Structure & competition in West Africa s cocoa trade. Edward George Head of Soft Commodities Research, Ecobank 21 November 2012

Transcription

1 Structure & competition in West Africa s cocoa trade Edward George Head of Soft Commodities Research, Ecobank 21 November 2012

2 Cocoa production in West Africa Annual production, MT 1,600 % share of world production 1,400 1,200 1,000 10% 36% % % / / /12 Côte d Ivoire Ghana Nigeria Cameroon Togo Côte d Ivoire Indonesia Cameroon Ecuador Ghana Nigeria Brazil Rest of world Cote d Ivoire dominates production, with 1.4m MT produced in 2011/12 Ghana is its closest rival, with 860,000 MT production in 2011/12 Nigeria & Cameroon each produce 200, ,000 MT per year West Africa accounts for around 70% of world production Sources: ICCO; Ecobank Research. 2

3 World cocoa processing Total cocoa grind,2011/12 Netherlands Germany USA Cote d Ivoire Ghana Malaysia Brazil Indonesia Sources: ICCO, Ecobank Research. 3

4 World exports of cocoa & cocoa products Total exports, 2011/12 USA Canada Europe Mexico Ecuador Soft commodity production (not to scale) Brazil West Africa Singapore Malaysia Indonesia Cocoa beans Cocoa butter Cocoa powder & cake Cocoa paste & liquor Chocolate Sources: ICCO, Ecobank Research 4

5 Cote d Ivoire is dominated by the top trading houses % of total purchases by volume, 2011/12 Cargill & ADM dominate purchases, with a 3 market share Barry Callebaut is the only major confectioner to buy cocoa directly Other foreign players include Cemoi & Touton (France), Olam (Singapore), Ecom & Novel (Switzerland), Noble (Hong Kong) & Armajaro (UK) Just 230,000 MT (22%) were bought by local companies in 2011/12 The largest local player is Saf-Cacao, owned by Ali Lakiss But much of this cocoa is sold on to the major trading houses, further diluting African players market share Source: Ecobank Research. 3% 3% 6% 6% 8% Cargill Barry Callebaut Saf-Cacao Touton Zamacom (Ecom) Novel 19% 16% 1 ADM Cemoi Cocaf Ivoire (Noble) Outspan Ivoire (Olam) Armajaro Coex-ci 5

6 Ghana s sector has strong local champions Local companies account for 8 of cocoa purchases % of total purchases, 2011/12 Cocobod is responsible for the marketing of all cocoa in Ghana, licensing Local Buying Companies (LBCs) to purchase beans The formerly state-owned Public Buying Company (PBC) has a 3 market share Local champions include Akuafo Adamfo (13%), Transroyal & Fedco Armajaro & Olam are the main foreign players, although other trading houses also buy cocoa via third parties Ghana has resisted pressure to fully liberalise the sector, enabling the emergence of local champions Sources: Cocobod, Ecobank Research. 1 8% PBC Armajaro Ghana Olam Ghana Cocoa Merchants Ghana Others 3 13% Akuafo Adamfo Transroyal Ghana Federated Commodities Kuapa Kokoo 6

7 Nigeria has one major local champion % of total purchases by volume 3% 6% 1 23% Bolawole Enterprises Olam Armajaro Agro Traders (Cargill) Continaf (Amtrada) 9% 21% Saro Agro Sciences (ADM) Ekom Trade 18% Others Nigeria produces around 220,000 MT of cocoa, of which 90% is exported as raw beans Bolawole Enterprises is the one local champion, affiliated to Shri Lal Mahal (India) The rest of the sector is dominated by the major trading houses & their buying agents Sucden (France) has recently started cocoa operations in Nigeria Sources: Ecobank Research. 7

8 The main trading houses dominate in Cameroon % of total purchases by volume, 2010/11 4% 3% 6% Cargill ADM 16% 43% Olam Novel Continaf (Amtrada) Fakoco 23% Others Cargill & ADM purchased 2/3 of Cameroon s cocoa in 2010/11 Local buyers purchased just 17,000 MT, or 8.2% of the total Total cocoa grind was just 28,000 MT, equivalent to 12% of the country s production Sources: Office National Cacao et du Café (ONCC), Ecobank Research. 8

9 The Big Five dominate the cocoa sector in West Africa % of total purchases by volume, 2011/12 11% Cargill Olam Armajaro Noble Ecom PBC 26% 2% 3% 3% 4% 4% 14% 11% 8% ADM Barry Callebaut Cemoi Touton Novel Other African companies Total of 2.5m MT of cocoa was purchased in West & Central Africa in 2011/12 Cargill & ADM dominated purchases, with a ¼ market share Olam, Barry Callebaut & Armajaro make up second tier of buyers, with >550,000 MT African companies make up 3 of purchases, 1/3 of which is PBC But many sell their cocoa to the Big Five The main trading houses are heavily involved in cocoa futures and increasingly in providing trade finance to their suppliers Difficult of obtaining financing is choking off the emergence of new players Source: Ecobank Research. 9

10 It s all about the offtakers Confectionery sales by leading chocolate manufacturers, 2011 Company HQ Total sales (US$ million) Kraft Foods Inc USA 19,965 Mars Inc USA 16,200 Nestlé SA Switzerland 12,808 Ferrero Group Italy 9,612 Hershey Foods Corp USA 6,112 Chocoladefabriken Lindt & Sprüngli AG Switzerland 2,796 August Storck KG Germany 2,205 Yildiz Holding Turkey 2,095 Meiji Co Japan 1,791 Arcor Group Argentina 1,716 64% 11% 9% 3% 1% Kraft Mars Nestlé Ferrero Hershey Lindt Others Total chocolate sales were US$105bn in 2011 The Top Five companies Big Chocolate account for >1/3 of world sales For the largest offtakers the key issue is securing a regular supply of beans & products Source: Candy Industry magazine.

11 Thank you