Alter Eco Wants to Make Chocolate a Regenerative, Not Extractive, Industry

Earlier this month, several of the world’s largest chocolate companies created buzz with the promise that they would work with NGOs to stamp out deforestation within their supply chains. That announcement, however, was limited to a statement saying the effort is a work in progress; more details will supposedly be revealed during the COP23 climate talks in Bonn, Germany, later this year.

But the promise of reducing deforestation, along with pledges to improve the lives of cocoa farmers, are nothing new to Edouard Rollet and Mathieu Senard, co-founders and co-CEOs of Alter Eco Foods.

Known mostly for its line of fair trade and organic chocolates, the California-based company also markets rice and quinoa food products. Last week, TriplePundit spoke with Senard by telephone to learn more about his company’s impact on the chocolate industry, as well as listen to his reaction to the aforementioned news from the industry’s chocolate giants including Hershey, Mars and Nestlé.

Senard was cautiously optimistic about the global chocolate companies’ pledge to make their sourcing of cocoa beans more responsible and sustainable. “They understand that the long-term viability of their supply chains are at stake,” he began. “It’s not that they are moving in this direction to do something ‘good,’ but they know it’s in their best financial interests to start working on these things.”

The problems the chocolate industry faces are well documented. The future supply of chocolate is threatened by drought and exhausted soil, which are among the many tolls exacted by climate change. And these challenges are hardly new, Senard explained. “Frankly, when we have visited farmers and share with them ways to offset climate change, the farmers tell us, ‘Well, we’ve known this for 20 years,'” he told 3p.

Climate change is making the cultivation of cocoa even more difficult for farmers as unpredictable climate patterns can prove disastrous. Drought is the obvious risk, as one bad harvest can decimate the global chocolate supply. But too much rain can affect the fermentation and and drying of the cocoa before it is ready to be processed into chocolate.

Those risks can trickle down into the entire global supply chain. If there’s a disruption in Ghana or Ivory Coast – which in Senard’s estimation produces 70 percent of the world’s supply of cocoa – smaller companies such as Alter Eco will feel those repercussions.

“We want to be a regenerative, not an extractive company," said Mathieu Senard, Alter Eco co-founder and co-CEO.

Then add the social factors that come into play before a chocolate bar is finally purchased and unwrapped. Many children are still working on cocoa farms, while the nature of the worldwide chocolate industry often leads to the poor prices farmers often receive. Desperate farmers, in turn, do what they can to maximize yields from their lands, which often contributes to even more environmental degradation.

“If there’s going to be a viable chocolate supply chain in the future, then we need to reinvent and regenerate the industry to make sure farmers have a livelihood for them and their families,” Senard insisted.

In his view, chocolate giants would do better to follow the lead of Alter Eco and other companies striving to produce fair and ethical chocolate.

From the beginning, Alter Eco worked with farming co-ops directly, eschewing the traders that are one factor behind the global chocolate industry’s human rights and environmental struggles. This work was a natural transition for both Senard and Rollet, as they began their careers with NGOs, lived around the world and eventually completed business school. “For us, fair trade came at the intersect of our education and business experience,” Senard explained.

The two friends decided to build a business based upon the success of coffee, which was the first commodity to be bought and sold using the fair trade model. “The idea behind Alter Eco was to extend the offering of foods beyond coffee to be fairly traded and create impact,” Senard recalled. “So we started with chocolate, and then into grains such as quinoa and rice. Our goal is to buy directly from cooperatives and, more importantly, pay a fair price.”

Alter Eco extended the fair trade model to what Senard described as “full-circle sustainability.” The company insists that it goes beyond fair trade with a holistic approach that benefits both people and the planet. “We want to be 100 percent organic and non-GMO,” he continued, ”but, in addition, we offset our carbon emissions, and use compostable packaging.”

By incorporating all ideals of sustainability, Alter Eco is building what it hopes is an exemplar of future business by providing excellent food products, while at the same time, harms no one and nothing in the process.

In Senard’s view, fair trade was merely the first building block of the company’s efforts. The company claims that it treats its suppliers in a fair way, and pays a fair price in order to help break the cycle of poverty that has long been the bane of small farmers who cultivate the vast majority of the world’s cocoa supply. The company partners with farmers to make sure there is no child labor – as Senard was quick to say, “Kids belong in school, not in the fields.”

Ensuring that any children living these communities can stay in school starts with making sure the company’s partner cocoa farms in Ecuador and Peru can thrive in the first place. After all, more efficient farms can result in less labor needed to cultivate cocoa, or any crop for that matter. To that end, Alter Eco works with NGOs, such as Pur Project, as well as local farmers, to implement various programs that can improve cocoa cultivation, such as transitioning these co-ops to organic agriculture techniques.

Agro-forestry, or the planting of trees within farms, is just a start, as they help to regenerate the soil, prevent erosion, provide shade and improve local water management. Senard repeatedly emphasized that if the company is really going to be viable in the long run, it needs to do whatever it can to regenerate and invest in its supply chain – a lesson he hopes is imparted as well to the large players within the global chocolate industry.

The fair trade premiums, which according to Alter Eco’s books have totaled $1.2 million, can result in countless dividends for communities. From repairing roads to the improvement of the facilities in which the cocoa beans are fermented, the enhancement of these businesses’ operations is one important outcome. Farmers feel more empowered and motivated as well, as in the end they are the ones who decide how these funds will be spent. The premiums can also help grow local economies sustainably, as they can be applied to the construction and staffing of new schools, the purchase of farm animals, investments in additional agriculture products, or even the launch of eco-tourism ventures. These funds are hardly charity, as these farmers have worked hard to reap these funds - and Alter Eco also benefits from a stronger and more resilient supply chain.

Alter Eco’s efforts on paying special attention to its supply chain certainly justify its triple bottom line business model. The company keeps growing its revenues, from $7 in 2012 to $14 million in 2014, and to what is now a $20 million annual business. A taste of its chocolate bars or truffles also explains the company’s success; like many of its competitors in the fair trade chocolate space, its products are both smooth, have depth, and lack the waxy texture and sugary taste typical of the mass produced chocolate found in supermarket candy aisles. The company does not use any emulsifiers such as lecithin, and to skirt the palm oil controversy, Alter Eco sources coconut oil from India instead.

From Senard’s point of view, Alter Eco’s success shows that business should be a force to regenerate the world, rather than simply extract from it. He hopes the big players in the chocolate industry will follow. “When you just extract from areas like Africa and South America, and just extract from famers without thinking about their livelihoods, the fact is that you can’t keep increasing chocolate sales without destroying the chocolate supply chain, as some companies have been doing the past 50 years,” he said as he wrapped up his conversation with 3p.

Image credit: Alter Eco