The chocolate industry is one of the biggest and most lucrative industries in the United States of America. Besides that, it is also a very tightly controlled industry by a handful of major companies. This makes it as incredibly difficult for an outside player to enter and find a foothold in the market. But around a decade back, a company from the ‘Low Country’ managed to pierce its way into the extremely tight industry. Meet ‘Tony’s Chocolonely’ – a Dutch chocolate company with its own ambition, plan, business model, and a unique name with a purposeful reason behind it.
Tony’s Chocolonely has garnered several positive reviews from the US consumer base, with some ranking it above Hershey’s chocolate bar, a major chocolate brand in the US in terms of consumption. While that was a good start, Tony’s Chocolonely has a much bigger vision and aim in front of it. They are proudly a brand that doesn’t rely on child labor or slavery to manufacture their products. For the unbeknownst, the chocolate companies often rely upon illegal and forbidden modes of conditions for sourcing the cocoa beans and manufacturing chocolate. Child Slavery is a big problem staring at this industry.
Almost all big chocolate companies like Hershey’s, Nestlé, Mars, etc., source their cocoa beans from West African countries. Ghana and the Ivory Coast (Côte d’Ivoire) lead the production among those countries, with nearly 60% of the world’s cocoa production coming from these two nations.
There, a large portion of the work involves cutting down the cocoa pods from the trunk and branches of the cacao tree, and then bursting them open to secure the cocoa powder and beans from those pods. This work is often done by children below the permissible age.
Since it has been happening for ages, Tony’s Chocolonely decided to put an end to it by envisioning a bold, ambitious, and arduous task. They not only want to stop child slavery behind their chocolate products, but also for the entire industry. Their battle began thus and is still ongoing. Here’s how they have done it and plan to continue doing it in the future.
Tony’s Chocoloney’s Big Battle and How it all Began
The name ‘Tony’s Chocolonely’ comes from the name of its founder, Teun Van De Keuken. Teun becomes Tony, as is globally recognizable, and Chocolonely is an amalgamation of the words ‘Chocolate’ and ‘Lonely’. While ‘Chocolate’ is self-evident, ‘Lonely’ is because they are fighting a very lonely fight against the big chocolatiers and the industry itself that wants to keep the system as it is. Keeping the system as it is means more exploitation of child labor and more illegal means behind their chocolate. That is exactly what Tony’s fighting against.
It all began way back in 2001, when US politicians Thomas Harkin and Eliot Engel introduced the ‘Harkin-Engel’ protocol. It was an international agreement signed by 8 of the major chocolate manufacturing companies, including Hershey’s, Mars, and Nestlé. The goal behind this agreement was to put an end to child slavery in the chocolate industry. Despite this agreement, if child slavery existed in large numbers, then you can imagine how rampant it must’ve been before 2001.
This is exactly what Teun van de Keuken found out. Van de Keuken was a journalist who took a trip to West Africa alongside other Dutch journalists to investigate the positive impact of the aforementioned agreement. The result they found was disappointing, to say the least.
In several pockets of Africa, child slavery still existed in chocolate-making process. Teun van de Keuken decided to put an end to it. After publishing facts and returning home, Teun took it a step further and decided to get himself arrested. He walked into a police station in the Netherlands and ate a chocolate bar from one of the big companies, and insisted that he get arrested since he was aware that there was child labor involved in making that chocolate. In the European Union Law, if an individual knows of wrongdoing and still allows and partakes in it, then he/she is punishable under the law. They could get a prison sentence of up to four years.
Despite Keuken’s wild and desperate attempt to popularize this illegal act behind chocolate-making, the police officers only looked at him in bewilderment. Teun van de Keuken did not go to jail. Around that time, Charlie and the Chocolate Factory (2005) had just released, and the bars of chocolate in the movie were manufactured by Nestlé. Teun requested Nestlé to use only those chocolate bars free of child labor, but Nestlé refused. Frustrated, disappointed, and possibly enraged, Teun van de Keuken then found his own company – Tony’s Chocolonely.
Besides the interesting and purposeful etymology, as mentioned above, Tony’s Chocolonely’s chocolate bars had other interesting details. The chocolate bars do not look like other normal chocolate bars, but are instead made up of small fragments that are uneven in shape. According to Tony’s, they represent the inequality in the system. Moreover, some of the shapes resemble the shapes of many West African countries that produce cocoa. Symbolism and visual metaphors aside, Tony’s has had to justify their business to achieve their goal, and that is just what they have been doing.
Tony’s Chocolonely’s Business Model and How They Plan to Consolidate the Market
In the fiscal year 2023, Tony’s generated around $162 million in revenue. This is a significant growth by the company, given where it started and the tightly competitive chocolate market of the United States. Tony’s was introduced to the United States in 2014-15 as it had begun to expand globally. The US was always going to be their biggest overseas market, given the Americans’ penchant for eating chocolates. They also have one of the largest consumer bases for it.
In terms of currency value and the potential worth of starting a chocolate company, the US is second to none. They spent around $19 billion in chocolate sales in the US in 2023 alone. This was a rise of 6% in 2023 from 2022. Hence, Tony’s Chocolonely started selling their uneven bars there, alongside the top market leaders like Hershey’s, Mars, Nestlé, etc. Even though a single bar of Tony’s costs $4.99, which is almost twice the price of a single chocolate bar of Hershey’s at $2.49.
The top 5 manufacturers of chocolate in the US own nearly 90% of all sales in the industry. Despite that, the remaining 150-odd chocolate manufacturers account for nearly an upwards of $1 million in sales in the US. To generate $162 million in revenue in 2023, Tony’s saw a growth of 23% that year. On top of that, they received an additional $22 million in funding. However, despite such positive signs of late, Tony’s Chocolonely is yet to see major profits in its business.
Given that they operate at such high ethical standards, and the cost of expenditure is high, Tony’s Chocolonely needs to go a long way before it actually makes a profit. At the moment, they have reached a break-even point, their CEO, Douglas Lamont, said to CNBC Make It. One of the reasons their cost of manufacturing is high is because of the very thing they are fighting against.
Folks at Tony’s Chocolonely have figured out the root cause of child slavery in the chocolate market – Less or non-payment of farmers. Since the cocoa farmers are severely underpaid, sometimes even unpaid, they find extreme difficulty in procuring the right labor for the job. Naturally, as a solution, their children are put to the task. Tony’s Chocolonely works very closely with their farmers and swears by their clean and ethical process of chocolate manufacturing. From the jungles of West Africa to the Walmarts and Costcos of America, Tony’s Chocolonely is very open about its methods and very proud of it.
Even though Tony’s is yet to make a profit in the market, they still want to invest and grow in the US. They even launched a manufacturing unit in Chicago, which takes the upfront investment. The company, along with its CEO, Douglas Lamont, is confident that they will start making a profit and reach their ethical goals.
How Does the Future Look for Tony’s Chocolonely?
With a growing revenue, Tony’s Chocolonely is expanding its business in the US. They are also spreading their ethos everywhere in the industry at the same time. Besides their main chocolate business, Tony’s also has a second business called ‘Open Chain’. Here, any brand or any private retailer can source cocoa from Tony’s Open Chain and put it in their supply chain. They have also partnered with the ice cream company Ben & Jerry’s.
Tony’s Chocolonely has 100% traceability of its cocoa beans, mainly from the Ivory Coast (Côte d’Ivoire). They know every farmer who provides beans to them. Tony’s believes they will continue to source their cocoa beans from West Africa, as they aim to reduce child slavery there. After they source the beans, a lot of them get turned into cocoa butter in West Africa, and the rest is shipped to Europe or the US, where they get turned into liquid chocolate.
The company’s aim to eliminate child slavery was further emboldened after it found out about 1000 cases of child labor in 2023 itself. The company founders truly feel that the chocolate industry is going to pick up pace, and with industry regulations around deforestation and traceability, people at Tony’s Chocolonely feel like all the things that needed to fall in place are finally happening.
Tony’s Chocolonely serves as a bright example of what can happen via an accident, and can still cause a major stir in the International Market. It remains one of the finest modern-day examples of an International Marketing success.
