Divine Chocolate is a fully international brand that holds board meetings in three countries. We spoke with CEO Sophi Tranchell about what caring for local economies means in that context.
What’s the origin of Divine?
Sophi Tranchell: Divine’s story started back in 1993, when the liberalization of the cocoa market in Ghana meant that there was an opportunity for farmers to set up a cooperative run for farmers, by farmers. They set up “Kuapa Kokoo,” which means “good cocoa farmer.” They were also committed to democratic principles and gender empowerment right from the beginning. They had an annual general meeting each year; two people from each village attended, to ensure that one of them was a woman. They invested in weighing scales and carried around a weighing stone to check the scales often, and ultimately employed technicians to maintain those scales. That meant people trusted the transactions. They quickly grew because they were seen as honest and efficient.
By 1997, they had about 25,000 members. In their annual meeting, they voted to set up a chocolate company, so the NGO that had been working with them in Ghana came back to Britain to find like-minded investors. The Body Shop International and Christian Aid invested, and then the British Department for International Development, which is the equivalent of USAID, gave a loan guarantee.
Tell us a little bit more about the business model and how it empowers the cocoa farmers.
ST: From the start, the farmers have had two seats on the board. The board meets four times a year, once in America, twice in Britain, and once in Ghana. The farmers own 44 percent of the company, so they get 44 percent of the distributed profit.
We also pay a Fair Trade guaranteed price for the cocoa, and that includes a social premium of $200 a ton above the world market price. In addition, we invest 2 percent of our topline turnover [revenue] in programs which support the farmers setting up their businesses, like training in agricultural practices, training in working in a cooperative, developing databases so that we’ve got good member information, and helping and supporting the cooperative election process to ensure that it’s free and fair.
We’re creating, in total, four income streams: the guaranteed Fair Trade price, the Fair Trade social premium of $200 a ton, the profit dividends, and the 2 percent producers’ support and development program.
How do you manage the relationship with the farmer-owners, and what lessons have you learned along the way?
ST: Their representatives have full transparency on all of the matters that come up in a board meeting, like the strategy for the company and the business plan for the next year. We produce an annual report as a laminated poster that goes up in each of the village cocoa sheds, so everybody has access to that information. Then I attend their annual meeting each year and report to them on how the company is doing.
But the farmers have been their own best ambassadors. It’s one of the things that’s been integral to the success of Divine and also motivating to be a part of. They’ve come to Britain and America and traveled around and met all sorts of people. They’ve told their story and answered questions and seen just how much chocolate we all eat. Actually, they’ve been surprised about how many people are interested in how they grow cocoa and whether they are getting a decent livelihood out of it.
The lesson I’ve learned is that if you’re going to put together an unusual group of stakeholders, then you have to invest in making sure that the communication works and that people feel they are welcome to contribute in a board meeting. You’ve actually got to make an effort to make this work. One of the advantages we’ve had is the official language in Ghana is English. But our board meetings have been challenging because we’ve got Dutch investors, a German investor, Americans, English people, and Ghanaians. Everybody’s speaking in English, but are they actually understanding each other? Having patience and investing in making sure people are coming on the journey together is quite an important thing.
Has this shareholder model strengthened the Divine brand?
ST: It’s the absolute core of it. It’s been all of our inspiration. It’s also the story we tell. We launched into an incredibly mature market which is dominated by giants. The sense that we have something different to say because the farmers own us and they have lovely stories of their own has been very important.
Do you have any specific stories that really illustrate the purpose or the mission of Divine for you personally?
ST: One of my favorite memories is from when we launched Divine in America in 2007. We launched it on Valentine’s Day in Washington, DC. The farmers chose a 55-year-old woman called Comfort Kumeah to represent them.
When we first came across Comfort in 1999, she hadn’t really left her village. Then, through the process of en- gaging with us, she came to Britain in 2002, got a bit more confident, and got elected onto Kuapa Kokoo’s National Executive Committee. She came to Washington, and we woke up on Valentine’s Day to two feet of snow. We had to get to a briefing on Capitol Hill, and she spoke at that event, and her picture was on the front page of the [Washington] Times.
When she was 50, if you’d asked her if she could imagine all these things, she would have just laughed. It was unfeasible. I love the way that that’s life-changing; she becomes a completely different role model to her children and her grandchildren.
Could you talk to us about how you financed Divine? Were you able to find mission-aligned investors and, if so, how?
ST: One of the advantages of Fair Trade is that there is some nance that has been particularly developed for it. But the finance we’ve had more recently, which enabled us to set up in America, was from a Dutch social investment organization called Oikocredit. They’re completely aligned with our mission, and it means that they’re also a patient investor. One of the things that’s really challenging when you’re setting up a startup is how much time you spend mobilizing money versus how much time you spend building the company. Because we got good, patient money, we were able to then spend our time building the company.
Do you have any advice for mission-driven entrepreneurs who are embarking on a capital raise?
ST: You need to be very careful. You need to make sure that you’re working with people whose values align with yours and be brave enough to have the conversation about, “Are you expecting to exit? When?” Rather than hoping that they’re not going to exit, actually put it on the table, have a conversation about what your long-term expectations are. The thing that’s complicated is discerning be- tween people who are targeting social businesses as an area of high growth versus people who are genuinely aligned with your values.
Can you comment on how Fair Trade really ensures that the local economy, wherever you’re working, is being treated fairly and that it’s actually bringing people out of poverty?
ST: The Fair Trade certification is a good consumer guarantee that what we’re saying is true. We have to make quarterly declarations, and they come and check our books on an annual basis. But they also go and audit the manufacturers in our supply chain, and they make sure that the money is getting to the farmers and the democratic process is happening effectively.
Obviously, it’s all spot-checks. They’re not everywhere all the time, but they’re looking at minutes of meetings, then seeing people who were apparently present in those meetings to check that those meetings took place. And if it says that there was a school built, they’re going and seeing it. The level of poverty is quite high, and so you’re managing to go from things like not having clean water to having a pump. You’re not ending up with taps in everybody’s houses yet.
Now that you know what you know, after 17 years in your position, is there anything that you would have done differently along the way?
ST: I walked in and they had one product, Milk Chocolate, 150 grams. Knowing what I know now, I would have come up with a range of products. Because when you manage to get in to see a buyer, you want to have a range of things to show them so that if they really like it they can take everything, and if they’re not too sure they can take one or two things. We showed our one bar to people and they were surprised at how good it was, but all they could do was take one thing, and then it just sort of disappears, because one thing on the shelf is too small. It’s about understanding the category you’re in, and chocolate is a category where brands have a selection of products. Also coming in with a whole proposition would have enabled us to grow more quickly.
What is giving you hope for the future?
ST: It’s great to see an increased interest in the different ways of doing business. We’re seeing consumers who are becoming more demanding. The other place I’m seeing it is people wanting to work for different sorts of businesses that deliver more than a bottom line. That’s increasingly what people are saying in interviews when they come to talk to me.
There’s also an interesting thing happening about gender. Thirty-five percent of the 85,000-plus farmers we work with in Ghana are women, and the country elected its first woman president in 2010, and its second one in 2014. That was previously quite unthinkable. Women are starting to get their place, and people are assuming that women should be part of it. That’s also cause for hope. Because I think we might look after the world a bit better! [Laughter]