Balancing the Brew of the Chocolate Business

Once considered a luxurious delight just for wealthy people, chocolate has become a household treat as middle class families with disposable incomes have grown in numbers. Fortunately, too, more socially-conscious entrepreneurs are veering towards more sustainable production and fair trade partnerships, thus opening opportunities for small cacao farmers and processors.

Looking to fill the fair trade cocoa demand is Seed Core Agri-Industrial Corporation, a Philippine enterprise founded in 2011 and operated by eco-entrepreneur Rob Crisostomo.  As an agricultural business leader, he works with rural farming communities, which serve as supply chain producers of cacao beans, the staple ingredient of chocolate.

As a young entrepreneur, Rob, 32, embraces the cause of sustainable development, and advocates organic food and a healthy environment.  While still a student of business management, he and partner, Bea Misa, were already selling organically grown products. The couple then opened Ritual, a neighborhood grocery store in Makati City, which sells organic food and home goods sourced from small producers countrywide.

From 2011-2012, he was the managing director and chief executive officer (CEO) of Islands Cacao, a top Philippine manufacturer and trader of cocoa beans and products. “We tried to merge what consumers look for with what we generate as long-term sustainable livelihood. We saw the global demand for chocolates. We like chocolate ourselves so we built our businesses around that,” said Rob.

His entrepreneurial drive never ceased to seize opportunity. Seeing that the cocoa supply could be kicked up and bring better incomes to Philippine rural farmers, Seed Core geared up to provide quality cacao seedlings to rural communities by establishing a collective network of nurseries. To create a resource network of government agencies, local authorities, public corporations and farmers groups, Seed Core packaged the Planting SEEDS (Social Environmental and Economic Development and Sustainability) project, which could supply 20,000 cacao trees for farmers in a “tree-to-market” program in selected provinces. Aside from cacao seedlings, the project also provides training and information to the farmers so that the trees have a high survival rate. 

For Rob, venturing into a social enterprise is not something everybody can excel in. The biggest challenge is remaining financially sustainable. It was his passion, resilience, attitude and managerial skills that have kept their enterprises active and hardy–able to hurdle tough times.

Rob explained: “You need to have an entrepreneurial mindset, the ability to spot opportunities, the willingness to take risks, and the awareness to discern needs and take advantage of those needs. But you also need the ability to survive because only 2 to 3 out of a hundred businesses survive.”

His place in the industry allowed him to perceive potentials and capitalize on these. Instead of focusing on the local market, he chose to engage in exports because overseas buyers offer higher prices. Exporting also pushes the enterprise to raise product and process standards to internationally certified levels. Through these and its brand equity, the product and the enterprise behind it gain credibility as well.

Seed Core’s major current client is Barry Callebaut, based in Switzerland, one of the world’s leading manufacturers of high-quality chocolates and cocoa products. Callebaut’s customers include top-brand chocolate producers worldwide such as Hershey’s, Néstle and Cadbury.

“Locally, we supply beans to artisanal chocolate makers like Theo & Philo. This year [2015] we’re extending our supply chain and developing our own cocoa products,” adds Rob. The company is converting some farms into nurseries that use organic fertilizer and more sustainable agricultural practices, as well as expanding operations to more small-scale farmers, who can earn more in the cacao supply chain.

For Rob, social enterprise is not simply equated with doing business.  “A social enterprise works on principles, to make profit but at the same time to commit to the social good and adhere to environmental laws that drive the business forward. The challenge lies in balancing,” he said.

“When you present yourself as a social entrepreneur, people expect you to give things for free. But among suppliers, producers and the workforce, everyone is equal. All members of the team work towards the vision of improving the lot of everybody. This differs from a hand-me-down [project]. There should be mutual respect between you and the farmers.”

Although a fairly young enterprise, Seed Core has already earned a number of accolades such as the top Social Enterprise Award of the British Council in I am a Changemaker competition held in October 2011. The company’s business plan had also been granted the Starbucks Shared Planet Award.

The Peace and Equity Foundation (PEF) partnered with Seed Core and with a Php1 million credit line, supports the livelihood of cacao farmers in Davao City; but Rob hopes that the relationship prospers so that he could invest in other aspects of production and sales in the future.  “PEF actively supports our advocacies by providing training in the preparation of feasibility studies or helping us to invest in other technical and managerial competencies so that we can contribute to the cacao industry in Davao,” Rob said.

Overall, Seed Core is still creating the right system for the business, including building a strong team of employees, and network of partners, suppliers and buyers. Rob further said with foresight, “You need to create a system that could go on, be scaled up or expanded–with or without you–for the enterprise to remain sustainable.”

Rob likens the managing of a business to navigating a river that requires focus yet also flexibility to shift strategies in case previous ones do not work. “Rivers meander and do not follow a straight contour. They curve this way and that.  You may hit a rock or drop into a ravine or waterfall.  The key is to keep afloat with determination, compassion for others, and zeal.”