ALONG WITH the election of a black President and the end of 30 years of Reaganomics, here’s another thing to celebrate this week: the 10th anniversary of Divine Chocolate.
Actually this juxtaposition is less forced than it sounds, since in a small way the founding of Divine Chocolate in 1998 was a deliberate counter to Reaganomics. It was an attempt to demonstrate an alternative to unregulated free trade and the market pressures that allow powerful multinationals and their shareholders to benefit from low commodity prices – prices that keep the farmers who grow the crop in such poverty that few have ever tasted the final product.
In theory (as sceptics pointed out at the time), the idea of creating a new brand in an overcrowded arena couldn’t work. Chocolate is a cut-throat, advertising-led global business dominated by big multinationals – Cadbury, Mars and Nestle own 80 per cent of the UK market, half of which goes through the supermarkets.
As a Fairtrade enterprise, Divine gave itself another handicap by deciding to compete in the mass-market rather than the premium segment while paying higher-than-market prices for its cocoa, plus a Fairtrade premium to fund community projects.
Furthermore, Divine is co-owned by a group of organisations with differing agendas, including alternative trading company Twin, which set it up, Dutch microfinancier Oikocredit, Christian Aid and, at 45 per cent the largest shareholder, Kuapa Kokoo, the Ghanaian farmers’ cooperative whose cocoa is Divine’s raw material (this courtesy of Clare Short at the Department for International Development, whose loan guarantee allowed the cooperative to participate in the company as owner rather than just supplier).
Finally, admits Sophi Tranchell, Divine’s feisty and articulate managing director since the beginning, neither she nor the first sales manager knew the first thing about UK food retailing. ‘I just thought, it’s a great bar of chocolate and a terrific story – how could it not work?’ she says. ‘It’s a good job we didn’t know what we were doing. If we had, we probably wouldn’t have started.’
Yet work it does. Divine is not just a worthy project – ‘heavenly chocolate with a heart’ – which is, among a raft of other plaudits, The Observer‘s Ethical Business of 2008.
It is also a profitable one. On turnover that rose to pounds 10.7m, Divine last year made pre-tax profits of pounds 635,000, allowing it to pay a dividend for the second time. In 2007 it launched in the US, giv ing it a foothold in a $13bn market with huge potential.
Tranchell has a campaigning background, and campaign is the best description of the first attempts to get Divine chocolate in the shops. First to take it was Tesco, which promptly took it out again. The Co-op then placed it in a few outlets, as did Sainsbury and, oddly, Iceland. The first real breakthrough came through a Christian-Aid-orchestrated assault on Sainsbury that got Divine into 350 stores – in effect national coverage.
The second turning point came when the Co-op, wanting to make a big statement about Fairtrade, decided to source all its chocolate bars, including own-label offerings, through Divine. ‘That gave us the income and time to grow the brand, develop new products, and sell them in,’ says Tranchell. The company is now in drinking chocolate, boxes and bakery as well as bars.
For Tranchell, the lesson of the company’s first decade is a cheering one: that consumers do have power and, if given the opportunity, will use it. The key to getting them to act is personalising the story. ‘I never met anyone who didn’t like the chocolate,’ says Tranchell. But neither customers nor retail buyers knew anything about the farmers who grew the stuff. The same was true the other way round: many farmers had never seen, let alone eaten, a bar of chocolate.
Making consumers and producers visible to each other has a revelatory effect. Tranchell is clear that Divine has to be ‘fantastic chocolate – people won’t buy it if not’. But after that, of huge resonance is farmer ownership. The message goes down particularly well in the US, where ownership is part of the American dream. In fact, at least in the US, it is a stronger message than fair trade.
So what next? Further expansion, obviously, particularly in the US (so far, says Tranchell, sales are holding up in the crunch). Beyond that, she’d like to develop more involvement for UK employees, John Lewis-style, to match initiatives to reinforce the functioning of the co-op. She’d like Divine to become a model for others to follow she says: ‘It’s a good way of doing business’. As her company moves from simple trading that improves the daily lot of poor farmers to fulfil the long-term goal of creating capital for those who previously had none, yes, it is. In more ways than one.
the Observer, 9 November 2008