Vietnam cocoa splashes into organic market

Organic cocoa has more nutritional benefits than its nonorganic counterpart such as more fibre, iron, magnesium, copper, manganese and other minerals. In addition, it contains plentiful antioxidants, which helps to protect skin.

Currently, the Dominican Republic dominates the global organic cocoa market in terms of production, holding roughly a 70% market share while Peru, Ecuador and Mexico collectively control around 20% of the market.

The remaining 10% is held primarily by other South American countries including Bolivia, Ghana and Brazil with other parts of the world meeting only a miniscule portion of the world’s demand.

Speaking at a recent conference in Ho Chi Minh City, Luong Van Tu, chairman of the Association, said market conditions are right for Vietnam farmers and other enterprising entrepreneurs to take the plunge into the niche organic cocoa market.

Mr Tu said demand for organic cocoa products is highest in the US, UK and Germany, and manufacturers of organic cocoa products in North America and Western Europe are at wits end trying to find adequate supply sources.

On the basis of application, the organic cocoa market is segmented into confectionaries, bakery, functional food, health drinks, home cooking use and others (pharmaceuticals, ointments, and toiletries).

Organic cocoa is majorly used in the food industry as a main ingredient of chocolate, which historically has always had a perfectly inelastic demand— meaning it’s high price has had little effect on the quantity ordered.

There are particularly huge opportunities in the North American, Western European and Japanese markets, said Mr Tu, and the Asia Pacific region excluding Japan is an untapped market for which there is also a gigantic potential market for organic cocoa.

This is attributable to increasing inclination of consumers towards organic products, rapid urbanization, strengthening supply chain for organic cocoa and rising health consciousness among consumers in these markets.

Research by the Association shows that over the past decade cocoa consumption in China has tripled and the figures for India and Brazil indicate demand has more than doubled, he noted.

All told, our analysis indicate that Asian nations have imported more than 500,000 metric tons of fermented cocoa on average per year from West Africa and South America.

There simply is no reason why Vietnamese farmers and businesses can’t be filling that demand as they have the capability to produce a higher quality and timely product at a better price than the competition.

As recently as 2013 Vietnamese cocoa was chosen a world’s best quality at a competition in Paris, France and in 2015 the International Cocoa Organization selected it best for fragrance, said Mr Tu.

Meanwhile, cocoa prices fell sharply recently as a result of Britain's exit from the EU and fears it would impact demand for the main ingredient in chocolate from the UK, its largest consuming region.

Cocoa for September delivery dropped 4.8% to US$3,032 a metric ton on the ICE Futures US exchange.

However, most market analysts report this drop will be short-lived and there is already speculation that the price will not only rebound but could see US$3,400 a metric ton in the not so distant future.