Valentine’s Day: Choc-Full of Supply Chain Challenges

This Valentine’s Day, consumers are expected to celebrate by spending a record high of $19.6 billion on treats like flowers, champagne, and of course—chocolate.

While a box of chocolates might seem like a simple enough treat, manufacturing chocolate is anything but simple. How exactly do manufacturers turn a bitter white bean from a tropical tree in West Africa into a rich brown Valentine’s Day truffle?

Let’s take a look at the precious (and precarious) supply chain of chocolate.

 

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So why, exactly is producing chocolate such a complicated task? For starters, here are a few of the biggest challenges.

1) Cocoa beans are geographically volatile.

Chocolate’s key ingredient, cocoa beans, can only grow under specific conditions: in tropical regions 20 degrees north or south of the equator line.

There’s high risk in these regions because of changing weather patterns. For example, in West Africa’s Ivory Coast, where more than 70% of the world’s cocoa is produced, increasingly dry weather has devastated production in the region, contributing to a decrease in 30-40% of global supply. A recent article in the Washington Post went so far as to say this could lead to an international shortage.

Political conflict is another risk, as many cocoa-growing countries are home to regional conflict. Returning to the cocoa bean capital of the Ivory Coast, the country faced a civil war and militaristic takeover of their national government just four years ago. And 90% of cocoa beans come from local farms that are particularly vulnerable to this type of conflict.

2) It’s a long distance from raw material to product.

After you’ve secured your supply of cocoa beans, you’ll need to ship them thousands of miles away to countries across the world where the raw material is turned into the chocolate that appears on retail shelves.

While most cocoa beans are grown in South America and Africa, the biggest chocolate manufacturers are thousands of miles away in Europe, the US, and Japan. Following production, much of the European chocolate then gets shipped to the US, and increasingly to Asia as well.

Because of this long journey, airtight shipping practices—both upstream and downstream—are of the utmost importance.

3) Timing is everything.

Chocolate is a seasonal product, revolving around major Western holidays. A boatload of chocolate nibs that shows up on a manufacturer’s door on February 16th or December 26th, for example, is essentially useless. From a packaging perspective, the types of boxes and marketing material used to sell products drastically changes with the season. After Valentine’s Day, the next largest holidays (by pounds of chocolate sold) are Halloween, Easter, and Christmas.  

There’s one caveat to the truth that manufacturers depend on seasonal holiday spending to propel sales: an increasing demand from Chinese and Indian consumers. In the past few years, Asian customers have been developing a taste for what Europeans have been hooked on for the past 500 years, and in a more consistent (less seasonal) demand pattern than American and European shoppers.

4) Food Safety.

Like any food product, chocolate risks complete disaster if anything goes wrong in the safety of its supply chain. This is especially true of increasingly popular “raw chocolate” that includes beans cooked under lower temperatures than the standard process. Salmonella contamination in particular has been a risk in past years.

Bottom Line

Like so many products, for chocolate, what seems like a simple treat at first glance is actually a complicated manufacturing and logistical feat dependent on geopolitical environments, climate patterns, and contamination control. There’s a narrow margin for error in the supply chain here, and chocolate producers must focus on constantly monitoring risk and managing fluctuating shipment schedules to stay out of the red. So when you celebrate this weekend's holiday, remember the labor of love—and precise supply chain management—that went into your Valentine chocolates. 

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