The latest Food and Agriculture Organization (FAO) publication on The World’s State of Forests shows that 10 million hectares of forest cover was lost per year between 2015 and 2020. Growing global demand for agricultural commodities drives much of the world’s deforestation as farmers and companies clear land to earn a living. Between 2000 and 2018, more than 50 percent of deforested land was converted into cropland, while almost 40 percent was used for pasture. The new ‘no deforestation’ regulations from the European Union (EU) came into effect in 2023 that aim to ban imports of agricultural products linked to deforestation and forest degradation. This includes cocoa, coffee, palm oil, soybeans, timber, meat, and their by-products. This is another step in the fight against deforestation and adds to a growing number of international agreements and private sector initiatives designed to encourage sustainable agricultural practices.
The biggest importers of cocoa butter within EU member states are Germany, Belgium, Netherlands, France, and Poland. These countries not only have large populations but also have well-established cocoa processing and re-export industries, as well as significant confectionery and cosmetic production industries. In addition, Germany, Belgium, Italy, the Netherlands, and Poland are among the leading global exporters of chocolate. The African and Asian countries like Ivory Coast, Ghana, and Indonesia are the leading exporters to the EU, supplying cocoa butter products in bulk. In addition, Brazil, Latin American countries like Peru, Mexico, Ecuador, and Colombia also play an essential role as cocoa butter suppliers to the EU.
Major Cocoa Butter importing countries in the European Union
Germany
Germany occupies a prominent position in the cocoa butter market, driven by its status as one of Europe’s largest consumers and exporters of chocolate. The country also has a strong cocoa processing industry. In addition, Germany acts as an important trade center, exporting approximately 98,548 tons of cocoa butter in 2022, mainly to other European countries.
Over the years, Germany has witnessed a steady increase in cocoa butter imports, rising from 151,176 tons in 2018 to nearly 167,714 tons in 2022. The Netherlands is the main supplier of cocoa butter to Germany, followed by Ivory Coast, Indonesia, Nigeria, Ghana, and France.
Belgium
Belgium has a worldwide reputation for its high-quality chocolate and has a well-developed chocolate manufacturing sector that serves local and international markets. With the scale of Belgium’s chocolate industry, there is substantial demand for cocoa butter. In 2022, Belgium imported 108,219 tons of cocoa butter and exported 5,597 tons.
The Netherlands ranks as the leading supplier of cocoa butter to Belgium, followed by France, Germany, Ghana, Malaysia, Spain, and other countries.
Netherlands
The country is home to a vital cocoa processing industry and is critical in the international trade of cocoa products. Between 2018 and 2022, cocoa butter imports to the Netherlands increased from 89,863 tons to 109,130 tons, while exports of this product group reached an impressive 254,210 tons in 2022.
Ivory Coast occupies the top position as a supplier of cocoa butter to the Netherlands, followed by Ghana, Indonesia, France, Germany, Cameroon, Malaysia, India, and other countries. significantly yearly.
France
France has a significant domestic chocolate industry and has well-developed production capacities for most of the required cocoa derivatives. However, despite its domestic production capacity, France is among Europe’s largest importers of cocoa butter. Cocoa butter imports to France increased from 75,186 tons in 2018 to 90,773 tons in 2020. In addition, France exported about 84,248 tons of cocoa butter, mainly to other European countries in 2022.
France imports cocoa butter from countries like Ivory Coast, Cameroon, Netherlands, Ghana, Malaysia, and others.
Poland
Poland has seen a notable increase in cocoa butter import volumes, driven by the growth of its chocolate sector. Both domestic and multinational companies have made substantial investments in food and confectionery production facilities in the country in recent decades. In 2022, Poland imported 58,379 tons of cocoa butter, representing a 58% increase compared to 2018 volumes. The country also exported 672 tons of cocoa butter in 2022.
Poland gets its cocoa butter imports mainly from other European countries, such as Germany, the Netherlands, France, Italy, Switzerland and others.
Analysis of the EU cocoa butter market
Attractiveness of the EU market as import destination of cocoa butter:
The European market shows consistent and significant demand for cocoa butter, driven by the thriving confectionery, baking, and cosmetics sectors.
The open market policies of the European Union facilitate the smooth flow of goods between member states. This allows international cocoa butter suppliers easy access to a broad customer base and efficiently distribute their products throughout Europe.
The European Commission has implemented Directive 2000/36/EC governing the use of cocoa butter substitutes in the chocolate industry. A maximum addition of 5% vegetable fats and cocoa butter is allowed. However, premium chocolate manufacturers in Europe follow even stricter rules.
Downside of EU as import destination of Cocoa Butter:
Europe is increasingly dependent on imported cocoa butter to meet its demand.
The European market comprises several countries with different consumption preferences, incomes, cultural influences and market dynamics. Navigating this fragmented market, understanding local preferences, and creating effective distribution networks across regions can be challenging for suppliers.
The European cocoa butter market operates within a strict regulatory framework. Compliance with EU regulations, including food safety standards, labeling requirements, and traceability, can pose challenges for suppliers, especially for smaller-scale producers who may face difficulties meeting the necessary compliance measures.
There are ethical and sustainability concerns. Growing consumer awareness and demand for sustainable and ethically sourced products pose challenges for the European cocoa butter market. Suppliers must address deforestation, child labour, and environmental impact concerns, ensuring responsible sourcing practices to meet growing consumer expectations.
In 2023, the EU Parliament passed a new law covering various products such as livestock, cocoa, coffee, palm oil, soy, timber, etc. This law requires companies to ensure that the products they sell in the EU have not contributed to deforestation and forest degradation. As a result, buyers will now impose even stricter regulatory requirements on exporters.
Opportunities in the EU market:
European consumers are known for their discerning palates and for appreciating premium quality products. The demand for fine chocolates, luxury cosmetics and gourmet foods create opportunities for suppliers of high-quality cocoa butter products to serve this sophisticated market.
The cosmetics and pharmaceutical industries mainly use ready-made semi-finished cocoa products in their production processes. On the other hand, participants in the mass confectionery sector usually start their production process directly from the cocoa beans.
There is a growing trend towards sourcing cocoa butter at source, surpassing imports from European processors.
The growing demand for sustainability and traceability in food products, especially in the chocolate sector, presents an opportunity for brands to differentiate themselves. Companies can establish a competitive advantage by demonstrating a commitment to ethical sourcing, environmental stewardship, and support for local cocoa farming communities. In addition, there is a great niche market for organic food products, particularly in the affluent countries of Western Europe.
Brazil and the EU are negotiating a free trade agreement within the Mercosur group. The possible EU-Mercosur Association Agreement aims to increase trade integration among Mercosur countries and open new trade and investment prospects with the EU by eliminating tariff and non-tariff trade barriers and facilitating foreign direct investment (FDI).
Competition in the EU Cocoa Butter market:
Despite the high demand for cocoa products in Europe, there is still a preference to buy locally from large vertically integrated European multinational conglomerates. Competition faced by independent exporters of cocoa products from outside the EU is intense due to the prevailing practice of European chocolate manufacturers to process cocoa beans in-house or purchase semi-finished products from European processors. The European market has strong historical ties and is accustomed to purchasing cocoa butter from Ivory Coast, Ghana and Indonesia.
However, in Europe, cocoa butter faces competition from alternative fats and vegetable oils that can be used as substitutes in various applications, including chocolate production. These alternatives may offer cost advantages or different characteristics that attract certain manufacturers, which represents a challenge for the market share of cocoa butter.
Conclusion
In conclusion, cocoa butter plays a vital role in various industries, including confectionery, cosmetics, and pharmaceuticals. The EU market presents both strengths and weaknesses for cocoa butter imports. The market’s strengths include consistent and significant demand, an open market policy facilitating distribution, and familiarity with imported cocoa butter. However, navigating the fragmented market and complying with strict regulations and sustainability concerns pose supplier challenges. The EU’s recent deforestation and forest degradation law further adds to regulatory requirements. Despite the challenges, there are opportunities for cocoa butter exporters in the EU market. European consumers appreciate premium products, creating a demand for high-quality cocoa butter. The growing trend towards sourcing cocoa butter at the source and the demand for sustainability and traceability present opportunities for differentiation.
In summary, while the EU remains a significant importer of cocoa butter, there are opportunities and challenges for importers to face by adequately addressing regulatory and sustainability concerns.