CHOCOLATE GOES EAST?

I was gripped by Bill Emmott's admonishment of Barrack Obama,in last week's Sunday Times, "Europe is for wimps. Tough guys go East."

My mind being one track related it to things chocolate and cocoa. Indeed it seems that chocolate is trending East Ironically it seems that most of the moves are made by the Europeans proving perhaps they are less wimp than we may be.

"Chocolate Challenges" Report says that chocolate consumption in Asia Pacific is growing at a rate of 25% a year. Manufacturers from the West are using new strategies to introduce their products and strategic tie-ups with local networks.

Cadbury, Nestle, Dove, Golden Monkey, Hershey"s have already established local ties. Barry Callebaut starts production with a capacity of 25,000 tonnes at Suzhou. This city is close to Shanghai where chocolate consumption per head is one kg(China per head is 100gm).

China, interesting also seems to go for quality. A new legislation will require that products with more than 5% vegetable fat will need to be labelled as containing cocoa substitutes.

Confectionery New Product Development reports that in 2007, 30% of new confectionery was launched in Asia Pacific second to Europe with 30%.Asia now stands at 17% of the world's cocoa consumption. If forecasts are right the chocolate cultural hub should move somewhere East.

Switzerland is the hub of the chocolate eating world. If it moves East where it it be?China, India, Singapore? I think the answer is coming to be clearer. It must be Indonesia.

Yesterday Merrill Lynch"s Lionel Neave announced the launch of the Gulamerah Fund. Though the name implies Palm Sugar, the Fund is all about chocolate. It aims at raising S$30million to plant cocoa plantations in Java, around Sukabumi(150years there were cocoa plantations here), Jember(close to the Cocoa Research Station) and elsewhere. Neave has been very successful in Cambodia with other crops.

Also not so long ago the Minister of Trade Mari Elka Pangestu(who is reported to love chocolate) announced that Indonesia will work with the Association of Chocolate, Biscuit and Confectionery Industries of the European Union(COABISCO) in developing cocoa based industries here. COABISCO recently visited Indonesian cocoa plantations and cocoa based industries here.

In Feburary Antara reported that PT. Uniflora would invest $2billion in a cocoa processing plant, in Serang, Banten.

These ambitions are not new. Three year ago Piter Jasman , Chairman of the Indonesian Cocoa Association(Askindo)proposed that cocoa exports look east towards ASEAN and China, pointing out that they are nearer and have large populations, with obviously great appetites for chocolate.

Indonesia is ideally placed to be the cocoa/chocolate hub, both functionally and culturally, in the Asia Pacific region. Indonesia produces about 450,000 MT of cocoa each year. About $700million in value. The country is the third largest producer of cocoa in the world. About 400,000 smallholders working on an average of 0.5ha to 1.5ha earn their livelihoods from cocoa. Eighty-five percent of Indonesian cocoa is grown in Sulawesi. The beans exports are unfermented, bulk beans and low cost and is used as a filler with fermented beans by chocolate manufacturers. Some have learned to use it skillfully.

The government has kept a hands off policy with cocoa and that ha actually befefitted the Indonesian farmer who can expect 75-85% profit from export prices as opposed to West African farmers who earn 50-60%.

Indonesia has very competitive advantages. It closer to the vast cocoa and chocolate potential.It has low cost high production capacity, efficient infrastructure and open trading. The cocoa value chain has also experienced phenomenal growth in the last decade. The free trade agreement between China and ASEAN will also be an advantage.

Java has the technology, science, the resources for innovation, expertise and experience and some of the giants in cocoa processing and chocolate manufacturing.

Java bring procurement closer to suppliers and manufacturers located closer to their markets. It then becomes cost beneficial.

We also have an appropriate location, historically rich Jogjakarta , a confluence of many cultures and one capable of absorbing a chocolate too. Surrounded by notable universities, an creative population and a very popular governor. Wat does it entail?

1) It requires learning. Setting up a Faculty of Chocolate at a university. To study the enormous possibilities of chocolate globally and towards the development of tastes, textures and flavours appealing to consumers in Asia Pacific, with focus on using backyard resources. And growing with trends because chocolate and cocoa development will never slow down.

For the university it can turn into commercial possibilities. Charles Stuart University in Australia made their own wine and cheese. And enterprisingly export their products.

2) Create a kind of Astor Center (modelled after New York"s)where the finest chocolate, food, nutrition experts can discourse share and demonstrate all aspects of their passion.

3) Set up a interactive, taste and experience oriented chocolate museum. Probably on location in a plantation.

4) Set up a carefully studied and researched chocolate cafe with franchise possibility. Carefully because it can be a venture fraught with some discouraging problems as Max Brenner in Singapore is experiencing.

5)Relate to the tourist industry and export potential of resources gained.

I will take up each of these points in future blogs.
It is a simple and feasible start and I hope some initiatives come along.