Divine Chocolate Touts The Conscientious Business Model
Divine also gave consumers something else: a way to do good and get a positive experience in return. Before Divine launched, Gorman said fair trade, which was in its infancy in the U.K., was not an attractive option for consumers given the market was limited to only a few low-quality coffee and craft products. At the time, it really took a good Samaritan to choose a fair trade cup of joe over a mainstream brand. Since then, experts agree the fair trade market and recognition there has far outpaced that of the U.S.
Recently, even the big players in the chocolate sector are adopting similar practices. Last year, Cadbury committed to sourcing fair trade beans for the brand’s top selling Dairy Milk chocolate bars. This move alone triples the sales of fair trade cocoa beans from Ghana. Divine takes some personal pride in industry-wide strides like these. “The success of companies like Divine and those that came afterward has really laid the groundwork on the things you see today,” stated Gorman, who also credits campaign and charitable organizations that work to create fair trade.
To further increase demand for fair trade cocoa, Divine launched its line of dark, milk and novelty chocolates into the $16.9 billion U.S. chocolate market in 2006. “The thing that made us optimistic about the U.S. market is that it is so big,” she said. “Even capturing a very small percentage of that would make an enormous difference in the lives of cocoa farmers.” Before the farmers could profit, however, Divine needed to find a way into the market, which is dominated by market leaders like Hershey and Mars.
Prior to the start of the recession in 2008, small, premium and dark segments of the market were fueling the industry’s growth—all good indicators for companies like Divine. Since the economy began to slow, much has been made of the seemingly recession-proof candy sector, but Susan Smith, the senior vice president of strategic communications for the National Confectioners Association (NCA), cautions against overstating the industry’s resistance. “Confections does better than other products during a recession. It’s affordable and it’s a small pleasure, but they are affected like all industries” she said. Accordingly, market research firm Mintel adjusted its growth predictions for the market from 4 percent per year through 2012 to 2 percent. Both Mintel and the NCA agree that even the segment leaders, along with the rest of the market, are slowing as the categories reach saturation and consumers trade down to less expensive treats.
Even in the face of these market pressures, Divine reported 100-percent growth last year. This is partly attributable to Divine’s decision to sink its teeth into the maturing fair trade niche in the U.S. Though the company targeted conventional retail giants like Tesco and Sainsbury in the U.K., Divine decided that given the size and segmentation of the U.S. market, it needed another approach here. “We recognized that we weren’t going to be able to get into a supermarket shelf by going head to head with Hershey” said Smith. “We decided to go after that specialty and natural foods consumer as a way of catapulting us into more mainstream outlets.”
According to the Fair Trade Federation Interim Report, fair trade sales increased by 102 percent in the U.S. and Canada between 2004 and 2007. Though these numbers seem to bode well for brands like Divine, findings from Mintel suggest consumers here have yet to digest what fair trade means. In its March 2010 natural and organic food and beverages study, Mintel found that of the respondents who were interested in natural foods, only 56 percent were interested in fair trade products and approximately a quarter had no opinion one way or the other, leading the firm to conclude “that part of the lack of demand for fair trade products is tied to the fact that many consumers—even those who use natural/organic products—do not know what fair trade is.”
