Chocolate business these days is bittersweet
MANILA, Philippines – From the early 20th century, Jose Maria Pueo has become synonymous with chocolate-making in the country.
The 17-year-old Spanish immigrant bought his chocolate manufacturing know-how that he learned from his Spanish godfather, who was also a friar. Adding his own innovations, Pueo started the first chocolate factory to produce Antonio Pueo chocolates (naming it after his father and uncle). Pueo steadily earned a reputation for making quality chocolate drink manufactured locally from the finest grade of cacao.
Fast forward to 2014, the chocolate maker Antonio Pueo Incorporada that became known for its tableas (chocolate tablets) and other cacao, instant, and baking products, is now diversifying its product line to cope with the shortage of cacao beans in the Philippines.
It is becoming increasingly difficult to procure cacao locally because on top of the low supply situation, local chocolate makers are competing for supply with exporters who sell to buyers in the US and China, company general manager Patricia Limpe lamented.
Ten years ago, the company was procuring about 56 metric tons (MT) of cacao annually for their manufacturing needs. This procurement volume fell gradually until they were only able to procure about 8 MT in 2013.
“10 years ago, supply was still good. We really need to encourage local production,” said Limpe.
Limpe added that cooperatives and commercial growers who export their cacao are often encouraged by the technical assistance and training provided by foreign buyers.
Diversifying the business
To date, Antonio Pueo Incorporada still makes tableas, including chocolate mixes for baking and 4-in-1 chocolate mixes for drinks. These products are sold in major supermarkets such as Hi Top, Landmark, and Shopwise and also exported to buyers in the US, Middle East, and Hong Kong.
While Antonio Pueo still manufactures the whole line of cacao-based products, it has temporarily stopped delivering to some of its clients, Limpe said.
“We already gave up some clients. Most of our new products are non-cacao based,” Limpe said.
To cope with the decreased cacao supply, the company has been manufacturing instant coffee and milk tea mixes for use in airline food service – a bittersweet way to stay competitive in the face of supply shortage and local demand.
Limpe said the company still sources cacao from Basilan and Davao but production in these areas is falling as trees get older and farmers lack cash to plant new trees.
The company can still manufacture its whole line of products if it can source at least 30 MT, Limpe said.
Local cacao production is currently placed at 10,000 MT but demand is placed at around 30,000 MT.
The Philippines imports around 20,000 MT of cocoa beans annually to bridge the supply gap, costing an average of $42 million. Beans are usually imported from African cocoa producers in Nigeria and the Ivory Coast.
Cacao can grow anywhere in the country because of its favorable climate but it requires great care since it is prone to pest infestation and can easily be flattened by strong winds.
Crop consolidators sell cacao to food manufacturers for P100 ($2.23)* per kilogram (kg), a 25% markup from farm gate price of P75 ($1.67) per kg.
Meanwhile, domestic demand for chocolate is growing because it remains the preferred flavor for drinks and pastries.
Limpe added that the Chinese market is also learning to drink coffee so with domestic cacao supply, they really compete with exporters.
“The market is growing and it can grow so much. Chocolate is the number one flavor (choice) for drinks and pastries. In coffee shops, for instance, parents don’t give their children coffee,” Limpe said. – Rappler.com
Cocoa power and dark chocolate image from Shutterstock
*$1 = P44.80
