Cocoa drying in Ghana for Tony’s Chocolonely
Dutch chocolate maker Tony’s Chocolonely produces great chocolate and original chocolate bars. But, more importantly, it also goes at length with its sustainability mission to achieve a 100% slave-free chocolate industry. Not just for themselves, but for everyone on this planet. A conversation I had with their Head of Impact, Paul Schoenmakers, reveals how serious they are about this mission and how they strive to accomplish it.
As mentioned in an earlier article, the story of Tony’s is a remarkable one. It started in 2004 with Dutch journalist Teun (Tony) van de Keuken creating awareness for the fact that there was no chocolate available which was 100 % guaranteed slave free—meaning there is no child labor involved and no exploitation of farmers working below the absolute poverty line or under inhumane working conditions. Fast forward to today, Tony’s is now market leader in the Netherlands and growing at fast pace by expanding to other countries. And, as of recently, they make headway on the aim to further enlarge their impact by helping competitors follow their way of working.
Tony’s Six-Layer Sustainability Strategy
As Schoenmakers points out, “Tony’s is an impact company.” This means that, unlike many other companies, Tony’s has a sustainability-first strategy. They don’t measure success in revenues or profits. They measure it in terms of how much chocolate they have sold, how much cocoa they have purchased on equal business relations, how many farmers they directly work with and how much they have paid farmers in terms of premiums above ordinary prices. So, they measure their success by their impact. When analyzing how they strive to achieve this impact, it turns out they have an outspoken impact strategy consisting of six consecutive layers building on top of each other.
Layer 1: Focus on One Big Problem and Raise Awareness
The first layer of Tony’s strategy started even before the idea of starting a business emerged. Being a journalist, cofounder Teun van de Keuken wanted to raise awareness for the slavery problem in the cocoa supply chain. With this starting point, Tony’s focused on one big problem and made it their mission to solve it. The focus implies that, even though other ingredients of their chocolate bars (such as hazelnuts) have problematic supply chains too, Tony’s focuses on improving one supply chain while using what is best available in the market for other ingredients. This means they can put all their effort on raising awareness for that problem—and on solving it.
Raising awareness was not just an initial step. It is an ongoing effort that continues as long as Tony’s mission is not achieved. A clear example, is the packaging of their chocolate bars. Both on the outside and the inside, they explain their mission in a clear and accessible way. Other things they do include organizing an annual Tony’s fair and providing presentation packages that anyone can use to spread the word.
Layer 2: Create and Sell a Unique Product
The second layer of Tony’s impact strategy is practicing what they preach and showing the world it can be done. Creating awareness is important but to make a real impact, Tony’s wants to show it is actually possible to create slave free chocolate—a strategy similar to that of Fairphone, another Dutch impact company.
Accordingly, Tony’s strategy is to create a unique product that had the possibility to disrupt the market. As explained earlier, this is an essential step to make impact, because, without a great product, there is no solid basis to build a scalable company on. A “me-too” product that is only distinct by its mission may be sufficient to convince a select group of customers. To reach the masses, though, a product is needed that stands out and that customers want to buy even without the mission. In Tony’s case, it is the unique and wild combinations of chocolate flavors they offer, together with an outspoken brand and packaging.
Layer 3: Grow Your Home Market and Internationalize
Without growth, it is hard to make any significant impact. Therefore, the third layer of Tony’s impact strategy is to grow. In doing so, their first focus was on their home market, the Netherlands. The fact that, with a market share of 19%, they are market leader now, shows they have been successful in that.
Because the home market is close to being saturated, further growth there is difficult. Therefore, Tony’s has started to internationalize in recent years. It is now present in Belgium, Denmark, Germany, Finland, Sweden, France, the U.K. and the U.S. and further internationalization efforts are made.
Layer 4: Create a Platform to Help Competitors Change
The first three layers of Tony’s impact strategy are the source of their success so far. They focus on building up a successful, scalable company that can make a serious impact. This is where most companies stop because this is how far it concerns their own business. Not for Tony’s. Layer 4 of their impact strategy is to reach out and help others change too. And the most remarkable thing about this layer is that they primarily focus on helping competitors.
Through their Open Chain platform, Tony’s provides competitors and others with all the information and tools necessary to copy what they have done. This means they do exactly the opposite of what traditional strategy tells them to do: they share their unique advantage with the world and help competitors copy what they do. This shows how serious Tony is about their mission. It is not the survival or success of their own company that matters most, but the impact they make. And together with competitors they can make much more impact than alone.
While this initiative started only recently, they already have Albert Heijn, the largest retailer in the Netherlands, on board. It has committed to produce their private chocolate label Delicata with cocoa purchased following the Open Chain’s Five Sourcing Principles.
Layer 5: Push for Institutional Change
And it doesn’t stop there. While the first four layers focused on consumers, farmers, retailers and chocolate producers, Tony’s fifth layer targets a fifth key group of stakeholders: governments. As Schoenmakers explains, there are already standards in place for fair business for almost a decade. Since 2011, there are the UN Guiding Principles on Business and Human Rights, translated by the OECD into Guidelines for Multinational Enterprises and the OECD Due Diligence Guidance for Responsible Business Conduct. This means it is known what needs to be done to improve a supply chain like that of the cocoa business and there are even official guidelines for that.
The problem, though, is that these guiding principles are not mandatory—they are voluntary. This is why Tony’s has started a petition in November 2019 to ask European and American governments to create legislation that requires companies to adhere to these principles. By fall 2020 they hope to have gathered one million signatures.
In parallel, they also lobby at governments in cocoa producing countries such as Ghana and Ivory Coast to modernize their farming policies to help cocoa farmers professionalize and scale up.
Layer 6: Raise the Bar and Inspire
The last layer of Tony’s impact strategy is to maintain their leadership position by continuously raising the bar for themselves and for others. While the previous five layers focused on broadening their impact, this sixth layer focuses on deepening the impact they make.
Again, they do something remarkable here. By continuously raising the bar, they make it increasingly difficult for themselves to reach their own standards. As Schoenmakers mentioned, whereas they focused on certification in the past and transparency today, their most recent step was to define a “living income reference price” that farmers really need to make a reasonable living. After several years of research, it was found that this price lies around $2.20 per kilo cocoa. This is about 20% higher than the price Tony’s already pays—which is in turn already significantly higher than the market average or even Fairtrade prices (+40%). This means that Tony’s expenses will go up, thereby putting their own profitability under pressure.
Along the line of layer 4, Tony’s has made this information available for others through their Living Income Model. By staying ahead of the curve in this way, and inspiring and helping others, Tony’s aims to maximize its impact—both within the industry as well as in other industries.