Opportunities for Latin American Cocoa Beans in Japanese Market

Yoshinori Doi

Meiji, CO. Ltd.

WCF 24th Partnership meeting

October 15-16, 2013

Santo Domingo, Republica Dominicana

Japan Domestic Chocolate Production & Import/Export

Unit: M/T Source: Domestic Production estimated by All Nippon Kashi Association (ANKA), Import/Export by Japan Ministry of Finance Composite Index by Cabinet office, Government of Japan

Japan Domestic Chocolate Consumption vs. Selected Countries’

Unit: M/T (per Capita in KG) Source: 2010, CCAJ (International Confectionery Association, CAOBISCO)

Japan Cocoa Bean Import, Grindings & Liquor Import

Unit: M/T Source: Import Statistics by Japan Ministry of Finance Grindings by CCAJ

Japan Cocoa Bean Import from Latin America

Unit: M/T Source: Japan Ministry of Finance

Japan Population, % of 65 Years Old and Above

Source: Ministry of Internal Affairs and Communications

Japan Market High Quality & Low Price More Health Conscious, Anti-Aging Bigger Spending per Child by Parents and Grandparents Always New Products (extremely short product life cycle) Where is an opportunity in chocolate business?

Japan Population Pyramid

Excellent point of Latin American Cocoa Beans

①Fine Cocoa Flavor

% of Each Flavor-Type in Total Aroma

②High Polyphenol Content

Polyphenol Content in Nibs

Effects of Cocoa Polyphenols and Cocoa Consumption

• Anticardiovascular

• Antihypertensive (to reduces blood pressure)

• Antiatherosclerosis (to reduce LDL-Cholesterol)

• Antidiabetic (increase in Insulin Sensitivilty)

Problems to be solved

1. Agri-Chemical Residue →to purchase beans from the specific areas 2. Higher Cadmium Content →to look for the specific area and take care of recipes 3. Insufficient in Quantity of High Flavor Beans →to improve the productivity

Conclusion 1. Future in Japanese Market

2. Advantages of Latin American Cocoa

3. Problem to be solved

Emerging Opportunities for Ecuador Cocoa in Asian Markets

Santo Domingo, October 16th 2013

Table of Contents

1. Ecuador Background

2. Opportunities in Asia

3. Exports from Ecuador to Malaysia

4. Conclusions

1. Ecuador Background

1. Ecuador Background

• Production in Ecuador is increasing constantly due to the following factors:

• Investment in new big scale plantations

• Newer farms reaching maturity, and consequently higher production

yields

• Intensive campaigns by the Ecuadorian Government, NGOs and the

private sector encouraging the small holder farmer to rehabilitate their

old cocoa farms in order to improve their income

• Cocoa beans and products exports have grown from between 100,000 to

115,000 MT per year 5 years ago, to close to 190,000 MT currently

1. Ecuador Background

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Ecuador Year Exports (MT)

Since the early stages of President Correa’s first term (2007), this

Government has placed a special emphasis on cocoa, as it represents over

400,000 cocoa farmers, while thousands more are involved working in cocoa

fields, commerce, logistics, industrialization and export of the product.

The Government has understood that in order to keep cocoa sustainable and

protect its relevancy, cocoa producers have to transition from small-holder

farmers into small business people.

The “National Cocoa Plan,” which was launched last year with the goal to

increase productivity of the small holder cocoa farmer, will for sure influence

positively the growth of our production in the years to come.

1. Ecuador Background

1. Ecuador Background

• Ecuador exports to Asia:

• Ecuador has been serving the Japanese market with fine flavor Arriba

Nacional cocoa for many years, as one of their main ingredients for

most of their chocolate makers

• Recently, exports of CCN-51 cocoa have become very significant to

countries such as China, Indonesia and Malaysia

• Exports to Asia for the first 11 months of the 2012/13 cocoa year reached

32,600 MT, which is equivalent to 19% of the country exports for the

period

2. Opportunities in Asia

• Asian cocoa industry is very vibrant, with a forecasted grinding total of

855,000 MT for the 2012/13 cocoa year

2. Opportunities in Asia

0

50

100

150

200

250

300

Malaysia Indonesia Singapore

Top 3 Asia & Oceania Grinders 2012/2013 ICCO Forecasts

• At the same time, production in the area has been declining in recent

years, with a forecasted total of 515,000 MT for the 2012/13 cocoa year

2. Opportunities in Asia

500

550

600

650

700

2008/09 2009/10 2010/11 2011/12 2012/13

Asia and Oceania Yearly Production

• This situation created a cocoa deficit for the region, which becomes an

opportunity for bean exporting countries such as Ecuador

2. Opportunities in Asia

0

100

200

300

400

500

600

700

800

900

2008/09 2009/10 2010/11 2011/12 2012/13

Asia & Oceania Production vs. Grindings

Grindings

Production

3. Exports from Ecuador to Malaysia

• Malaysia is the biggest Asian cocoa processor, and fifth in the world

• Yearly grindings of around 300,000 MT cocoa beans

3. Exports from Ecuador to Malaysia

0

100

200

300

400

500

600

Top 10 World Grinders 2012/13 ICCO forecasts

Netherlands

Côte d'Ivoire

United States

Germany

Malaysia

Indonesia

Brazil

Ghana

France

Spain

• As Malaysia’s annual cocoa production is below 10,000 MT, for many

years it has been a major importer of cocoa beans

• Historically, the main supplier for Malaysia has been Indonesia, however

in early 2012, Indonesia’s government taxed cocoa bean exports, as an

incentive to local industry

• As Indonesian cocoa beans became costlier, Malaysian processors began

buying heavily from Ecuador. Malaysia became the second largest buyer

of Ecuadorian beans, second only to the United States

3. Exports from Ecuador to Malaysia

• Last April, Malaysia introduced new regulations for cocoa bean imports, in

order to avoid the spread of the “South American Leaf Blight” –SALB-

(Microcyclus ulei) which affects rubber trees and is endemic to Central

and South America

• These measures include that cocoa cannot be produced, post harvested,

packed or stored without a minimum 50 kilometers distance from rubber

trees, and that cargo must be kept at temperatures above 25°C for at

least 30 days

• As a direct result of the above measures, exports from Ecuador to

Malaysia stopped to a halt since last June

3. Exports from Ecuador to Malaysia

3. Exports from Ecuador to Malaysia

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Ecuador Monthly Exports to Malaysia

4. Conclusions

• It is clear that Ecuador has the potential to become a volume supplier for

the Asian cocoa industry:

• Asian industry consumption is significantly higher than their cocoa

production

• Ecuador production is growing significantly, expecting to surpass the

300,000 MT mark by the end of this decade

• Ecuador’s CCN-51 cocoa is an ideal grade for the industry as it has

excellent yields and high butter content while at the same time a very

low FFA content

4. Conclusions

The contents of this presentation were prepared in October 2013 for discussion only

• Idioma único

• Cultura de la perfección

• Constelación de detalles

• La atracción francesa: ejemplo de la

pintura (Monet, Manet, Toulouse-

Lautrec, Katsushika Hokusai, Utamaro

Kitagawa

• Respeto y distancia

• Idioma extendido

• Cultura de la flexibilidad

• Vamos al grano

• La atracción americana: Mc Donald,

Progreso, aceptación del cambio

• Abrazos y besos

JAPON

REP. DOMINICANA

Eiffel Tower Tokyo Tower

Primer productor y

exportador en RD de cacaos finos.

Líder en Investigación

&Desarrollo aplicada

al cacao

Líder en cacaos

finos, “de domaine”,

a la medida

• Microbiología y Bioquímica

• Lactobacillus Paracasei Rizek

Los Ancones

Palmaritos

Los Vásquez

Buena vista

Dos Rios

Don Hector

Tainori

Caraibe

Ramonal

Pequeños productores afiliados: 4,500

Aéreas certificadas: 22,000 Ha

Volúmenes certificados: 12,000 TM

Los agricultores afiliados a FUPAROCA están actualmente certificadas por la IMO según NOP, CEE, JAS y las normas de Bio Suisse, así como de acuerdo con la norma final de Rainforest Alliance para el cacao en grano y con normas UTZ y Comercio Justo.

Certificación lograda en 2013: FAIR TRADE USA

• Ecuador

• Ghana

• Costa de Marfil

• Venezuela

• Recetas tradicionales europeas

• Paladares conservadores

Volumen de cacao

importado desde Rep.

Dominicana: 49 TM

Volumen total de

cacao importado por

Japón: 50,000 TM aprox

Porcentaje de

participación de Rep.

Dominicana = 0.09% 0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Import from RD Total Import Japan49TM 50,000 TM

1. Rompimos el hielo

en FOODEX 2005.

2. Crisis Ecuador.

3. Crisis Venezuela.

4. Crisis Agroquímicos y

pesticidas

5. Interés en nuevos

sabores y perfiles

aromáticos

CAMBIOS 2005~

Porcentaje de participación

de Rep. Dominicana

para el 2012 = 3.8%

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2009 2010 2011 2012

Importación de Cacao desde RD hacia Japón

205TM 940 TM 500TM 2,000TM

Total de importación

anual de cacao en Japón:

50,000 ~52,000TM

LOGROS • Aceptación del cacao Dominicano

en el main stream

• Cambio de percepción del País:

antes nos confundían con Dominica

• 3 cacaos con Denominación de

Origen – Meiji 100% Chocolate Café No. 20 y 32

– Una flor y

– Rico Flor de Fuji Oil

• Flexibilidad en las recetas

TENDENCIAS • Dominicana sustituye a West Africa

• Certificación Orgánica

• Traders involucrados en la

promoción

• Cacao con atributos saludables

• Nueva generación Japonesa

propensa al gasto y al cambio

• Compradores realistas y pragmáticos

• Alianzas en produción

• Cacao con atributos saludables

• Sintonizar el paladar y armonizar el vocabulario

• No decir siempre que sí.

• Fe y paciencia

..

..