, not the causes. They use their sustainability programmes to avoid a living wage conversation.”
Lamont refers to the Harkin-Engel Protocol, a public-private initiative that sought to ban child labour in cocoa farming. Big chocolate manufacturers signed it in 2001, but essentially not much has changed: “Big chocolate has done nothing of significance for 23 years.”
That is because of the paradigm of profit maximisation for shareholders, he says: “If they can buy beans cheaper, why not?” But that paradigm is shifting. “As chair of The Better Business Act in the UK, I am advocating a change in the law that would require companies to better balance people, planet and profit instead of just going for profit maximisation. It is going to change: it is not a question of if, but of when. With Tony’s, we want to accelerate that change. The faster we grow, the bigger our impact, the more we make sure ‘big chocolate’ rethinks its model.”
“Multinationals are hiding”
Currently, those big companies are still hiding behind the lack of traceability to not pay a living wage, Lamont says, because they supposedly do not know where the money is going. So they keep it to themselves. But that excuse no longer applies, he believes: “This tiny company that is Tony’s has figured out how to achieve 100 % traceability with almost no resources. We pay directly to the cooperatives, without intermediaries, thanks to traceability.”
“Multinationals spend 15 % of their revenues on marketing, we spend 3 or 4 %. But we spend 8 % on impact, and they only half a percent. They could use the billions they earn every year to address the causes. They claim that consumers will drop out when they have to raise prices. However, when their costs went up – and it had nothing to do with farmers – they managed to raise prices by 20 % to safeguard their own profit margins, without the slightest impact. Consumers seem to accept that. So I do not believe their arguments.”