Mondelēz of Oreo, Milka & Cadbury preempts cocoa procurement

Mondelēz, whose brands include Oreo, Milka, Cadbury and Daim are taking steps to preempt any disruptions to the procurement of one of its most important resources: Cocoa.

In a Mondelēz press release the company announced that it will spend an additional US US$600mn by 2030 on its Cocoa Life Program - an initiative which aims to scale cocoa volumes and, it claims, "address environmental and human rights challenges and improve the livelihood of farmers who raise cocoa."

Expanding on this, a recent supply chain dive (SCD) article stated: “By 2030, Cocoa Life aims to increase the number of farming households earning a living wage, enhance child protection and access to quality education and end deforestation on Cocoa Life farms. Its goal is to work with about 300,000 farmers by 2030.”

However, despite Mondelēz's pro-ESG claims, the Cocoa production industry is not without controversy. It has faced numerous challenges, including fluctuating prices, low farmer incomes, persistent child labor and ongoing impacts of climate change.

Sceptics will see this as a PR move by Mondelēz attempting to mollify the criticisms of ESG-conscious consumers.

The SCD article emphasises, “with the cocoa and chocolate market projected to surpass US$67bn by 2025, according to a 2020 report from Fortune Business Insights, companies that depend on the ingredient have little choice but to spend big now to ensure they have enough supply in the future at a reasonable price.

“The surge in demand comes as consumers place more importance on sustainability when determining what products to buy.”

The squeeze on cocoa supply concomitant with the rise in demand means large suppliers battling it out to procure the product in an effort to outdo the competition.

A recent Procurement Magazine article revealed that Mars Wrigley (MW) Europe announced that it will sustainably source 100% of its cocoa by 2023, following a growing trend of global sustainable procurement moves.

MW’s sustainable-cocoa move will impact some its best-known brands such as Mars, Snickers, Galaxy, M&Ms, Maltesers and Milky Way. 

There’s a lot of cocoa-related products in the picture, and these upcoming shifts are set to have gigantic impacts.

Whether these will, in the end, be ecologically or economically beneficial is yet to be seen.

Sustainable procurement needs to be holistically sustainable, and aim to offset any potential ecological depredations along the way - especially considering that global warming is already having a marked impact on procurement functions and supply chains themselves.