The global supply of chocolate is in danger. Cacao trees, responsible for the delicious chocolate we all love, require very specific conditions to prosper. As such, Chocolate is largely grown in areas within ~10 degrees of the equator.[i] In fact, over two thirds of the world’s supply of chocolate is grown in West Africa, an area already plagued by the growing challenge of drought.[ii] Howard-Yana Shapiro, Global Head of Plant Science and Research for Mars, the largest chocolate company in the world, said “Cote d’Ivoire is the largest producer of cocoa in the world. Mars has bought cocoa from there for sixty years. … In 10 years, under a 2% increase in consumption we will need (an area corresponding to) another Cote d’Ivoire”.[iii] In fact, Mars believes that global demand could outweigh global supply by over a million tons by 2020.[iv]
Mars has committed to invest $1 billion to combat climate change through their “Sustainable In A Generation” initiative. Within their global supply chain, Mars is focused on ending deforestation, saving water, and helping cocoa farmers build more profitable and sustainable businesses.
- Deforestation: Mars has published extensive sourcing policies, including purchasing all raw materials from legal sources and mandating no burning to clear land for new developments or to re-plant existing developments, that will require the company to change suppliers if a supply chain partner does not adhere to their documented sustainable standards. By doing so, Mars has combined their proactive sustainable initiative with their significant power in the channel to focus their purchasing leverage to penalize negative practices.[v]
- Saving Water: Similar to their deforestation standards, Mars is impacting the water shed. If interventions don’t help relieve stress on a local watershed, Mars is prepared to abandon that source of water to protect the natural habitat it supports.[vi]
- Helping Farmers: Today, it is estimated that cocoa farmers produce just 10% of their potential output assuming perfect conditions, compared to 60% for corn production. The opportunity to improve productivity is enormous. Mars is committed to helping the nearly 5 million small-scale cocoa farmers across the world through process improvement initiatives. In Cote d’Ivoire, Mars has set up Cocoa Development Centers designed to help farmers by providing improved planting materials fertilizers, and training in agricultural best practices. Today, they have 25 active centers serving 50,000 farmers, with a goal of reaching 150,000 (50 additional centers) of the 750,000 farmers by 2020.[vii] On a broader scale, in 2008 Mars, in partnership with IBM and the US Department of Agriculture, launched a project to sequence, assemble and annotate the genome of the cacao tree. Mars has taken a further step forward by releasing the conclusions from their studies so that breeders can identify traits of climate change adaptability. If this initiative can help farmers improve productivity – improvements in cocoa yield per parcel of land will dramatically change the supply/demand imbalance well into the future.[viii] Mars is also taking immediate steps to generate solutions by forming the “Farmer Income Lab”, a collaborative “think-do tank” tasked with designing insights and solutions to help create more sustainable practices for the smallholder farmers that operate within their supply chain. To further speed the flywheel of progress, these solutions will be shared throughout the industry to drive broader adoption. Their vision is to dramatically impact the practices of the estimated 200 million smallholder farmers that produce food within the world’s supply chain.[ix]
- Incorporate sustainability ideals into Mars brands’ physical products: Mars has alluded to nourishing well-being, and creating healthier products, but there is currently a disconnect between the company values expressed in this sustainability project, and the branding for Twix, Snickers, M&M’s, and other Mars brands. By adjusting the product packaging and other aspects of the brand identity, it would display long-term commitment both internally and externally to the sustainability mission, which in turn would re-enforce stakeholder buy-in throughout the company, industry, and throughout the global supply chain.
- Create tangible KPI’s for the Farmer Income Lab: While I support giving this think-tank the freedom to innovate without creative restrictions, that ought not to relieve them from committing to measurable goals that would hold both this team and Mars accountable for results. I would suggest setting specific targets such as the number ideas generated, pilots initiated, and results driven with specific impact KPI’s for each. In the end there must be measures for solutions operationalized over the next 3-5 years.
Question that remains:
Should demand exceed the supply that conforms to Mars’ sustainability standards, will Mars have the will to negatively impact revenues and adhere to the values outlined above? If not, will the company sacrifice these aspirations and begin to source from suppliers who don’t meet their criteria? How will they handle what will assuredly be mounting pressure from shareholders?
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