Why Sustainability is Key to the Future of Chocolate and Business

By Ralf Hilpuesch, Chief Executive Officer, Ritter Sport U.S.

Key Takeaways: 

• Control over sourcing: Direct control over its cocoa sourcing ensures ethical and sustainable production while fostering long-term partnerships with cocoa producers.
• Consumer demand for sustainability: Increasing consumer preference for ethically sourced, environmentally conscious products, especially among Gen Z and Millennials, presents a business opportunity for chocolate brands to align with these values.
• Brand longevity and resilience: Rising cocoa prices and climate change pose risks to the chocolate industry, making it crucial for companies to invest in sustainable practices to ensure supply chain resilience and maintain consumer trust.

The U.S. chocolate market has been facing significant scrutiny over the past several years. From cocoa costs and sourcing to unethical business practices and environmental concerns – manufacturers must take decisive, meaningful action to address these critical challenges. 

As industry leaders, it is our responsibility to implement solutions that secure the future of chocolate while fostering a sustainable and ethical supply chain.

Working for a family-owned, fourth-generation chocolate brand has shown me that it takes more than just money to address the underlying issues of chocolate sourcing and manufacturing. It takes resources and a strong commitment to create and build a sustainability program and business approach that’s meaningful and impactful for people and the planet. 

There are three main reasons why chocolate manufacturers need to carefully evaluate existing sustainability practices to not only secure the long-term success of their own brands but also protect the planet’s future.

1. Control

In the supply chain, having direct control over the sourcing, production and delivery of products can help in a company’s ability to closely monitor the entire process to ensure it’s completed in an ethical manner. At Ritter Sport, we recognized early on that increased visibility over our cocoa sourcing was essential to tackling the environmental and ethical issues endemic to our industry. So, we established our own 6,000-acre cocoa farm in Nicaragua, called El Cacao, which allows us full autonomy in producing sustainably sourced chocolate in harmony with people and nature.

El Cacao was established in 2012 and has over 1 million cacao trees and over 30,000 shade trees (220 different species). The farm employs approximately 450 people who receive fair wages, healthcare, and education through the La Academia training center. After six years of hard work, the first harvest was reaped in 2018. Once El Cacao reaches its full productivity, it will cover 20-25% of our cocoa mass demand.

Additionally, we’ve set aggressive, yet realistic measurement goals regarding sourcing. By 2025, we aim to trace 100% of our cocoa back down to the farming organization. We achieve this through close collaboration and a 30-year history of trusted partnerships with cocoa producers. These long-term partnerships build trust and accountability on both sides and make supply chains more resilient, meaning we receive high-quality cocoa and farmers have a reliable partner.

2. Consumer demand

While price will always be a factor when consumers are evaluating a food purchase, how a product is sourced and produced is becoming a serious consideration as well. Meeting the demand for ethical products is not only a moral imperative but also a powerful business strategy to capture market share among discerning consumers.

Consumers (especially Gen Z and Millennials) are willing to pay a premium price for products that are high quality and ultimately align with their values. A poll of 2,000 U.S. young adults (commissioned by Tom’s of Maine) found that nearly four in five (78%) younger Americans said it’s important to them to buy products that are organic, natural, and environmentally conscious. With 82% of younger consumers prioritizing environmentally conscious products, brands that fail to adapt risk losing relevance.

Ensuring that a brand’s strong ethics and sustainable practices allow it to produce its product in harmony with people and nature is an evident selling point in capturing the attention of consumers who use their dollars to support companies modeling transparency.

3. Brand and product longevity

Cocoa prices surged 250% over the past year and reached a historic high of more than $10,000 per metric ton in early 2024 due to a global supply shortage and chronic underinvestment in cocoa farms. Impact of erratic weather where cocoa beans are grown (Ghana and Ivory Coast) is threatening the global chocolate supply, and almost a third of global cacao production may no longer exist by 2050 due to rising temperatures.

Furthermore, unit sales of chocolate decreased by 5.5% since 2023, showing that rising prices of chocolate products could lead to a decrease in consumer demand and ultimately, market share for chocolate brands.

There’s a risk to chocolate manufacturers on two fronts: 1) a shortage of cocoa could result in less product to manufacture for chocolate brands, and 2) consumers are shifting their spending to other snacks, like cookies or salty options, so cost is turning the consumer away from chocolate products.

To thrive in this volatile market, chocolate manufacturers must proactively invest in climate-resilient and sustainable practices. Putting metrics and programs in place to evaluate how to get closer to climate neutral allows companies to better support the environment. By achieving climate neutrality in 2020*, we not only contributed to environmental stewardship but also bolstered consumer trust and loyalty.

*By compensating unavoidable emissions (Scope 1, 2 and 3 influenceable) with Gold Standard climate certificates.

Food for thought

As we look to the future, the chocolate industry has a unique opportunity to lead by example, proving that sustainable practices and profitability can go hand in hand.

Embracing sustainable sourcing practices offers a win-win-win model that benefits people, the planet, and businesses — showing how solutions that align with evolving consumer values and that ensure long-term brand success aren’t always too good to be true. However, it does require genuine commitment and purposeful action that starts at the top. Chocolate brands have an opportunity to create meaningful impact that transcends good marketing, fostering environmental stewardship, ethical supply chains, and long-lasting positive change in the communities we touch.

I challenge my fellow industry leaders to join us in this commitment, fostering a more ethical and sustainable chocolate industry for generations to come.

Ralf Hilpuesch has more than 30-years of experience in the confectionery industry leading some of the most well-known and respected global candy brands, including Storck North America and Ritter Sport. Hilpuesch currently serves as the CEO of Ritter Sport’s newly established U.S. subsidiary and operations.